Industry 4.0: How a maturity assessment can strengthen your organization

Within an Industry 4.0 framework, organizations should be able to take advantage of their existing data to help them make key real-time decisions. Sounds simple enough, but it can actually be a long and involved journey to get to a place where an organization is truly optimizing its data.

Industry 4.0 encompasses the advancing trend of automation and data exchange technologies in the manufacturing industry, and introduces new processes and technologies that can be leveraged across multiple functions within an organization.

In the recent webinar, “Industry 4.0: Gauging your enterprise technology and the power of integration,” members of Baker Tilly’s supply chain and manufacturing consulting practice Peter Pearce, principal and practice leader, and Cameron Reid, director, discussed how the maturity levels of organizations can be properly assessed through their business and technology streams as well as what they can do to improve or strengthen those levels.

Industry 4.0 business and technology streams across maturity

When measuring where an organization lands on the Industry 4.0 maturity continuum, Baker Tilly looks at eight functional areas within its business and technology streams.

Software integration: The organization’s core business functionality and technology should communicate and work together, without manual intervention, which is one of the key tenets of Industry 4.0.

Business strategy: Before investing, leadership should look within the context of the organization as to whether certain emerging technologies are pertinent to its business strategy and ongoing operations.

Data management and analysis: This considers not only how an organization is managing and collecting their information, but how it is securing that data as well.

Big Data analytics: Organizations have enormous amounts of valuable information available to them, but how do they mine that to derive timely insights in a way that can help them make appropriate fact-based decisions.

Production technology integration: Organizations should be collecting, mining, storing and sharing the data from the shop floor to substantiate assumptions and improve their decision-making process.

Mobility: Technology allows stakeholders to access real-time information from their manufacturing facility from anywhere and at any time so they can make well-informed decisions with current data.

Product development: For a manufacturer, this can mean either creating a new product line or divesting of a stagnant one, but using contemporaneous information about consumer requirements and needs to make those adjustments quickly.

Robotic automation: Robotic process automation (RPA) teaches machines to tasks that have historically been done with manpower, creating efficiencies and reducing human error.

The maturity continuum assessment

Why do organizations need all of these? For many, it is the need to stay relevant and ahead of what the trends are in their industry. It is also about improving an organization, whether that is defined by an increase in its bottom-line profit, market share or consumer satisfaction.

“One of the interesting things is in order to be a world-class organization, you don’t need to be a level five for every one of these functions and streams,” Reid said. “You have to look at your organization and determine what is important to it.”

However, a major part of Industry 4.0 goes back to the “lean” and Six Sigma-type concept of continuous improvement, which is what the five levels are intended to articulate to an organization. It is really about continuous evolvement of an organization to move it along the continuum, Reid said. He added that he fully expects the levels and their definitions to change as technologies emerge.

Baker Tilly ranks the maturity levels of each of the aforementioned streams from one (underdeveloped) to a high of five (optimized).

The current definitions of the five levels are summarized below.

Level one: Undefined/undeveloped

“This is management by Excel,” Reid said. An organization’s processes are unpredictable, poorly controlled and reactive to what is happening in the business. It does not have data integration between multiple business functions. It has gaps in its processes, based on disparate systems that leaves data either underutilized or not accessible throughout the organization. The organization may have some high-performance areas where it is meeting expectations, but, for the most part, performance is inconsistent. Metrics are not in place and the integration between processes is essentially nonexistent.

Level two: Repeatable

These organizations have certain technologies in place. Most likely an enterprise resource planning (ERP) system, where it has some consolidation of information, and can now generate performance metrics. The standardization across an enterprise is being talked about and multiple facilities within the same enterprise may be sharing not just information, but processes as well. Cross-functional cooperation is happening. Processes are becoming more structured and harmonized. There may not be full integration, but real-time information is available for consumption and, most importantly, for decision-making over time.

Level three: Defined and integrated

At this level, organizations have standardized processes in place. Furthermore, they have identified opportunities for automation and are considering new technologies. Level threes start to integrate sales information with manufacturing information, which, within the Industry 4.0 context, means it is moving toward applying up-to-the-minute information to make critical decisions. They are seeing improved communication and are actually synchronizing work efforts at an enterprise level versus at a facility level in order to better serve their customers. A major point within level three is having visible performance metrics that are being acted upon in an effort to improve them. A key aspect of all of this is having real-time data accessible across the business functions. A level three within the maturity continuum for Industry 4.0 is truly dependent on real-time data available. Not all processes are integrated, but they are moving in the right direction in progressing along the continuum.

Level four: Measured and managed

To advance to this level, an organization has to have established stable technology with data clearly flowing among its multiple integrated systems. Level four indicates the digitization strategy of an organization is not only in place but is actively budgeted for by the organization. Leadership is looking at the digital footprint of the organization and recognizing investments to be made and planned for in order to progress along this continuum and to achieve continuous improvement over time. Integration is happening at all levels and even beyond, with integration between the supply base and customer base to share valuable information. Key performance indicators (KPIs) at this point become an essential decision-making tool within the production lifecycle. Human error is significantly reduced because integration has become more automated. It is also at this stage in the continuum that organizations see and start to realize the benefits of the latest technologies, which sometimes requires an organization to evaluate what is truly “appropriate” for its purposes. Just because artificial intelligence exists does not mean a specific organization needs an AI tool in their technology toolbox. Organizations have to look and pursue what is most suitable for their business and for their strategy over time.

Level five: Optimized

Just as technology continues to evolve, so do level five organizations. They have embraced a culture that values change if it means improving the enterprise. These organizations are already using the right technology, but are also paying attention to where technology is going. Leadership understands the benefits advanced technologies provide to the organization and recognizes that if they are not leveraged and utilized properly, the organization may fall behind the competition. Always looking for continuous improvement is a core tenet of Industry 4.0. Organizations have to balance leading-edge technology against their core competencies, but they also want to evaluate appropriate technologies deployed for their organization’s strategy and business culture because disruptive innovation could put them above their competition. This all falls back on performance metrics. KPIs are updated in real time and are a primary source of decision-making. A level five organization is actively using the information that is available to progress along the maturity continuum.

Not every organization has the desire – or even the need – to be a level five. And, Reid said, “simply having a capability does not equate to good health.” For instance, an organization could be a level three, but be considered “unhealthy” because while it has certain technologies in place, it may not be using them effectively. He said it all goes back to Industry 4.0’s key concept of continuous improvement. No matter the organization’s level, it should always be seeking to do better.

For more on Baker Tilly’s maturity assessment, please watch our three-part webinar series.