Perspective

Industry 4.0: the challenges of transforming manufacturing

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Dorothée Kohler et Jean-Daniel Weisz

Dorothée Kohler is the founder and managing director of Kohler Consulting & Coaching. She and founding partner Jean-Daniel Weisz explore the new challenges of taking manufacturing digital through an examination of the German industrial model in their 2016 book, Industrie 4.0: les défis de la transformation numérique du modèle industriel allemand (Industry 4.0: the challenges of the digital transformation of the German industrial model.)

The fourth industrial revolution is underway

After the steam engine, assembly line production and the arrival of numerical control, the time has come for what Germans are calling the fourth industrial revolution, which is centred around information flows in production.

“Industry 4.0 does not have a standard definition”, says Jean-Daniel. In Germany, it means a smart factory with a decentralised automation pyramid. The idea is to enhance responsiveness in order to manufacture personalised, connected goods for the same cost as mass produced items. Germans also couch the concept primarily in technical terms, with expressions such as “cyberphysical systems” (enabling smart production), “cybersecurity” (guarding against attacks) and the “Internet of Things” now in increasingly common usage. In France, the industry of the future is more typically associated with issues of robotisation, start ups, and the risks and opportunities associated with “uberisation”. “We are positioned more from an industrial catch-up perspective, as our factories are less robotised than those in Germany”, explains Jean-Daniel. Even the way the two countries’ domestic manufacturing systems are structured is different: the Mittelstand, Germany’s industrial backbone, is built around mid-sized family businesses and features world-leading firms. French industry, conversely, tends to suffer from a split between large groups on the one side and small businesses on the other.

Adopting a new approach to change

With Industry 4.0, Germany is working to maintain its leadership by “organising the marriage of information & communication technologies and the mechanical industry”. Dorothée stresses how German government ministries have sought to make Industry 4.0 a global transformation project by opening it up to include representatives of civil society such as business leaders, elected politicians, academics, researchers and trade unionists. This is critical, as 80% of transformation projects fail because they do not get all stakeholders on board for the launch – a point noted by the two Kohler C&C founders during their own stints in industry. Dorothée and Jean-Daniel responded by coming up with a tailor-made method and a very operational approach. First, the problem is analysed with management. Next, this analysis is enriched with insights from staff and clients. Finally, a jointly prepared change process is used to reach appropriate, lasting solutions. “In a sense, we reverse the usual process and take things in a bold and unusual direction by devising solutions progressively in collaboration with management and local staff”, explains Dorothée. They have been applying their approach since 2009 with Kohler Consulting & Coaching, the firm that they founded.

In their coaching and consulting for industrial companies, Dorothée and Jean-Daniel encounter one question time and again: what about the jobs of tomorrow? Industry 4.0 will cause some tasks to vanish, especially the most routine chores, which can be automated. “But it will also allow new jobs to emerge”, says Jean-Daniel. This may be an opportunity for people with unusual backgrounds who can offer increasingly prized cross-cutting skills. What sorts of profiles will be in demand? Problem-solvers, people who can get different cultures to work together and, obviously, people with coding and data scientist skills. At the heart of it all, developing new methods for employee learning will be key. “If you fail to address the question of training and skills transfer as part of your 4.0 project, you might have a fine-looking factory, but it will be tough for people to acquire the requisite skills”, cautions Dorothée. Another mistake companies often make is to assume that hiring a Chief Digital Officer (CDO) will solve all their problems. Dorothée argues that these issues concern the entire company and that management must be mindful not to conflate strategy and technology. “Technological building blocks are a way forward. But while investing in new tools may be comforting, stage one must be to work on 4.0’s impact on the business model and value chain”, she stresses.

Taking a collaborative approach to imagine a 4.0 future

In their book, the two partners show how Industry 4.0 is generating novel kinds of cooperation and enabling new players to emerge. They describe how a new industrial geography is taking shape as major corporations, mid-tier firms, small businesses, start-ups, research centres, academia and trade unions team up to create pools of participants.

Dorothée sees value in a shared approach by France and Germany to explore digital’s impacts on a three- to five-year horizon. She makes the case for setting up joint groups of businesses, researchers, trade unionists and students to build national or even pan-European projects, identifying this as a way to seize the opportunities now opening up.

Jean-Daniel points out that “all over Europe, companies are moving to Industry 4.0”, although some sectors, such as the auto and aerospace industries, are ahead of the pack. “Large French companies are making real headway. The challenge now is to involve players from across the entire sector”, he says, by sharing 4.0 transformations with suppliers, clients and other links in the value chain. The biggest challenge is cultural, because business models also have to be converted to 4.0. “This industrial makeover extends to HR, R&D, sales, marketing, financial and other functions. Getting staff and management to buy into the same roadmap is vital to success”, Jean-Daniel explains.

So what is the next challenge for Industry 4.0 in France? “We are counting on the ability of firms to mobilise and work together. With its breeding pool of mid-tier firms, smaller businesses and start ups, France is a major player”, comments Dorothée, who underlines the importance of a collaborative approach, stressing the need to “experiment together”. She ends by making the point that “relational competitiveness, or the ability to create interactions and tap into network effects, is starting to become more important than cost competitiveness.”

Website: www.kohler-cc.com

Industrie 4.0: Les défis de la transformation numérique du modèle industriel allemand. To get more information or buy the book, go to http://kohler-cc.com/industrie-4-0/

Production | September 2017