Challenges and solutions for the digital transformation and use of exponential technologies

Around the world, traditional manufacturing industry is in the throes of a digital transformation. The widespread adoption by manufacturing industry of information and communications technology is now paving the way for disruptive approaches to development, production and the entire logistics chain. Commentators use the term ’industry 4.0’ to refer to a fourth industrial revolution with four main characteristics:

• The vertical networking of smart production systems, such as smart factories and smart products, and the networking of smart logistics, production and marketing and smart services, with a strong needs-oriented, individualized and customer-specific production operation
• Horizontal integration by means of a new generation of global value-creation networks, including integration of business partners and customers, and new business and cooperation models across countries and continents
• Through-engineering throughout the entire value chain, taking in not only the production process but also the end product – that is, the entire product life cycle
• Acceleration through exponential technologies that, while not really new in terms of their development history, are only now capable of mass-market application as their cost and size have come down and their computing power has risen massively

This study investigates the extent to which surveyed companies have positioned themselves in relation to this digital transformation and the opportunities the switch to industry 4.0 offers them.

• Increase competitiveness: a majority of companies believe the transformation will increase competitiveness. A few companies argue industry 4.0 can slow down the trend towards relocating production to low-wage countries
• Utilize opportunities and reduce risks: major opportunities include opening up new ways for companies to integrate customers’ needs and preferences into development and production processes, and making machine data analysis easier. In terms of risks, companies believe cyber risk could be further increased
• Adjust talent and IT resources: most of the companies note they do not have all the staff needed to make the transformation. One-third of companies have an appropriate IT infrastructure in place for the switch
• Develop potential for individual business segments: R&D, procurement, production, and logistics are currently undergoing the most transformation, while sales and services are the segments with the greatest potential to benefit from it. These segments should switch from the ’push into the market’ of better products to an individualized understanding of customers’ needs and industry-specific solutions (’pull from the customer’)
• Use impetus from exponential technologies: a majority of companies agree the key technology 3D printing will accelerate the transformation. Only very few companies are so far making full use of this technology