The State Of Industry 4.0 In 2020: Plants And Processes

Robert Merlo

Part 2 in a series on the findings of an Industry 4.0 adoption study by The MPI Group

The previous blog in this series looked at the overall findings of a recent study by The MPI Group that surveyed hundreds of manufacturers on Industry 4.0 adoption. One specific area of focus in this study was plants and processes – which we’ll look at here.

According to MPI, organizations are making significant progress. To date, the study says, “manufacturers have incorporated smart devices or embedded intelligence into 41% (average) of their production processes and equipment.” Meanwhile, 88% of respondents expect this percentage to increase over the coming two years.

On only a slightly smaller scale, organizations are also connecting their back offices – with manufacturers indicating that they’ve embedded smart devices and intelligence into 33% of non-production processes and 86% of respondents saying they expect activities to increase in this area over the next two years.

Among the process areas getting the most focus are assembly, logistics, and document management. Who’s taking the lead on these initiatives? Here’s the breakdown:

  • IT (31%)
  • Operations (19%)
  • Dedicated Industry 4.0 departments (18%).

Significant improvements

The MPI study finds that these initiatives are driving significant improvements. Respondents cited the following improvement areas:

  • Product quality: 84% of manufacturers.
  • Production decision-making: 85% of manufacturers
  • Productivity: 88% of manufacturers
  • Profitability: 84% of manufacturers

Challenges persist

While the progress made is significant, organizations still have room for improvement. One challenge area, in particular, is providing access to Industry 4.0 data for executives, customers, and suppliers. To quote from the study:

  • Company executives: Just 46% of companies provide access to all who need it. Many executives who could be using Industry 4.0 data for analytics and planning don’t yet have it.
  • Customers: Just 23% of companies provide access to all who need it. Customers increasingly expect to see order status in real time as goods are produced – e.g., timeliness, specifications, quality. If they don’t get insights and updates from one vendor, they may seek them elsewhere.
  • Suppliers: Just 24% of companies provide access to all who need it. The ability for suppliers to track demand in real time improves their availability and delivery performance – and those of customers. These critical connections can improve end-to-end supply chain responsiveness regardless of lot sizes.

Security is another challenge. While a high 86% of respondents indicate confidence in their cyber-risk management programs vis-à-vis their Industry 4.0 initiatives, the “implementation of best practices for improving security has lagged in the last 12 months” while “only 40% of manufacturers have conducted cyber-risk assessments.”

So, where do we stand?

It’s a mixed picture. Progress is being made – yet obstacles and challenges stand in the way. This is hardly surprising, however. Manufacturers today are midstream in their Industry 4.0 transformation initiatives. As infrastructures are built out and capabilities are brought online, most manufacturers are advancing along the learning curve and steadily moving forward.

Industry 4.0 is a completely different way of operating. The shift is from spreadsheets to context-based data shared in real-time; from lag-times for taking action to increased agility and the ability to respond almost instantaneously. While this shift is dramatic and will require organizations to change significantly, many SAP customers are moving in the right direction.

Stay tuned for the final blog in this series, which will look at how organizations are implementing the principle of Industry 4.0 into the products they sell. In the meantime, have a look at the full MPI study here.

Robert Merlo

About Robert Merlo

Robert Merlo is Vice President of SAP Solution Marketing, responsible for Strategic Positioning of the Digital Supply Chain and Manufacturing Portfolio of SAP Solutions. Specifically focused on R&D and Manufacturing.