The Industry 4 Paradoxes: The Challenge of Digital Transformation

The fourth industrial revolution has been happening all around the world. It is an global phenomenon in which advance scientific and technological development are pushing and breaking through many possibilities, blurring geographical boundaries, and disrupting how the business in the industry operate or even upend the business competitive landscape. Even in Thailand, the government has adopted and adapted this concept and turned into 'Thailand 4.0' where we would like to shift from traditional low tech operation to be advance and innovative technology with smart device and system.

What exactly Industry 4.0 is?

Emerging technology breakthroughs; Advance robotics, Artificial Intelligence (AI), Internet of Things (IoT) with high speed everywhere internet access, are a key driver of the fourth industrial revolution. If we have to put a short words for 'what is industry 4.0' then we can it is basically a 'Smart factory'. To elaborate further, it is where we combine and connect digital and physical world, the machine work smarter in such a way that not only it can be digitally controlled remotely by human but also it can think, analyze and act by itself including 'talking' to other machine for collaborative work as well as alert or feedback to human for further intervention. It is not just 'man-machine' as found in the Third industrial revolution but now the relationship become more complex like 'man-machine-machine-man'.

To help us understand about this, we have to look back and understand about the three previous industrial revolutions. The first industrial revolution happened in late-18 century when the first steam engine and hydraulic power to make production more efficient. Then in late-19 century, an electric power and assembly line make the mass production possible which drove us into the Second industrial revolution. The Third industrial revolution, around 1960, when advance computer allow us to program and control the machine in a much more automated.

What Industry 4.0 will mean for manufacturing companies?

First, the obvious benefit come from the production line itself, where the factory can improve productivity by eliminating unplanned downtime, ensuring uninterrupted production line where required resources; man, machine, material are well synchronized with advance AI and IoT. Next with fully automated and connected device, it will dramatically reduce operational risk in business thus help driving business growth without major stumble or roadblock.

However, the real benefit and true potential of Industry 4.0 has profound implications when company take a bold step to be as truly transform itself by rethinking business strategy, creating new business models or redesign organizational structure.

Deloitte Global survey

To understand how companies are investing in Industry 4.0 to enable digital transformation, Deloitte conducted a global survey of 361 executives in 11 countries around the world. The survey captured insights from 7 key industries, aerospace and defense, automotive, chemicals, metals and mining, oil and gas, and power and utilities.

The survey revealed a mix of enthusiasm and ambitious plans for future investment—as well as a series of disconnects between companies’ plans and actions. There are 5 paradoxes can be observed which are strategy, supply chain transformation, talent readiness, investment in innovation and around the physical-digital-physical loop.

This suggests that the will for digital transformation remains strong, but organizations are largely still finding a path that balances improving current operations with the opportunities afforded by Industry 4.0 technologies for innovation and business model transformation.

The strategy paradox.

Nearly all respondents (94 percent) indicated that digital transformation is a top strategic objective for their organization. However, doesn’t necessarily mean they are fully exploring the realm of strategic possibilities made possible by digital transformation. In fact, many fewer (68 percent) see it as an avenue for profitability.

The supply chain paradox.

Executives identified the supply chain as a top area for both current and prospective digital transformation investments. However, supply chain executives who direct the actual day-to-day business operations and the implementation of digital technologies—do not appear to have a seat at the table when it comes to decisions about digital transformation investments.

The talent paradox.

Always, any initiative require people. Talent play a vital role in driving all changes (also resisting it along the way). Executives point to finding, training, and retaining the right talent as their top organizational and cultural challenge.

The innovation paradox.

Executives report their digital transformation initiatives are driven largely by productivity improvement and operational goals or doing the same things better. This finding has been in-line with previous Deloitte studies, suggesting a wider pattern around using advanced technologies for near-term business operations, rather than truly transformative opportunities.

Around the physical-digital-physical loop paradox

The ability to fully harness information from connected assets and use it to drive informed decisions is important to the full realization of Industry 4.0, and one which many organizations may not yet fully be able to execute in practice. The result from survey has shown that more than 50% still can connect only half-way thru the loop. While some are working on 'digital-physical' loop - the last part of the loop which is the most challenging but also the more critical one of becoming a 'smart' factory or industry 4.0

Breaking the paradoxes

There is no single way to successfully navigate the path of Industry 4.0, and no single paradox is more important than any other. But the findings from our research suggest a few final high-level observations:

• Digital transformation is not some abstract endeavor separate from core organizational strategy and purpose. Once it is undertaken, it becomes central to the organization, touching upon every aspect of the company. Digital transformation is potentially so much more than simply a means to do something faster or more cheaply.
• Digital transformation does not have a single definition. It is, ultimately, what a given company uniquely makes of it and hopes to achieve from it. Digital transformation serves the needs of the organization; no two digital transformation initiatives are identical.
• Digital transformation may profoundly affect talent. It is imperative that the newly digital organization thoroughly understands and responds to its talent needs, including helping legacy talent understand how their roles may be reshaped.
• The culture of the digital organization should be inclusive. A full array of people throughout the organization—at all levels—drive digital transformation and ensure its viability on a daily basis. Their voices should matter. As Peter Drucker once said 'Culture eats strategy for breakfast'.

The changes digital transformation may bring about in organizations will evolve, perhaps in ways no one could have anticipated. This is to be expected as the foundational technologies that comprise Industry 4.0 and drive digital transformation, themselves, evolve at an ever-faster pace. But it seems almost certain that, however that evolution unfolds, the era of Industry 4.0 is here.