The fourth industrial revolution is leaving no company behind. Companies that didn’t embrace computing in the second half of the 20th century struggled to remain competitive against their peers. Now, with Industry 4.0 firmly in place, interconnectivity is the new objective, whatever the industry.
In traditional industries, like manufacturing, interconnectivity can be a tough transformation to make. There are risks to be considered and investments to be made, but ignoring this shift may make it riskier and more expensive to do business in the future.
Andy Coussins, SVP and head of international at Epicor, says some manufacturers are still cautious about change. To some extent, this is explained by companies relying on their tried-and-tested in-house IT teams, particularly in highly specialised and highly regulated industries like medical device manufacturing. “However, given the overwhelming advantages of a highly secure and scalable cloud approach, the calculation in determining on-premises or a cloud solution should really come down to the experience and know-how of the cloud partner,” Coussins adds.
That’s not to say it’s a bleak outlook for manufacturers. Make UK charted a 6% growth for 2022 in the manufacturing sector. The UK also ranks in the top 10 largest manufacturing nations by value of output and sees 51% of the nation’s exported goods derive from the manufacturing sector. This explosive industry is in a strong position. And the pandemic has shown that its resilience is unquestioned.
But maintaining this positioning in the future will rely on a renewed focus on technology, software and the ability to digitise. Make UK’s research indicates that 45% of manufacturers have already introduced digital technologies. But 15% of companies have no plans to do so by the end of 2023. These technological laggards may find it challenging to keep up in the era of Industry 4.0.
Cloud technology is one of the primary routes to interconnectedness that manufacturers can take. In fact, according to Epicor’s research, 50% of manufacturers say they will move ‘most business solutions’ onto the cloud in due course. That indicates a sense of optimism and trust in the cloud. But the reality is that data backups and IT functionality are still the primary uses of cloud technology on the ground.
With the industry being squeezed in all directions, manufacturing has had to adapt to increased competition – often from non-traditional competitors – supply chain disruption and the ‘need it now’ consumption trend. Vaibhav Vohra, chief product officer at Epicor, says: “Fortunately, technology innovation in recent years – particularly in the cloud – bodes well for helping companies respond to these requirements. Cloud uniquely gives companies the flexibility to do business where they need to – in factories, offices, or at home. It also provides opportunities to develop cost structures that can move from upfront, fixed-fee implementations to the flexibility to subscribe to cloud services over a period of time.”
The shift to the cloud is also made prescient by changes to required skills in the manufacturing labour market. “The fourth industrial revolution is creating a mismatch between available workers and the skills necessary for open jobs,” writes Deloitte in its report, ‘The future of work in manufacturing.’ Not only does it indicate that manufacturers will have to better embrace their people and new working models, but they will have to attract employees with digital skillsets and technological knowledge in order to remain competitive. Even traditional roles like scheduling will now have to be digital led as ‘smart scheduling’ becomes embedded.
“Cloud solutions enable manufacturers to focus on what they do best. Design, development, and production of the very best products they can. New talent coming into any business wants to be able to be enabled by technology and not held back by it. The technology to have a multiplier effect on the success of the people within the business,” says Coussins. Making it easy to work with technology that runs on familiar platforms employees may use in their personal lives will help manufacturers compete for digital talent.
The pandemic motivated new ways of working within manufacturing, much of it underpinned by technology. During the pandemic, companies in the sector noted an increased rate of production, a boost in productivity, easier adherence to health and safety guidelines and improved communications, according to Make UK. It notes that 64% of manufacturers have undertaken digital skills training in the last year. Smaller companies found it easier to remain agile and upskill. Companies of any size that improved training said they were at an advantage when the pandemic required new ways of working at speed.
Coussins agrees that agility is essential in manufacturing today. “Agility is the name of the game in today’s globally connected and fast-moving business landscape. This is the underpinning and essence of digital transformation, and technology plays a central role in this change. To survive and thrive, many manufacturing organizations are leveraging cloud technology to make their business practices more efficient to increase margins, find ways to achieve broader market reach and grow their business, and provide more value-added services and better customer experiences to increase customer loyalty, all while ensuring your systems are scalable, reliable and secure.”
One of the motivations behind the shift to cloud-based solutions was the pandemic and the need to mitigate risk. Make UK found that 26.4% of companies plan to adopt cloud-based solutions as a way to address vulnerabilities and increase resilience.
“There used to be a time when organisations were nervous to put their data in the cloud, under the impression that once up there ‘anyone could get at it.’ However, today the cloud is where all the innovation happens and that applies for security as well as analytics and productivity,” Vohra says. He points out the level of investment and cybersecurity involved in a major cloud platform. Comparatively, a single server run by an in-house IT department is vulnerable to modern cyber attacks. “Being ‘in the cloud’ is the only sensible choice to ensure the highest possible levels of ERP business application security, Vohra adds.
And, with nearly 90% of manufacturers surveyed by Epicor noting that data is safer in the cloud, new software solutions are a simple fix for operational resilience concerns.
Industry 4.0 is touching every element of business operations, from employment and skills to connectivity to security and resilience. Manufacturers are recognising the need to embrace new technology in order to remain competitive. After all, Industry 5.0 may be just around the corner.