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Why Industry 4.0 isn’t here yet

Nov. 9, 2018

PLM enables businesses to use data and systems to hit bottom-line targets.

Industry 4.0 and the Industrial Internet of Things (IIoT) has spawned a lot of incredible ideas.

Upchain's John Laslavic

Ideas like digital twins and digital threads that enable a complete understanding of the product lifecycle and up-to-the minute data on how the product is actually being used, serviced and performing.

Ideas like sensor technology, big data analytics, machine learning, AI, and AR/VR, which collectively will revolutionize manufacturing spaces, find efficiencies, and spot and solve problems early, when those problems are small and cheap, rather than later when they’re big and expensive.

Ideas like 3D printing operating not as a prototyping nice-to-have, but rather as a standard production method, akin to die casting today.

Ideas like smart infrastructure, grids and cities, which will work with edge computing to achieve the holy grail of smart manufacturing—a truly closed feedback loop.

These ideas exist now, and products are beginning to hit the market that turn concepts into reality. But we’re still years away from a full-blown IIoT.

Once you step out of the clouds and onto the manufacturing floor, you realize the reality of the factory is not the clean-energy, off-white, glass-towered utopia promised at the start of every sci-fi movie. For all our innovation, the business of making stuff is still pretty gritty.

The manufacturing market today

When we talk about digital transformation and the tsunami of disruption that’s on its way, it’s easy to forget exactly who is making things today. For the most part, it’s SMBs. 98% of manufacturing firms in the US employ fewer than 500 people.

That means that truly smart manufacturing, which achieves the utopic vision of a closed-loop product lifecycle where every process is optimized and data and data analysis are plentiful, is a long way off.

To be blunt, businesses don’t have the time or resources to invest in the infrastructure, software and staff needed for digital-transformation initiatives to truly provide promised benefits. As Adam Echter, senior director at Simon Kucher & Partners, explained at Smart Industry 2018, manufacturing businesses today aren’t ready for data lakes, machine learning or AI.

While digitalization is definitely what businesses are interested in, their goals are less lofty than those promised by the Internet of Things. For the most part, businesses want to use digitalization to reduce or avoid costs and improve their bottom line.

Where digitalization is really headed

Let’s reconsider what we know:

  • Manufacturing is mostly done by small businesses

  • Most small businesses don’t have the scale, time or resources to dedicate to a whole-scale digital transformation overhauls required for something like a closed-loop product lifecycle

  • Most businesses are only interested in digitalization from the perspective of reducing costs and getting to market faster

  • We’re still years away from a from IIoT that stretches beyond the largest enterprises

So, the real objectives of digital transformation aren’t to achieve utopia. Rather, the objectives are to cut costs, optimize processes, and do it quickly, effectively and on a budget. This flips the entire digitalization and digital-transformation conversation. Suddenly, something that was nebulous, expensive and transformative becomes accessible, tangible and feasible, without entirely rethinking how the business brings products to market.

And that’s where I think product lifecycle management (PLM) comes in.

By evolving existing processes and using the product data you already have more effectively, you can empower teams to achieve more and deliver the significant gains that digital transformation promises—without the cost, time and pain of a whole digital transformation.

PLM is the obvious candidate for digitalization efforts, especially for small and mid-sized manufacturing companies. First, manufacturers and industrial companies are product-centric companies. Their product is the heart of the organization, and all value springs from that. And yet, product data is often siloed, difficult to find, not in a usable format, or out of date.

For most product stakeholders outside engineering, access to product data is very much an afterthought, despite their heavy involvement in the product-development lifecycle.

PLM creates a shared version of the truth and lets stakeholders plug into the product data and access what they need to run their processes, without changing the underlying workflow they use.

Second, the dark side of digital transformation is the significant headcount requirements needed to both gather the data and transform meaningless information into meaningful insights. In contrast, PLM can be deployed quickly and easily, without adding significant additional overhead (this is particularly true with cloud PLM).

Finally, the digital transformations that most commonly get bandied about are both expensive and difficult. 70% will fail to reach their mark, for reasons ranging from leadership, consensus, and buy-in, to complex integration challenges and a gruelingly slow ROI.

Product-lifecycle-management software circumvents these problems. People can continue to work with the tools and processes they already know and like, while the leadership requirements of the organization are minimal.

What PLM means for digital transformation

The vision of digital transformation is incredibly exciting. And the truth is, we’re on the road toward an Industry 4.0 reality. But we’re not there yet.

Large enterprises might be embracing IoT platforms, edge computing, AI, and machine learning, but the SMBs and mid-sized organizations that make up the bulk of the value chain are approaching digitalization with a more humble objective: cut costs, and get products to market faster.

PLM offers these businesses a way to use the data and systems they have to drive aggressive bottom-line targets, without requiring the exhaustive digital-transformation initiatives that so regularly require a rip-and-replace approach, and so regularly fail to find their mark.

Don’t get me wrong: Industry 4.0 is here. But not all aspects are fleshed out yet.

Cloud PLM is a part of this vision. And best of all, it’s ready to go right now.

John Laslavic is founder & CEO of Upchain.