4 Things That Business Owners Get Wrong About Industry 4.0

Navigating today’s technological age can be confusing, with so many buzzwords to understand. One of the most common buzzwords today is ‘Industry 4.0’. It is also known as the fourth industrial revolution. But what does it really mean?

When it comes to being part of the fourth industrial revolution, most business owners do not know exactly what it entails. And the lack of real understanding has only led to misconceptions. 

What Is Industry 4.0?

Traditionally, Industry 4.0 is about automation in manufacturing technologies. But this transformation has gone on beyond manufacturing and is in full swing across industries. 

One way to understand Industry 4.0 is to see it is the linking of computers and machines, allowing communication with one another to make decisions without human intervention.

It involves advanced technologies such as artificial intelligence (AI) and the Internet of Things (IoT).

Businesses not in the manufacturing sector can also adopt Industry 4.0 technologies. For instance, adding a chatbot to your website to handle your customers for the night shift is also considered a form of automation.

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Misconception #1: Industry 4.0 Is Not Relevant For Traditional Businesses 

The prospect of digital transformation can be daunting for traditional businesses, with an overwhelming number of latest technology trends to keep up with. In comparison, as younger startups carve their paths in the digital world, one might be quick to assume that Industry 4.0 is more suitable for these startups. 

Traditional businesses can, and should, adopt 4.0 initiatives too and make the pivot to go digital. For instance, Seager – who owns concept stores such as The Wallet Shop and The Planet Traveller – used to rely on worker’s intuition to decide the number of products to restock when stock is low. 

The backend IT system could not provide sales and inventory data in real-time, so reordering decisions were often made based on gut feel. Naturally, this caused excess or insufficient inventory, as the stores were unable to meet consumer demands or had high inventory costs. 

Seager decided to crunch those numbers they had. They rewrote their backend IT software from scratch to gain real-time sales and inventory data. It took a total of one year to perfect the interface, but now the company can make accurate sales forecasts. 

The example of Seager also shows that Industry 4.0 technologies is not just for the knowledge-based economy. Even traditional industries like retail can benefit.  As much as it is a significant challenge, traditional industry SMEs should look to being ready for Industry 4.0, to remain competitive in the marketplace. 

Misconception #2: Adopting Industry 4.0 Technologies Is Costly

Smaller firms expect the adoption of Industry 4.0 to have expensive groundwork. Some assume that new equipment has to be bought or replaced. To avoid such high initial cost, businesses might choose to delay their transition into Industry 4.0. But this is not necessarily the case. 

Businesses can start off slow by relying on existing equipment. Industry 4.0 requires data collection. And for that, you can always connect your current equipment (instead of purchasing new equipment) to devices that can capture data. 

Data collection lays the foundation for the next step, data analytics, which crunches the numbers to understand patterns.  This can be achieved with the right data analytics software. 

For instance, a company can have their data stored in Microsoft Azure’s cloud and analysed with data analytics platform Databricks. 

It’ll take some time and effort to figure it all out, and might even cost a small sum, but it’s definitely not just for big companies with deep pockets to deploy Industry 4.0 initiatives. Even if you were to collect and analyze data on your own, it would also be considered a 4.0 adoption on a small scale.

Misconception #3: Technology Will Solve All Problems

Those who understand the potential of Industry 4.0 are attracted to the advantages that it will bring to the business. But in reality, it’s not as simple as choosing a most popular solution and going ahead of it. It takes time to experiment and figure out what works for your processes. 

Take A Better Florist for example. Founded by ex-Googler Steve Feiner, who came from analytical background, saw the floral industry ‘ripe for a disruption’. This startup uses data to optimize inventory management, positioning themselves as an online flower delivery site against the traditional florists.

Yet, A Better Florist fell short of expectations on two consecutive Valentine’s days on 2017 and 2018. Orders either failed to meet standards, were delivered later than expected, or did not arrive at all. The main reason was caused by an overwhelming demand, creating bottlenecks that congested workflow.

This can be compared to FarEastFlora Holdings, one of Singapore’s oldest florists since 1965, who ventured online in 2000. They invested in customer relationship management (CRM) and enterprise resource planning (ERP) technologies. CRM manages relationships with potential and current customers, while ERP is a business process management software. Implementing such processes have boosted their growth as more processes became automated.

According to Ryan Chiong, Managing Director of FarEastFlora.com, by digitalizing manual processes, they saved as much as 80% in labour. The team was also able to respond to customers more quickly. 

And it is not every digital fad that the homegrown florist jumps onto. They pulled the plug on their mobile app due to low traction. Too much resources were required to maintain the app and it was not pragmatic to Chiong to hold onto an unsuitable business model. 

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Misconception #4: Industry 4.0 Causes Retrenchment

It is a common assumption that adopting digital solutions would lead to a cut in staff count. This might have held back family businesses or SMEs to pursue Industry 4.0 technologies, who value their employees as their priority. 

FarEastFlora’s employees were not replaced even as the company tapped on new technology. A SMS system, and then upgraded to an online delivery service tracking system, was implemented to allow customers track their order status. This improved customer satisfaction and reduced the Customer Service team’s workload. 

No one was retrenched and instead, Chiong chooses to focus on continuous staff training, sending employees to learning courses.

Even as businesses move to digital solutions, certain job functions cannot be delegated to machines, such as data analysis. 

At an e2i event, Sun Xue Ling, Senior Parliamentary Secretary for National Development, gave a scernario in a police operations centre, where huge amounts of data are collected from cameras around Singapore.

“Regardless of how we look at data collection, we do need people to sense make and analyse the data,” said Sun. “If you have an incident happening in Place A, and another in Place B, are the two connected?”

After obtaining data from different parts of Singapore, the officer sitting in the ops centre can then triangulate – Is this incident related to that? Or are they separate incidents? The officer’s job is then to gather information and make sense out of it. 

Sun said, at this point in time, with the technology we have, robots do not have the sense-making capability and necessary experience on the ground to draw the correct conclusion.

“And that’s where we still need human beings,” Sun added.

It’s not just about technology

The business world is no stranger to buzzwords. Industry 4.0 has created much buzz about going digital and adopting technology. To be Industry 4.0-ready, leaders should do preliminary work to understand their business needs and the technology involved, before moving on to adoption. 

One thing for certain is that Industry 4.0 is inevitable. 

As a takeaway for business leaders, Sun said: “You move forward by feeling the stones. Rather than think of a distant future, take the immediate step to just get started on this journey.”

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