Manufacturers must turn ambition into action to drive industry 4.0 value, says KPMG

While most manufacturers are investing in industry 4.0 capabilities, few have achieved the scale and integration needed to drive enterprise value, according to KPMG’s Beyond the hype: Separating ambition from reality in industry 4.0 report.

The report finds that, while many manufacturers are working towards creating the ‘factory of the future’ or digital enterprise, few have worked out how to apply those capabilities across all of the corners of their operations. Most are still experimenting with discrete pilots or trialling solutions.

"UK manufacturers have shown more enthusiasm than preparedness for industry 4.0, and our latest report, Beyond the hype: Separating ambition from reality in industry 4.0, reflects that this is a global trend,” notes Stephen Cooper, Head of Industrial Manufacturing at KPMG UK. "In February, we released our Rethink Manufacturing report, which showed that the majority (56%) of UK manufacturers agree that industry 4.0 represents an unprecedented opportunity to revitalise manufacturing across the country. However, they are far less sure about how it will affect their business and whether they have a coherent strategy and the right talent and skills to capitalise on it.”

The report included a number of benchmarking exercises which found that many organisations demonstrated only a low-to-medium level of maturity in key areas, such as demand-driven supply chain, machine-to-machine (M2M) communication and digital twinning. However, they showed somewhat better maturity in cloud, robotics, Big Data, cybersecurity and Internet of Things (IoT) technologies.

Alec McCullie, Associate Director and UK lead for Industry 4.0 at KPMG, added: "Gaining experience with industry 4.0 technologies is certainly important. But the real value of industry 4.0 comes, not from the component technologies or capabilities, but rather through smarter processes that integrate automation, data, analytics, manufacturing and products in a way that delivers unique competitive advantages and unlocks new business and operating models. And this cannot be accomplished without achieving larger scale, greater integration across functions and a willingness to disrupt the status quo.”

Rather than focusing on pure investment numbers and reported investment returns, this research focuses on identifying how the leaders of today’s industry 4.0 revolution are driving value from their investments and preparing their organisations to take advantage of emerging opportunities in the future. The report also identifies areas where manufacturers could be taking a more integrated and strategic approach to industry 4.0 adoption. And, in each area, it offers practical advice for driving adoption and creating value.

"There are a number of key focus areas that are creating challenges for manufacturing executives across the value chain,” continued Alec. "Particularly as they work to transform their organisations for the industry 4.0 environment. This includes issues, such as developing a robust, goals-focused strategy, scaling up the programmes, managing the impacts across functional areas, integrating with products and improving the value network.

"Success in industry 4.0 is not about how much you invest; the winners will not be those with the deepest pockets. To win in tomorrow’s competitive and rapidly changing environment, manufacturers need to start being bolder in their vision, strategies and actions if they are to succeed.” Alec concluded.