Implications of Industry 4.0 for Business Operations and Personal Career

3475 words (14 pages) Essay in Technology

18/05/20 Technology Reference this

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Executive Summary

Industry 4.0 transformed from the 3rd industry revolution of digitalization is the advance digital technology including Cyber Physical System, Internet of Things, Artificial Intelligence, Virtualization, Big Data, Cloud Computing, and Blockchain. It improves the product and service quality as well as the flexibility, efficiency, and effectiveness of the process. With the development and application of advanced technologies, more and more organizations transform to a “SMART” organization in order to attain benefits from Industry 4.0 evolution.

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This report focuses on the effects of the Industry 4.0 influencing on my organization and my career. With the in-depth research related to the fourth industrial revolution impacting the future of work, Small-to-medium size enterprise, and business operations, the following sections will examine the potential implementation and benefits brings from industry 4.0 to my organization. Apart from that, I will discuss the possible barriers to my career and recommend how we can survive and sustain in the workplace as the industry 4.0 evolve.

To sustain the business growth and maintain a competitive advantage in the market under the ever-changing technological system and environment, it is critical for an organization to prepare for the fourth industrial revolution ahead of their competitors. Industry 4.0 is only an enabler to crystalize the process, employees and human are the critical components to drive the added values arise from technology. Therefore, instead of only investing in IT development, the organization is suggested to maintain training, engage and encourage employees to improve both personal and professional skills under the new ecosystem in order to keep pace with the vigorous change in the coming five to ten years.

To sum, industry 4.0 could be a challenge or pillar to an organization. With a successful industry 4.0 innovative strategy, not only the organization could be beneficial, but also employees could enjoy the enormous advantages. More importantly, it could help an organization build a smart business operation to sustain growth and increase the organization’s stakeholder values. In other words, it can create a higher quality of life to stakeholders and build a better society.

1.  Introduction

“Industrial Revolution will affect the very essence of our Human Experience” (Klaus Schwab, Founder, and Executive Chairman, World Economic Forum)

In the following report, I will unpack the Industry 4.0 impacts on my business operation in the coming 5 to 10 years, its potential implementation to my organization and its implication to my career. Finally, I will recommend how we can overcome the challenges and at the same time maximize the opportunities bring from the industry 4.0 evolution.

Industry 4.0

The first three industrial revolution from water and steam power to electricity mass production, and then digital computation and automation are characterized by a range of advanced technology that enhances the production process by humankind. In 2006, the 4th industry revolution integrated from the 3rd revolution originated from Germany by leveraging physical-cyber systems via computing and Internet of Things technologies. The figure 2.1 demonstrated the four industrial revolutions and the components involves in industry 4.0. “The underlying concept of Industry 4.0 is to connect embedded systems and smart production facilities to generate a digital convergence between industry, business, and internal functions and processes” (Interreg, 2018). With the holistic transformation and development with automation, big data, and manufacturing execution architecture, the 4th revolution aims to improve efficiency with the integrated production and commerce between company, employees, and supplier (Lydon 2016).

Figure 1.1 The Dawn of Fourth Industrial Revolution (source from Shockoe)

My Organization Background

My organization, Toyeast Limited established in 1998, is a Hong Kong small-to-medium-sized enterprise with 50 staff. We develop precise and high-quality scale models and miniatures for different countries with their customized and cultural features. With the human-centric orientation, we create model cars and diorama aiming to connect to customers emotionally and preserve the Hong Kong Nostalgic memories through our products. Although my organization is not on a large scale, our business operation covers different aspects, we have different departments including R&D, marketing, retails (Online and Physical shops), logistic, IT and financing, etc. Large established enterprises have higher adaptability to emerging technology and can better benefits from the future of work (Hinton 2018), this results in even more challenges for my organization to prepare and adapt the industry 4.0 to survive under the robust technology change. In the following section, I will further discuss the impacts, challenges and how our business operation management might move to keep up with the revolution needs.

2.    Industry 4.0 effects to my Business Operation over the next 5 to 10 Years

The physical and cyber technologies including Artificial Intelligence (AI), Internet of Things (IoT), robotics, automation, big data, data analytics, quantum computing, cheap battery operated high-end and small sensors integrate into production and many other business operations greatly strengthen the supply chains and improve productivity and efficiency. Below summarized the effects on my business operation by industry 4.0 over the next 5 to 10 years.

Increase Productivity and Profitability

Production: Machine learning, automation and robotics using sensor technology can with lower defective rate by reducing errors and improve productivity in manufacturing. According to the research from Mckinsey &Company, industry 4.0 technology will increase the forecast accuracy and labor productivity by 85% and 50-70% respectively. Besides, it is estimated to bring a reduction in design engineering cost by 10-30%, inventory holding cost by 20-40%, and cost of poor quality by 30-40% (Sikka, 2018). In other words, industry 4.0 not only improve productivity but also further increase our profitability.

