India – this is what could derail your Industry 4.0 initiatives

India – this is what could derail your Industry 4.0 initiatives

Category : Industry 4.0

Globally, the manufacturing industry is witnessing a shift towards Industry 4.0, a concept that employs multiple digital technologies to enhance and improve the complex touchpoints of this industry. Industry 4.0 also has come to the forefront as we become a consumer-centric economy where improving customer experience trumps cost cutting to accelerate business growth.

India, too, cannot remain alien to this revolutionary concept. Presently the manufacturing sector contributes 17% of the GDP. With impetus from the government to increase this number to 25% to push economic growth, manufacturing companies are being compelled to look at technologies such as automation, big data analytics, cloud computing, robotics and sensors and AI to boost the manufacturing process.  As Industry 4.0 establishes itself as an industry best practice, manufacturing companies have to look at strategies to bind the digital and manufacturing worlds. While the transition to Industry 4.0 will need a significant “economic and social transformation and political and institutional framework”, organizations adopting this standard have to be wise while embarking on this journey and ensure that they escape the traps of narrow vision.

In this context, what are these potential minefields that can derail India’s Industry 4.0 initiatives? Being one of the sixth-largest manufacturing nation and the biggest recipient of foreign direct investments (FDIs), Indian manufacturing companies have to ensure that they don’t make these epic mistakes.

Poor strategic business direction

“If you don’t know where you are going, any road will take you there”….or maybe not. In the case of Industry 4.0, organizations need to have a definitive digital strategy that is aligned with business goals and initiatives. These strategies have to be focused on maximum ‘value’ generation. This value generation can range from increasing product efficiency to increasing sales growth. Creating a clear business opportunities roadmap which accounts for productivity, product resilience and performance, sales growth, internal processes, product innovation, customer focus and consequent sales growth become essential. Not taking such an approach leads to haphazard and confusing implementations that impede, rather than improve, efficiencies.

Focus on technology alone

Yes, Industry 4.0 is the ground where technology meets manufacturing. But Industry 4.0 is not about the technology alone. It is about all the touchpoints that impact the production process and then some. Going gung-ho and making technology decisions without understanding how these choices will change processes, not having a plan on how to manage that change, evaluating the downtime, infrastructure needs and the costs associated with that can severely hamper the initiatives. The shift to Industry 4.0 has to be organic and must evaluate which processes need to be changed first and why.

If organizations just get excited about the technology, do not make quantitative estimates, do not set up a business case that takes into consideration complete costs from acquisition to operations and do not measure the impact of the change, these initiatives will most likely fail. Industry 4.0 cannot be approached from a technological perspective alone while pushing its impact on the business to the background.

Lack of a skilled workforce

The Economist’s Intelligence Unit survey cited skill issues to be one of the major barriers to the adoption of Industry 4.0 across the globe. “More than a third of survey respondents acknowledge that they are struggling with recruiting and retaining talent.” The survey also states that 42% of the respondents “worry that over the next three years they will not be able to recruit new workers with the necessary prerequisites for on-the-job training.”

The National Skill Development Corporation (NSDC), a public-private partnership set up by the Planning Commission estimated the rising skills gap to be more than 250 million workers across various sectors by 2022. An article in the Wall Street Journal shows that while India does not have the labor shortage, it has a shortage of skilled labor. Despite having numerous engineering and vocational schools, “The quality of the manpower when they come out of engineering colleges is not A-grade,” according to Bharat Salhotra, managing director for Alstom India & South Asia.

These numbers are not consoling as the level of technical dexterity needed in the Industry 4.0 era will increase incrementally. Identifying right training and upskilling opportunities will be contributors to Industry 4.0 success. If India wants to become a manufacturing hub, then along with government initiatives such as Skill India, manufacturing companies have to themselves take the initiative to identify where the skill gaps in their workforce lie and take measurable steps to resolve that with the right learning and development initiatives. Unless this happens, implementing Industry 4.0 in India will not bring in the promised benefits.

Industry 4.0, while being a superlative concept, can seem like a complex web woven by technology. The manufacturing industry, especially the Indian manufacturing companies, have been accustomed to certain manual processes and methods of operation. The shift to Industry 4.0 signals a change in times and change is never easy to accommodate and can often be a hard challenge to mitigate. While adopting any new revolutionary concept has some teething problems, it is essential to ensure that the concept does not become that white elephant – one that is hard to obtain and maintain.