Gap still there for business climbing aboard Industry 4.0

The good news for Australian business is they have moved beyond the hype and theory of Industry 4.0 but a gap still exists with many businesses, particularly SMEs, fully embracing digitalisation to move their businesses forward.

This is among the conclusions drawn in Ai Group’s latest report “The Fourth Industrial Revolution: Australian businesses in transition”.

The report builds on the one the peak body produced in 2018 which asked Australian business if they were ready for the Fourth Industrial Revolution and reviewed business investment in digital and associated technologies.

Ai Group uses its vast membership base across the manufacturing, services, construction and mining sectors to paint a picture of the current the state of play regarding key issues effecting business in Australia.

Ai Group chief executive Innes Willox said the latest report shows engagement with Industry 4.0 has matured but gaps still exist in its take-up.

Digitalisation engagement growing in Industry 4.0: Ai Group chief executive officer Innes Willox

“Business engagement with the current upheaval is growing, maturing and moving well beyond hype and theory,” Willox said.

“This report assesses progress on digitalisation and changes to the underlying technological landscape; highlights case studies from leading innovators; and sets out key policy priorities for work by government and businesses.

“In our latest report we find that Australian businesses are currently transitioning to and within Industry 4.0. An overall finding is that there has been substantial progress in embracing Industry 4.0. But the gap between 4.0 leaders and the majority of businesses is substantial.”

The report highlighted a number of case studies, among them being 65-year-old B & R Enclosures, Australia’s largest manufacturer of enclosures, racks, cabinets and hazardous area equipment.

Like many printers and signage producers and those working in the visual communications sector, this business had to compete globally for business while carrying high Australian labour costs in Australia and high volumes being produced offshore.

To deal with the problems it focused on providing both off the shelf and custom solutions by shifting its focus to delivering “overall value” for customers and creating an agile workplace to deliver these goals.

To create the agility needed, B&R invested in an Industry 4.0 strategy with the first digital transformation journey focusing on improving the factory floor by making information transparent throughout the production process to improve decision making, lowering costs and increasing service.

“The data that is communicated in real-time has allowed the manufacturing part of the business to become aware of log-jams on the production line,” B&R general manager Chris Bridges-Taylor said.

“Prior to that we didn’t understand why jobs were taking longer than expected.”

B&R attributes a 15 per cent saving in manufacturing time across the board and reaching an achievable DIFOT (delivery in full, on time) of 100 per cent to the focus on their Industry 4.0 strategy.

Cyber security was one of the key blockers to embracing digitalisation and Industry 4.0, the report found.

“Cyber security threats remain a growing and evolving risk management issue for many businesses. 2018 saw the commencement of a range of significant data privacy legislation including the Australian Notifiable Data Breaches (NDB) Scheme, as well as the controversial Assistance and Access Act which requires suppliers of secure systems to help circumvent them,” Willox said.

“Over 30% of businesses surveyed by Ai Group experienced a cyber security incident, with the most common arising from hacking, phishing, and malware. Positive news is that Ai Group data also found nearly 80% of businesses invested in cyber security measures, up from just over 20% in our 2017 report.”

“Even with improvements in cyber security investment, notifiable data breaches under the NDB Scheme point to the need for improved cyber security and data management posture within organisations, where government support might assist.

“More broadly, information is needed on how to navigate the wave of digitalisation: maximising participation, minimising the pain of change and disruption, and preventing disenfranchisement.

“This need is not just for businesses but the full range of organisations and individuals. Governments can provide strong visionary leadership. Australia needs to achieve inclusive growth. Making the most of the Fourth Industrial Revolution is essential to that goal.”

But despite the challenges of moving into Industry 4.0, the benefits are greater.

The Ai Group lists the key benefits as:

  • Cyber secure, resilient and trusted businesses: Strong cyber secure and resilient businesses are central to customer trust. This includes protecting data privacy, competitiveness, the strength of our economy and the reliability of our infrastructure. While in many ways diverse, business sectors have a common and collective interest to be cyber secure. It is a critical time for improved collaboration between governments and businesses.
  • Business and technology investment: Leadership in promoting investment in businesses, and enabling technology and infrastructure, can help boost the economy. While businesses have the leading role in driving growth in the Fourth Industrial Revolution, governments can also contribute by improving business confidence and helping to create the conditions for more decisive improvements in business competitiveness.
  • Innovation ecosystem: Innovation is critical to improve outcomes for Australia’s people, economy and environment, and it is essential to maintain and improve business competitiveness. We need to harness a wider range of capabilities through better collaboration between businesses, researchers and governments, and put this in service to a clear strategic agenda. Public policy support for innovation should be stable and informed by strategy, and should address all parts of the innovation system.
  • Legal and regulatory framework: Australia’s legal and regulatory framework needs to be sufficiently flexible to accommodate rapid changes in technologies that lead to new types of business models and competition, maximising the benefits that flow from that, while also protecting broader community interests.
  • Standards: Standards are fundamental to promoting digitalisation because they can promote an ecosystem for technological innovation, competition, international trade and interoperability. Standards, when called up by regulation, offer a mechanism to quickly respond to changing markets.
  • Sustainability: Climate policy presents a particularly important business transition challenge, creating both economic opportunities for new products and industries, as well as vulnerabilities where existing industries may experience a challenging transition or risk exit. At the same time, waste reduction, materials efficiency and the circular economy present important opportunities over the long term. Digitalisation can significantly assist businesses in meeting the sustainability challenges and in taking advantage of the many opportunities.
  • Trade: The democratising nature of the internet has reduced the barriers that previously excluded SMEs from global markets, exposing them to greater opportunities and risks. Public policy can play a key role to boost the prospects of the vast majority of Australian exporters.
  • Workforce skills: Education and training play critical roles in the transitioning economy and the broader community, both in addressing workforce skill needs and improving social inclusion. The digitally enabled economy is leading to skill mismatches and shortages due to new tasks in existing jobs and to new jobs being created. While business and government are making efforts to close the gaps, a range of measures is required to sufficiently meet business needs.
  • Workplace relations: Flexible workplace relations arrangements are fundamental to the improved productivity that is so important to Australia’s national competitiveness and our capacity to further improve Australian living standards, especially as industries transition to and within the Fourth Industrial Revolution.

Click here for the full report.

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