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Companies are now adapting and embracing the concept of Industry 4.0. This digital revolution is a mixture of cloud computing, Artificial Intelligence, Industrial Internet of Things (IIOT), machine learning, human machine interfaces, and advanced analytics that are designed to improve management, business operations, business models and customer reach by making processes simpler and more accessible than before.
What are the advantages of shifting from traditional methods to digital technologies? What are the benefits you could expect from implementing digital transformation to various business models? What are the impacts of Industry 4.0 on the supply chain and on society as a whole? What are the challenges and issues associated with Digital 4.0? This article will endeavour to answer all these questions whilst giving a thorough overview of the topic.
Table of contents
Section 1: Benefits & Advantages of Digital 4.0
Section 2: Impacts of Implementing Industry 4.0
Section 3: Challenges & Issues in Industry 4.0
Section 4: Digital 4.0 & What It Means For Your Business
Many companies across continents and countries have rated themselves highly digitalized, particularly in the manufacturing industry. Several manufacturing business entities have gradually shifted their operations to be essentially wholly digitalized. Companies are increasingly open to assigning considerable amounts of their revenue to digital transformation, thereby allowing the revolutionary Industry 4.0 to take over the corporate world and supply chain. Detailed below are some benefits of the digital transformation and Industry 4.0.
1. Higher Efficiency, Quality & Work Productivity
Research has revealed that companies across nations perceive product development & engineering, as well as their vertical value chains, as profiting greatly from digitizing. Machine learning has made it possible to easily answer questions such as how to speed up production and which elements take up too much time and resources. It can also alert employees when equipment and machinery need repair and maintenance.
Digital Technologies such as Analytics and human-machine interface (HMI) have played important roles in quality development and work productivity for these products. On the other hand, digital vision has helped companies highlight skills that they need to acquire, all of which heighten efficiency and optimize the quality and production of work.
Identify reports created on a periodic basis. Learn more about the specific purpose of every business report and know the data requirements that must be gathered. Know the end results of every report created. Use business intelligence, management information systems, as well as business report automation tools to produce the same results and reports without the need for human intervention.
Constantly improve employee performance by using an evaluation and feedback system. This system will bridge the gap between the planning and controlling processes of a business organization. The end results might deviate from what was originally planned and therefore necessitate a correction. It can be done with the help of evaluation processes that will provide feedback to the planning and organizing processes for higher efficiency and effectivity.
2. Better Customer Experience
Technology has connected functions for both sellers and consumers, from processing online orders down to analyzing product data to enhance customer service. Companies admit they use data analytics extensively in several areas such as manufacturing, product improvement, and customer relationships.
Data analytics promises many benefits in increasing customer satisfaction if companies hire data scientists, algorithm engineers, and C-level executives in order to improve their relationships with customers. Customers are increasingly shifting to digital instruments and it is prudent to establish a strong presence wherever they are.
Make a list of all high-end clients who have purchased products or subscribed to your company’s services in the past. Enter the list into an Excel sheet and record the sales each of these customers have made in the previous five months. Use Data Analytics to assess the results. Find out the reasons why they have not bought anything from you during that period of time. Follow up via e-mail and ask them for their feedback and suggestions.
Compare the contact list subscribed to your newsletter and the customers who have purchased your product in the past. Using Data Analytics, create a third contact list composed of contacts who are interested in your products or services. Attract them with customized offerings that will fit their budget or special needs.
Create a customer loyalty program to boost your sales. Let your customers earn loyalty points that can be converted into free items, products and services that you are offering. Make sure your loyalty program is known to your customer base as well as to the wider public.
3. Reduced Operational Costs
Global companies are expecting substantial gains from digital platforms over the next five years, which have significantly reduced in cost. These cost reductions will not compromise efficiency in any industry.
For example, predictive maintenance may decrease manufacturing failures by 70% - thus significantly cutting total cost of ownership (TCO) of production equipment according to a research paper published by the University of Patras. Manufacturing powered by digital technology enables purchases to be exact in quantity, therefore trimming inventory costs and avoiding any loss on sales.
