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2022 Manufacturing Outlook and Opportunities

2022 is shaping up to be a year of opportunity for manufacturers in spite of ongoing concerns regarding business resiliency, supply chain instability, manpower shortages and economic uncertainty exacerbated by the Omicron variant.

Manufacturers experiencing strong and consistent growth have one thing in common – they were early adopters of digital technologies, embracing Industry 4.0 and prioritizing digital capabilities to increase the speed, efficiency and agility of their operations.

In the midst of COVID-19, manufacturers just starting or yet to start on their transformation journeys are presented with the opportunity to accelerate their digital projects and make Industry 4.0 a core part of their business strategy.

Raimund Klein, Founder and CEO of INCIT (International Centre for Industrial Transformation), believes that manufacturers stand to benefit from globally referenced frameworks and standards that take a neutral, holistic view of digital transformation stages.

He shares his thoughts on the state of transformation in the global manufacturing industry in 2022, and why he’s on a mission to raise awareness and facilitate sharing of the latest developments in manufacturing technology and trends.

Q: What are the key benefits of Industry 4.0 transformation, and why is it more imperative than ever that manufacturers go digital?

A: Compared to Industry 3.0 which focused on the automation of machinery or processes, Industry 4.0 is focused on the end-to-end digitalization of the entire manufacturing value chain – including physical assets and external partners such as customers and suppliers – to build a digital ecosystem.

In its ideal form, Industry 4.0 means seamless data generation, analysis and communication between all parts of the manufacturing process, resulting in smarter decision-making and operational agility to increase productivity while lowering costs.

In the current state of the industry, which is facing challenges such as workforce shortages, health and safety risks, and supply chain disruptions, I believe that digital transformation will play a bigger role than ever in helping manufacturers stay resilient and keep operations going.

The past 20 months have been a wake-up call. Companies can no longer afford to ignore the limitations of their current information technology/operational technology (IT/OT) infrastructure if they want to continue scaling in 2022 and beyond.

Q: In spite of the huge opportunities presented by Industry 4.0, transformation in the global manufacturing industry has been relatively slow. What are some obstacles preventing manufacturers from achieving digital transformation?

A: Many companies perhaps have a misunderstanding of what digital transformation or Industry 4.0 is. We’ve seen that there is a tendency for digitalization efforts in the industry to revolve around the periphery such as cloud migration or cybersecurity, rather than the core parts of manufacturing such as the people and processes.

Some 70% of digital transformation efforts were found to fall short of their objectives because of a failure to consider operating models and organizational culture in the transformation framework.

That’s why INCIT was founded – to educate manufacturers about digital best practices, advocate for accelerated industry transformation, and provide clear and easy-to-use tools and frameworks to help manufacturers achieve successful transformation.

We work directly with key players in the global manufacturing ecosystem, including governments, technology providers and the consulting industry, to track and verify digital transformation impact over time, deliver data-driven insights to boost competitiveness, and monitor the progress of the industry’s digital transformation to prevent stagnation.

Q: How can an organization utilize INCIT’s tools and methods to accelerate their digital transformation?

A: One of INCIT’s key tools is the Smart Industry Readiness Index (SIRI), an automated tool to help manufacturers verify their current digital maturity. It encompasses the three main pillars of Industry 4.0: Process, Technology and Organization, and provides a framework that contextualizes how production problems can be solved while simultaneously raising productivity.

With SIRI, manufacturers can easily evaluate their digital transformation readiness in order to chart their strategic road map, at the same time helping their management and workforce to remain aligned throughout the transformation journey.

Coupled with the Prioritization Matrix, which helps identify high-priority areas that can deliver the greatest organizational impact, SIRI gives manufacturers the clarity they need to truly drive transformation results.

SIRI has been adopted internationally by both multinational corporations and SMEs, and is spreading quickly across the manufacturing industry. I’m proud to share that given its success, SIRI is being advocated by the World Economic Forum as an international standard for Industry 4.0 transformation in manufacturing.

Q: Has COVID-19 had any impact on SIRI and how it is used?

A: Certain issues have become more urgent to address in light of the pandemic, such as supply chain integration for de-risking and diversification, and automation technology and workforce development to tackle talent shortages.

But overall, the framework still remains unchanged, with each pillar deserving of equal weightage because the success of one relies on the success of the others.

Q: Do you have any advice for manufacturers starting out on their digital transformation journey?

A: If there’s ever a time to ramp up investment in digital transformation, it’s now. Industry 4.0 will be a huge boon to manufacturers that fully understand how it will change the way they do business and help them transcend past boundaries.

With the right clarity and benchmarks, you can start moving with deliberate speed and catch up with first-movers in the industry.

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