Industry 4.0 Can Solve the Productivity Gap: Five Actions for Leaders of Small and Mid-sized Manufacturers

Posted by David Boulay on Jan 28, 2020 8:30:00 AM


It is awe-inspiring to walk into today’s manufacturers and see the efficient and productive way things are made. Yet, even though the United States remains one of the most productive countries, manufacturing productivity has remained flat over the past decade. This should be a major concern. Productivity is a vital foundation for stronger companies, rising standards of living, and vibrant communities.

Dig a little deeper into the productivity trend and we find a significant gap between large and small manufacturers. Larger manufacturers have approximately 60% higher productivity per employee than smaller manufacturers. Small manufacturers are also lagging in new technology adoption relative to their larger counterparts, which directly effects productivity. Given that small and mid-sized manufacturers are 99% of manufacturing establishments and 60% of supply chain costs, their success is essential for our nation’s industrial strength.

Industry 4.0 technologies offer the promise to solve the productivity plateau. Many new technologies offer step-function improvements at reasonable costs for the small and mid-sized manufacturer budget. Regaining our productivity prowess can happen with five steps.

  1. Start with the problem Get clear on the root causes of your biggest productivity improvement opportunities. Write them down in a few sentences. Get specific. Knowing the root causes give the business case to solve the problem. While it is fun to think about owning the new technologies, clearly understanding the root causes will focus your limited resources on the most effective solution.
  2. Scout the technologies. There are likely many solutions to solve the problem. And, new types of automation and data tools seem to be appearing every day. Learn about the new technologies and how they address your needs. Turn to experts for insights. Ask questions based on the business case and root causes. Don’t be surprised if some solutions can come from “simple” things such as training or modest design improvements.
  3. Lay out the options. Once you identify the top choices to solve your problem do a comparison based on critical needs (time, money, future orders, etc.). Keep in mind the total long-term costs as many of today’s solutions are based on subscription models. Use an innovation voucher to access the right expertise to test or implement the technology solution.
  4. Recognize and address the new risks – cyber risks. Regardless of the technology, the common use of sensors and the Internet create cyber-attack risks. Reduce these risks by adopting the US Commerce NIST cybersecurity framework to identify, protect, respond, and recover. Be vigilant and protect your business assets.
  5. Develop skills for the workforce. This step requires an ongoing commitment to upskill talent. It begins with basic skills in problem solving and continuous improvement. Then, we need to figure out the relevant skills for our future needs and new technologies. And, train toward those needs. We also need to capture the legacy knowledge of our retirees.

These five steps will lead you to new standards of productivity and to ensure your company’s competitive position.

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David Boulay

Written by David Boulay

Topics: automation, illinois manufacturing, leadership, manufacturing, manufacturing technology, operations, productivity, workforce, Industry 4.0, robotics

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