Industry 4.0 and Indian manufacturing

According to HSRC’s “Global Industry 4.0 Market & Technologies 2018-2023” report, the global Industry 4.0 market is projected to reach US$214 billion by 2023. Recognising its importance, both advanced and developing economies are embracing Industry 4.0 to increase their manufacturing competitiveness.

While countries such as Malaysia, Thailand and Indonesia are implementing Industry 4.0 to truncate their journey to a higher base of economic benefits, large economies are shifting to a higher gear of innovation and competitiveness.

For instance, Japan – a technology powerhouse – launched the “Revitalisation Strategy 2016” to accelerate growth in advanced manufacturing sectors. The policy aims to build on country’s inherent strengths in manufacturing and technology while targeting the development of US$ 1.3 trillion of new industries and 4.7 million jobs by 2020.

Similarly, Singapore, a hub for high-value manufacturing, recently launched the “Singapore Smart Industry Readiness Index” to provide a common framework to motivate companies to start, scale and sustain Industry 4.0 efforts.

China, which accounts for about 25 percent of the world’s manufacturing activity, is seeking to close the gap in manufacturing prowess with Japan and Germany by embracing new technologies to enhance competitiveness. Initiatives such as “Scientific Innovation 2030” and “Made in China 2025” are further enabling manufacturers prioritize Industry 4.0.

The Indian government estimates India’s manufacturing sector would breach US$ 1 trillion by 2025.

However, manufacturers need to move beyond the current status, characterized by manual inputs, lack of ICT integration in manufacturing, and critical gaps in capability, to move to the next stage and fill the critical technology gaps.

To that end, government’s ‘Make in India’ initiative is providing the groundwork for both small and large companies to develop advanced manufacturing capabilities and invest in technology upgradation. Additionally, programmes such as green corridors and smart cities have been launched to support critical technology interventions across various industries. Besides creating jobs, these initiatives appeal to a new generation of workers with different values and skills that boost synergies.

Given India’s aspiration to move up the share manufacturing contributes to GDP from 16% now to 25% by 2022, creating 100 million additional jobs in the process, it is imperative that companies draw up medium and long-term strategic plans to embrace the advantages of Industry 4.0.

Apart from building long-term competitiveness on the global stage, India stands to gain significantly from adopting Industry 4.0.

First, it will allow manufacturers to improve productivity, efficiency, safety and performance and help position India as a global manufacturing hub. For example, technology deployment across manufacturing methods, processes and equipment will enable companies to track the production process from start to finish, analyse data across machines, and get real-time feedback on raw material availability, equipment condition etc., resulting in efficient processes and higher-quality products at optimized costs.

Several Indian e-commerce companies are using advanced data analytics to gain insights on customer behavior and improve business performance. Likewise, manufacturers can implement data analytics to improve forecasting, predict and prevent manufacturing downtimes, manage supply chain and enhance production capacity and quality. For instance, Rolls-Royce has more than 13,000 commercial aircraft engines in service around the world. Using a range of smart data analysis capabilities, predictive tools, and engineering expertise, we help airlines monitor and reduce fuel usage, fly routes more efficiently, and ensure the right teams and equipment are in place to service engines more quickly and maintain the highest levels of availability.

Second, Small and Medium enterprises (SMEs), which form the backbone of Indian manufacturing, can leverage Industry 4.0 technologies to become more agile, enhance productivity, streamline costs and reduce risks. The sooner they evolve to meet modern business needs, the more they will stay relevant and secure new business on a global scale.  

Third, employers will be able to increase the skills of their workforce. While some jobs may be lost, new ones will be created in the new economy. New technologies inadvertently require new skills and trained Industry 4.0-ready workforce especially in areas of cognitive robotics, advanced automation and industrial ICT. Training in safety-related skills will also come into play with an increased level of human-machine cooperation.

Finally, Industry 4.0 could provide a pathway for Indian manufacturing to transform to an innovation-led and high-value manufacturing stage. Technology-intensive sectors such as the Aerospace & Defence (A&D), which is at the cusp of innovation and growth in India, are clear beneficiaries.

At Rolls-Royce, Industry 4.0 is a critical aspect of business and strategy - using connected systems to make better decisions. This brings together a number of technologies, such as the Internet of Things, intelligent manufacturing, digital product verification as well as virtual design and simulation.

Opportunities for creating new business models will be another major advantage for advanced manufacturers. With real-time data insights, they can not only improve existing aftersales service but also drive revenue by offering customers value-added services. For example, Rolls-Royce is adopting a ‘power-by-the-hour’ business model when selling engines: customers pay a fixed rate per hour of operation and Rolls-Royce provides predictive maintenance services based on insights from its ‘connected’ engines that wirelessly send machine data to Rolls-Royce centers for monitoring and analysis.

Adopting Industry 4.0 is not a choice. It is imperative for every industry.  Here are some ways manufacturers can implement Industry 4.0:

• Clear roadmap: Have a clearly defined plan to analyze gaps, determine the capabilities that are in place and the ones needed to support adoption of Industry 4.0.

• Start small: Start small by creating dedicated cross-functional teams of business, operations, and IT, and scale-up once the projects get validated.

• Talent development: A qualified and skilled workforce will help implement new technologies quickly. Particular emphasis needs to be given to upskilling and reskilling existing workforce given India’s dependence on low-cost manufacturing. 

• Customer first: The ultimate goal for any manufacturer is to deliver a product or service that meets or exceeds customers’ expectations. Collaborating seamlessly across the value chain from supply chain partners to R&D to customers will help implement Industry 4.0 and also accelerate its pace of adoption. Working with start-ups, universities, or industry organisations will also be advantageous.