While the globe’s major manufacturing hubs are moving towards Industrial 4.0, a survey of UK manufacturers finds that many lack explicit knowledge of the benefits of the technology on business outcomes and few have strategies in place to upgrade their value chains.
Industry 4.0 is projected to bring with it considerable increases in productivity, cut down on costs as well as increase flexibility. Germany is one of the forerunners of the technology, investing €140 billion per year until 2020, while globally businesses are sinking a total of $4.5 trillion to 2020 into the rollout of the technology. While Industry 4.0 has a variety of meanings, Strategy& defines it as “the availability of all relevant information in real time by connecting all instances involved in the value chain.” In the context of manufacturing, both the vertical and the horizontal value chains become integrated: with the connection of people, things and systems creating dynamic, self-organising, real-time optimised value added connections within and across companies.
In a new report from BDO UK and the Institution of Mechanical Engineers (IMechE), the authors explore trends around the adoption of Industry 4.0 in the UK. The survey involves 318 respondents, from engineers in management-level and director level positions across a wide spectrum of industry sectors and geographies across the country.
Industrial understanding 4.0
While industry 4.0 is touted to be where the industry is heading – due to the significant improvements in productivity, cost, flexibility, customisation and consistency of quality, among others, – many UK manufacturing companies are not on the ball regarding the technology. The study reveals that 34% of respondents have little understanding and 22% have no understanding of Industry 4.0. 8% have a significant understanding of the technology and its potential.
In terms of region, Yorkshire has the highest significant understanding of Industry 4.0 (24%), followed by London, East Midlands, North West and West Midlands. Few sectors have a robust understanding of the technology, with even aerospace and automotive having fewer than 50% of respondents with some or significant understanding.
The respondents were also asked to indicate how they believe introducing Industry 4.0 into their businesses would potentially improve a range of operational facets. The top in responses is the belief that it would boost productivity, at 51%, followed by providing insight into the manufacturing process at 47%. Other potential benefits cited by respondents include increased competitiveness, cited by 46%, lower manufacturing costs, cited by 44%, and improved product quality, cited by 42%. The categories cited the least by respondents include ‘lower staff costs’ at 22%, and ‘right-shoring operations’ at 6%. 20% said it would provide benefits not defined within the scope of the question.
Strategy and investment
The survey also asked respondents to indicate in how far they have strategies in place to work with Industry 4.0 within their respective manufacturing businesses. The vast majority have no strategy in place, at 67%, although 48% of this group say they need to look into it. 13% say they have a strategy, but still need to implement it, while 18% say that they have a strategy which they are in the process of implementing.
Regionally, the largest group to claim they require no Industry 4.0 strategy comes from Wales, at 40%, followed by the North East (34%) and Scotland (33%). Of those who have no strategy in place but said they needed to look into one, the highest proportion came from Northern Ireland (67%), followed by Wales (60%) and the North West (60%). By industry activity, defence has the highest proportion of detractors, 41% saying their company do not need an Industry 4.0 strategy.
The research further finds that around one-third of respondents’ companies had invested no money in automation systems and Industry 4.0-related technology in the last 24-months, and about a quarter (24%) said they do not plan to invest in this capex in the next 24-months. According to the respondents, one of the main reasons for not investing in Industry 4.0 technology is a lack of understanding (44%). Only 5% said it was due to lack of external finance or grants, and just 8% said their infrastructure was unsuitable.