No matter how small the expenditure is, you still need to record it. Make use of budget tools and platforms that are reliable like Expensify or Xpenditure. Analyze the spending habits of employees, as well as company executives, and ensure that they don’t overspend their attributed allowances. You will be able to identify spending issues and resolve them once everything is recorded.
People now use and interact with Artificial Intelligence more frequently and companies utilize AI for efficiency and accuracy in their business operations. Digitalized companies require new skills, at a higher level, from their workforce. With automation and AI as long-term solutions, some jobs may already be considered obsolete. However, other jobs can be created and be in demand. New jobs entail new skills in accord with technological advancements, such as data scientists and website designers, and these can be replacements for obsolete jobs.
The improved digital vision that is present in Industry 4.0 allows for a greater capacity to anticipate and discover talents. Industry 4.0 has also presumed larger revenues for businesses. It has even made education more accessible, thus encouraging (the population) employees? to be entrepreneurs themselves. Industry 4.0 will create a booming global economy.
The global employment market will have to adjust with this technological transformation. Alongside changes in the industry, the skills and knowledge demanded from the human workforce is drastically evolving. Automation will have to replace humans in some fundamentally repetitive tasks. This means that developing and practising useful skills and knowledge should be the focus of future workers globally, as well as keeping up with the development of businesses in the current generation’s technological modifications. It is recommended that companies to provide training programs for their employees. Training is needed so that the workforce can cope with the businesses’ requirements from them in the digital revolution.
On a more positive note, Industry 4.0 impacts product lifecycles through shortening, but improving the lifecycle. Automation and use of robots through Artificial Intelligence minimizes errors in production of materials. Social media marketing boosts sales and also reduces the time products stay in inventory to cope with shorter product lifecycles. Data analytics allow further modification of products according to personalized preferences of target audiences. As a result, it increases the company’s market share.
While it is true that Industry 4.0 will influence several facets of business positively, challenges and issues are also significant in this industrial age which challenges organizations when overcoming these concerns. Listed below are some of the challenges and issues of Digital 4.0.
With this shift of technology, the emergence of automation and Artificial Intelligence about to take over business productions and operations, job loss for digitally incompetent workers may happen. The working population needs to cope with the demand for new skills by the international employment market, and develop their own skills required by companies now practicing Digital 4.0 in their respective businesses.
2. IT Security Issues
Security is another issue when implementing Digital 4.0. If the security system fails, the business could suffer the threat of major dysfunction and disruptions in business operations. This issue asks business executives to take on security matters personally. They may even opt to hire someone knowledgeable and skilled enough to manage a strong cybersecurity team within the business organization. A business should prevent leaks in their IT systems at all costs, as the whole entity would be at risk.
3. Lack of Regulation
Proper regulation is needed to make the digital revolution successful. Without proper regulation, the transition to Digital 4.0 could be a total failure. Without proper and efficient regulations, systems become disorganized, lacking coherent action plans. This could be a major mistake made by companies in the process of implementing Digital 4.0. Re-assessing organizational charts and delegating tasks accordingly should be part of addressing this issue. Creating a coherent plan of action also ensures the harmony and continuous, organized operations. Creating company policies that concern the digital implementation would also alleviate the risk.
Digital industry 4.0 creates a myriad of opportunities for those business entities adapting to the transformation. However, the challenges and issues Industry 4.0 introduces may be hard to overcome for some people.
Taking a digital transformation course or a digital business management course at a premier European business school with an established reputation for producing highly-competitive and practical graduates may allow you to gain adequate knowledge, skills, and wisdom that are indispensable if you want to be at the cutting edge of Industry 4.0.
Discover all of IMD’s digital programs boasting reasonably affordable tuition fees for the best return on investment in forming your company to be digitally literate and able.
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At the top of the charts
IMD's programs are ranked highly by the world's most influential business publications.