Falling behind on Industry 4.0 adoption

Departments - Editor’s Letter

Elizabeth E. Modic

Ohio manufacturing represents the largest sector of the Buckeye state’s economy with more than 12,000 manufacturing firms and 660,000 jobs contributing 17% of gross domestic product. Drilling down a bit, Northeast Ohio is the 15th largest market in the U.S. driving nearly 40% of Ohio’s economy, and at $42.6 billion, manufacturing accounts for 20% of Northeast Ohio’s GDP.

However, in the 2020 Ohio Manufacturing Report, conducted by The Manufacturing Advocacy & Growth Network (MAGNET) and Ohio Manufacturing Extension Partnership (MEP), the authors note that “companies in Ohio – particularly small- and medium-sized – are struggling to find on-ramps into Industry 4.0. The digital transformation journey is just beginning for the vast majority of Ohio manufacturers.”

Respondents indicated that 2019 was a good year with 56% growing revenue. And 2020 has them optimistic with expectations for increased revenue (72%) and rise in profitability (70%). Yet, adoption of Industry 4.0 lags. More than half the companies indicated they have increased their use of automation, signaling they are investing in the future and incorporating some digital/emerging technologies.

Industry 4.0 connects digital and physical technologies – artificial intelligence (AI), the Internet of Things (IoT), robotics, sensors, additive manufacturing (AM), cloud computing, collaborative robots (cobots), and more – enabling companies to be flexible, responsive, and interconnected to make better informed decisions.

So why is Ohio falling behind on Industry 4.0 adoption?

Survey respondents “don’t believe adopting Industry 4.0 is a priorit.” Reponses also show machine automation is the most common technology manufacturers are profiting from, yet that’s only 15% of companies responding to the survey. The survey notes, “technology investments are not keeping pace. More than half of companies don’t plan to increase capital expenditures on automation. This signals companies may not be planning for the significant technology investments they need to make now to compete in advanced manufacturing.”

Ohio is not alone. My editorial last month asked who the users or laggards of technology would be as we entered 2020. I referenced the Greenlight Guru report that found 81% of medical device companies aren’t using tools designed for the industry in quality management while 71% reported their company’s quality system data isn’t easily accessible in real-time.

Companies need Industry 4.0 guidance on they are going to stay competitive. A clear, comprehensive strategy will enable innovation, growth, and worker attraction.

Those on the fringe of Industry 4.0 need a plan to embrace it, including auditing themselves to find opportunities for the technologies; creating Industry 4.0 leadership positions; updating business models; establishing dedicated innovation teams; and collaborating with partners and suppliers.

Manufacturers can make the Industry 4.0 journey or be left behind.

Which will you choose?