Is the 4th Industrial Revolution really a revolution?
Is the 4th Industrial Revolution really a revolution?
A colleague and I recently spent a day at the Smart Factory Exhibition in Liverpool. This is the third year we have attended and the rapid pace of change and maturing of Smart Factory thinking is clearly evident. However, every year we have come away underwhelmed, which led to us question whether the 4th Industrial Revolution really is a revolution at all.
The use of data through machine learning, AI and neural networks and the way we can sense demand, improve quality and productivity is revolutionary. However, everybody we spoke to at the exhibition was focussed upon optimising productivity, quality and cost (usually replacing or augmenting people with technology) as the desired output. In other words, becoming more competitive at lower cost to stimulate more demand and greater profitability, which is hardly revolutionary. Nowhere did we see an organisation that articulated a vision of how the world was going to be radically different from today.
“Corporate culture is driving short-term performance around cost”
The experts we spoke to weren’t able to provide an answer about the vision for smart factories, either. What we did learn, is that corporate culture is driving short-term performance around cost, quality, delivery and the need for 2-year payback which is getting in the way of creating a coherent longer-term vision. This provides fertile ground for new entrants and disruptors (Tesla being an obvious example) with a clear vision on how to use technology in a radically different way.
At a societal level we are left with some major questions as to whether the 4th Industrial Revolution is dealing with the major issues we face. How as manufacturers, are we addressing a stressed planet, a growing population and finite resources when the motivation is to consume more at lower costs? The real revolution will come when we create sustainable business models with no (or minimal) net use of resources. This would require functional upgrades through connectedness, which is clearly happening, but also need styling and physical upgrades to be delivered through a closed eco system.
“A clear long-term vision that is more than platitudes about being carbon neutral”
If the core of your product was for life, then designing for sustainability and reliability becomes paramount and localised remanufacturing would allow stylistic and physical upgrades to happen. Apple are clearly starting to operate this way, but they seem to be very much in the minority. Most organisations seem to be pursuing a strategy of making everything more affordable, rapidly changing and consumable. This is taking us in the wrong direction, and we believe the Apple model will be the winner.
The starting point in challenging the current paradigm is to have a clear long-term vision that is more than platitudes about being carbon neutral. We need to consider how our vision impacts everything we do from product design, long-term use and re-use, corporate culture and KPIs to deliver this vision. If you want to start that journey, we would love to talk to you.
As for Iter, we have been clear that everything we do in optimising supply chains is a balance between working capital, operating cost and the service supplied. We are rethinking this to add a fourth balance dimension: the impact on the environment. Minimising C02 is an easy start point, but it is much bigger than this.
It will be interesting to see how many organisations design products or supply chains that are higher cost or less responsive because of their reduced environmental impact.
Tim Richardson
Development Director
Iter Consulting
Iter Insights
Welcome to Iter Insight, this is one of a monthly series of articles from Iter Consulting addressing the most critical operational and supply chain problems businesses face today.