Volume 1, Issue 4 - Spring 2017

Back to basics: Industry 4.0 and lessons from Bananarama

“It ain’t what you do, it’s the way that you do it. It ain’t what you do, it’s
the time that you do it. It ain’t what you do, it’s the place that you do it…”

By Jayson Myers.

You know the rest (sorry if you’re now humming it all day). It’s just one of those songs that are difficult to get out of your head. I like the Bananarama and Fun Boy Three version myself. But, the tune has been a hit since the 1930s. Maybe it’s good it sticks with you — it says a lot about how to succeed in manufacturing.

It’s a lesson Prairie manufacturers should take to heart in a world of slow-growth markets, fierce competition, and rapid technological change. Innovation has become the key to survival, competitiveness, and business growth. In every sector, companies are looking to new products and services, and to new markets, to boost revenues. And they’re turning to new technologies to improve efficiency, reliability, and flexibility; speed up design, development, and delivery times; and reduce costs.

Of course, it’s not just a Prairie phenomenon, which means that competitive challenges may appear more pressing than ever. On every corner of the globe, manufacturers are experiencing a fourth Industrial Revolution resulting from the application of advanced, digitally-enabled technologies like mechatronics, the internet of things, cloud computing, artificial intelligence, robotics, connected automation systems, virtual reality, additive manufacturing, advanced materials, and innovative processing and machining systems.

While the first Industrial Revolution was driven by mechanization, as well as water and steam power, the second by electricity and mass production, and the third by computers and automation, Industry 4.0 (I-4 as some now call it) is distinguished by the integration of cyber-physical systems — the application of high-powered information and communication technologies in smart and connected products and processes.

The impact of the revolution is widespread. In manufacturing, digitization is disrupting both production and business systems. Products are now being designed, tested, and engineered for manufacturing using three-dimensional software. 3D printing is enabling rapid prototyping and the manufacturing of highly complex parts at lower costs. Products are being made more frequently by smart machines in fully automated factories, allowing for greater customization, flexibility, and production efficiency. Software and data analytics are being more widely used to optimize manufacturing operations, value chain collaboration, and other business processes. And, interconnectivity is driving greater horizontal integration not only along the value chain from customers to manufacturers to their suppliers, but throughout the entire lifecycle of products as well.

The business of manufacturing is also changing as a result of new technological capabilities. Product development cycles are becoming compressed, forcing more manufacturers to prefer partnerships or acquisitions over in-house research and development to acquire critical technologies. Supply chains are being reconfigured more frequently. More value is being generated through technological knowledge, software algorithms, and data analysis than through easily replicable production processes. Local, flexible automation facilities are replacing long-distance supply chains.

Digitization is allowing manufacturers to cut costs, improve quality, and make better and quicker decisions. It is allowing them to develop more innovative products and offer new services for their customers. As products and processes become information platforms, new revenue opportunities are being generated through the analysis and application of that data, to provide solutions for customers that go well beyond the provision of products themselves.

Sounds neat. So how do you make money?

Technology trends, even if they are widespread, are not business strategies. For that, it’s important to go back to basics — and to understand the full range of risks and opportunities involved in adopting advanced technologies.

For any business, it starts with offering customers a solution they are prepared to buy, because it’s the best that can be reliably provided to do the job at a competitive price, and it’s easy to manage. Advanced technologies can play a role — often an essential one. But they won’t make sense unless manufacturers themselves can manage how they are developed, adapted, and applied in their production and business processes. That requires a comprehensive understanding of the business requirements for implementation for manufacturers and for their customers.

What’s the best technology solution to do the job? It’s not only a matter of price — or of technical requirements alone. It’s about the business processes — the information systems, operating architecture, revenue model, innovation partnerships, supplier relationships, skills, data security systems, regulatory compliance, and financing requirements — needed to implement, manage, and maintain integrated technology solutions.

A little I-4 lean thinking can go a long way. Focus on what customers value. Make smart technology investment decisions to optimize products and processes by focusing on eliminating non-value-adding activities for customers. Understand and take steps to mitigate the risks of managing the technologies best suited for the job. It’s first and foremost about implementing a business model that makes money on a sustainable basis.

Joining the Industry 4.0 revolution is no guarantee on its own of business success. I see too many manufacturers lose money because they leap into a technology they don’t necessarily need, or they don’t know how to manage, to drive improved business results. I see too many governments investing billions of dollars in schemes aimed at pushing technologies into the marketplace with little appreciation of how they would need to be applied or scaled up for commercialization.

I also see many Prairie manufacturers successfully competing and growing in North America and other markets around the world. They are doing something right. Whether they specialize in food or agricultural equipment, high-tech components or high-volume metal production, metal products, aerospace, specialized vehicles, or oil and gas field equipment, they are producing innovative products and services their customers want to buy. They are increasingly adopting the advanced technologies that drive Industry 4.0 to enhance products or improve productivity. But, they know that successful deployment of those technologies involves managing people, processes, customers, suppliers, and investors. The technology is the easy part.

Listen to Bananarama: “It ain’t what you do, it’s the way that you do it. And that’s what gets results.”

Jayson Myers is an award-winning business economist, specializing in industrial and technological change. He is an advisor to both private and public sector leaders, and has counselled Canadian prime ministers and premiers, as well as senior corporate executives and policymakers around the world.