How digital adoption will power the post-lockdown revival and create a new industry normal

Global manufacturing and supply chains are continuing to be impacted by the COVID-19 pandemic. Though a lot of factories and logistics providers are seeking to resume operations, they continue to face labour shortage, procurement and transportation delays, and regulatory uncertainties.

In this digital era, there has been an overwhelming supply of emerging technologies, digital channels, platforms etc. But its significance across the industry value chain is becoming more imperative now to raise the bar for adoption. Industry functions are re-thinking their investments as we enter the new financial year.

The COVID-19 lockdown has led to new challenges with limited quality labour availability and emerging compliance norms for health and safety.

The key challenges include:

1. Selection of market with respect to demand and financial crisis situation
2. Reduced workforce and production capacity, uncertainty in supply chain (including international) and sales op planning issues that lead to cash liquidity, stock pile-up versus production restart
3. Pressure for zero-defect/quality assurance and efficient production
4. For auto industry, BS-VI compliance with effect from April 1, 2020
5. Lack of preparedness for automation and Industry 4.0/cyber-physical.

Before we jump into technologies under the banner of industry 4.0, we need to understand demand-supply properly.

Demand emanates from industry domain and functions - Head of Manufacturing/plant operations/supply chain etc of large businesses and SMEs rather than IT, which only translates it to technology requirements.

Having an outside-in, user-centric approach towards understanding industry demands is key to seed-in any industry 4.0-led digital transformation.

It’s imperative that the Supply side, which includes service providers, tech SMEs, and startups, is fully aligned to use cases within the industry value chain - R&D, supply chain planning, sourcing and procurement, production scheduling/ manufacturing, distribution/logistics, sales/service, product, and industry collaboration.

The Demand side expects the Supply side to have innovative, flexible, economical, and interoperable solutions across the value chain. There are over-arching needs for security and standardisation.

Industry 3.0 was about the automation of isolated machines. Maruti Suzuki manages seven process shops and five assembly lines with 1,700 robots. Industry 4.0 concentrates on the end-to-end digitalisation of all physical assets and their integration into digital ecosystems with value chain partners.

Applied Industry 4.0, through emerging technologies, can bring desired outcomes through end-to-end supply chain visibility and optimisation, material flow optimisation, production scheduling and line optimisation, automation and remote monitoring across production lines, intra-logistics material flow optimisation, servicing and spare parts ordering etc. This can help lift KPIs – higher productivity, lower rejection rates, operational cost reduction, enhanced work safety, higher sales reach etc.

Post lockdown, this will set a ‘new normal’ in which revival or survival will skew around those who plan ahead applying simple solutions across their value chain.

Digital Maturity Index, or whatever we want to call, is very vital and needed by industry to understand “where they are today” and “where they want to go” to gain immediate benefits.

Recent digital health assessment to benchmark Indian manufacturing industry across OEMs and Component suppliers shows that the highest maturity when it comes to digital adoption has been in the area of sales and marketing.

Source: A T Kearney

What the new normal means

• Decoupling of supply chains: Managed supply chain risk, accuracy, greater visibility, and coordination across the supply chain will enable better collaboration.
• Remote work, collaboration, and the ‘virtual shift’: Rapid adoption of remote diagnostic, management, and collaboration tools, real-time data, and AI-based indicates the virtual shift.
• Revival of (automated) domestic manufacturing: Governments will promote domestic manufacturing as part of their plan to build strategic resilience. Automation and robotics will be a key component of the effort to revive domestic manufacturing
• Data infrastructure as a strategic asset: There will be accelerated deployment of Industrial IoT, including sensing, data visualisation, remote AI-based insights across operations, and control-tower view of data and insights, across the whole manufacturing operation
• Digitisation as a competitive advantage: Companies that have embraced digitisation are seeing a 7 percent revenue growth advantage.

Industry 4.0 could play a key role in boosting the manufacturing sector’s share in the country’s GDP to 25 percent by 2022 from the current 17 percent.

ALSO READ

Where is India’s manufacturing sector heading amid the coronavirus crisis?

That said, for the true value of Industry 4.0 to be unleashed, it must transcend large manufacturing companies and become accessible to enterprises that make up India’s MSME sector, accounting for about 45 percent of total manufacturing output and 40 percent of total export.

It is authored by Vivek Saha, Director – Digital Transformation & Industry 4.0 , NASSCOM CoE.