Posted on 10/10/2018

7 Things Your Boss Wants You to Know About Industry 4.0

Pavan Muzumdar

As Automation Alley has recrafted itself as Michigan’s Industry 4.0 knowledge center, we’ve realized one thing: we need to pay attention to the “So what?” that a casual observer might ask about all this excitement about the subject. In November, we will be hosting Integr8: The Industry 4.0 Conference, representing a massive investment of energy, attention, and resources. My hope is that this article answers the question and encourages you to attend the conference. 

In Michigan, we have companies that excel in physical technologies such as manufacturing, logistics and agriculture. This entire ecosystem, which is the economic backbone of Michigan, is facing Industry 4.0 head on. 

While this may sound scary, it doesn’t have to be. We see our companies uniquely positioned to take this challenge and emerge more vibrant and prosperous. After researching and talking with many forward-thinking leaders and experts, we have gleaned a set of best practices to you get started. 

So, here’s what your boss wants you know about Industry 4.0: 

1. It’s Digital and Physical

Industry 4.0 is a combination of physical and digital technologies. A pure digital product such as software delivered via Internet has no physical components. Similarly, a pure physical product such as a pair of pliers has no digital component. However, an Industry 4.0 product such as a smart torque wrench is a combination of a physical component with digital capabilities. The former implies that all the challenges of making physical products such as quality, reliability, delivery, etc. will be combined with the challenges and opportunities of the latter such as software versioning and updates, bug tracking, data management, and connectivity to downstream systems to support quality control and engineering analysis. 

2. Think Digital before you go Digital 

For companies dealing in physical products, thinking digitally is often a foreign concept. Digital products are conceived, architected, and engineered differently than physical products. In the physical world, we value consistency. That is the core objective of quality. Every unit must be exactly like the other. Digital products however require many iterations. The scope of a physical product is usually very clear. However, the scope of a digital product is often unknown and requires different engineering disciplines to manage. At Automation Alley we refer to this as overlaying a digital mindset on a physical business. 

3. Physical to digital is easier than digital to physical 

Before I get flak from all the coders reading this, let me explain. Making and scaling up production of physical products is hard and expensive. Any changes to products or production need to carefully managed. Mistakes can be very costly, dangerous, and require a lot of tracking. If you have ever had to participate in a part recall for your car, you know that isn’t as easy as getting a software update for your smartphone.

So, when I say going digital is easier than the other way around, I mean that the complexity of ramping up a digital product is much simpler. However, you still need clear objectives and understanding of the implications of engineering digitally in parallel with traditional engineering.

4. Going digital isn’t as expensive as physical

The introduction of a physical product is an expensive proposition. Some of the steps such as design, engineering, and simulation can be done digitally. However, at some point a physical prototype needs to be made. If the product is to be manufactured, there is an additional layer of work to ensure that what worked in the lab still works as a scaled product. There are raw materials, storing, transportation, and work in progress costs.

A digital product however, doesn’t require any of this. Development and testing tools cost a fraction of those for a physical product. Hence, dipping a toe into a digital pool costs less than one might think.  

5. Think outcomes not products and features 

Most physical products are purchased by customers to accomplish a certain objective that they have in mind. Purveyors of physical products have conversations with customers about features, quality, and reliability of these products. Going digital provides an opportunity to change the conversation. Digital transformation allows for intelligence to be added to a product thus enabling the developer of the product to focus on the outcome that the customer wants as opposed to the product as a means to the outcome. For example, last year at Integr8 we learned that Parker Hannifin has changed the conversation with some customers from filtration solutions to the outcome of clean fluids. They can do this because their systems now have the intelligence to not only monitor the system itself, but also the cleanliness of the fluid that flows through it.

6. Understand the human context 

The ability to deliver outcomes and the tendency for digital products having squishy scope means that product leaders need to understand the human context behind their offerings. A good question to ask yourself is, “What business are we in?”. The executives of Kodak Corporation thought they were in the film business. Kodak ended up declaring bankruptcy while other companies achieved success in digital photography.  Instead of describing themselves as being in the film business, if company leaders had instead understood that they were in the “capturing and distributing human memories” business, the outcome might have been different. 

7. Don’t predict; prepare

The only certainty in Industry 4.0 is that it is unpredictable. Technological advances combined with the complexities of physical product delivery overlaid with human reactions, butting against traditional ways of doing business, makes predicting anything with confidence impossible. Organizations can face this uncertainty by preparing. Companies that do so take risks, tolerate undesirable outcomes that result in learning, and recalibrate leading to eventual success.  

Automation Alley is your Industry 4.0 knowledge center. Our programs such as Integr8, weekly Tech Takeovers, and the Technology in Industry Report are designed to give members of physical businesses the insight needed to face rapid technological change. We hope to see you at Integr8: The Industry 4.0 Conference on Nov. 14 in Detroit.

About the Author

Pavan Muzumdar | Automation Alley

Pavan is the Chief Operating Officer of Automation Alley where he is responsible for facilitating the smooth functioning of the organization and enabling to execute its strategic goals with excellence and realize its vision. Blending his 20+ years of experience in executive leadership roles of family businesses with his love of financial analysis and entrepreneurial endeavors, Pavan brings a people focused, fundamentals-based analytical approach to his work.

Pavan has experience directing operations in IT, wholesale and retail distribution, as well as other matters including business development, capital raising, divestitures, litigation management, and turnarounds. In 2018 he published his book Venture Perfect: The Leadership System to Maximize Teamwork and Profit in Your Business.

He is a CFA charter holder, has master's degrees in Electrical Engineering and Computer Science from the University of Massachusetts, and a bachelor's degree in Electronics Engineering from the University of Bombay.


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