Figure 2.1 Industry impact on manufacturing (source: McKinsey&Company)

Supply chain: IoT together with high performance and small sensors, RFID, high speed connectivity, low-cost cloud storage, rapid computing processing and improving machine learning estimated to connect over 50 billion devices by 2020 (Leta 2017) , which provide an dynamic information system to capture and communicate the useful data to collaborate between different business operations throughout the supply chains to achieve production and distribution efficiency.

Transform into an intelligent and autonomous supply chain

The disruptive technology integrating with AI, IoT and blockchain crystalizing the business operations and the supply chain to be more collaborative, connective and intelligent. This can improve the whole process from engineering and design to production, logistics, sales, and marketing as well as accounting and finance, that enable an extended growth in the digital ecosystem between employees, trading partners, and suppliers. With the more secure and extensive collaboration, it would be more flexible to work without limitations in location, time, people and systems (OpenText, 2018). By extracting insights from analyzed data and progressively eliminating unfavorable factors by machine learning, this can allow more accurate prediction outcomes, meanwhile, optimize the business operations with better implementation efficiency.

Increase agility and drive competitiveness

3D modeling, simulation, and 3D printing support new products developing in shorter lead time with less iterative prototyping at lower cost. This advance technology immensely benefits more innovative idea generation, more creative and customized variation products creating to satisfy customer unique requirement.

Creative ideas generated and inspired by the shared knowledge and information in communities facilitate the company to obtain opinions and data through social media. Therefore, comprehensive and useful insights from data analysis and fast digital data computing can apply to product development and iteration in order to create better products and services. It also allows a quicker response to consumer requirement that enhanced the flexibility and quality of the production and services (Interreg 2018) that create competitive advantages in business operation and increase efficiency with better and faster product development.

Workforce characteristics change

The four industry revolutions in the early 20th century until the 1980s generally triggered needs in new employments with creative and different skills (Poliakine 2019). Similarly, the growth in industry 4.0 will increase the employment demand for staff who are competent in IT technologies and software development including supply chain coordinators, 3D designers, and modeling specialists, etc. In particular, my business heavily focuses on developing tailor-made models for different cities, advance technology designers and engineers will be crucial for us to compete with other large enterprise. On the other hand, there will be a decrease in the low-skilled employees responsible for repetitive and simple duties.

New ecosystem with partners, vendors and end customers with real-time communication

Through the Internet of Things with Cyber-physical systems and mobile devices connected via one protocol to cloud allows faster communication such as the cloud dashboard to enable better communication for project management. This can significantly help business operations to achieve more effective process between collaborates, partners and vendors in real-time (Want, Schilit, & Jenson, 2015)., whilst strengthen our integrated supply chain from production until point of sales. According to the research (Deloitte 2016), 72% of executives predict a tremendous increase in intercultural virtual teaming technologies and 78% believe mobile will dominate the technology environment in the coming five years (see figure 2.2)

Figure 2.2 The most important outcomes expected by the executives from increased levels of collaboration

Better quality of life for employees and society

Rajeshwari, Reddy & Reddy (2019) predicted the industrial automation (15%) will decrease 30% of man-hours by 2030. Workforce could better prioritize tasks and manage time effectively by IoT platform and smart manufacturing system. According to the survey data by Deloitte (2016) for existing workforce all over the world, 37% work mobile, 30% full-time workforce are not work in the employer’s office or place, and 20% are not working full time (e.g. freelancers or contractors). This showing the very high mobility of the existing workforce and this norm is already happened in my organization. I am one of the remote employees in my organization and the number of home office or remote employees are forecasted to increase in the coming year. The advanced technology improves the communication and collaboration between employees and employers, the real-time connectivity save employee traveling time to office that help employees to achieve work-life balance and enable better quality of life. With less traveling people during busy hours, this is both good for humans and the environment.

3.    Potential/ Applied implementation of industry 4.0 in my organization

Sales and Marketing

As an SME operating in the toy industry for over 20 years, we had experienced up and down. In order to survive in the rivalry market, we understand cost competition would not be our successful strategy, and therefore we change to niche differentiation strategy to provide high-quality premium products to our target customers. The critical success factor to sustain is human-centric orientation, “people don’t buy what you do, but they buy why you do it” (Simon Sinek 2010). The industry 4.0 enable us to engage customers emotionally and continuously by the advance technology IoT, Blockchain, Cloud services, fast data exchange, mobile devices, which provides new interaction ways to create superior shopping experience such as pervasive communication including video, voice, and data through social media. The simple, faster and practical functions from IoT smart devices provide a comfortable shopping experience to shoppers (Balaji and Roy 2017). Below figure 3.1 illustrates the potential implementation of industry 4.0 and its benefits to the sales and marketing functional units in my company:

Figure 3.1 Industry 4.0 implication to Marketing and Sales Department

Other Business Functional Units

Apart from the sales and marketing department, figure 3.2 make a list of other potential implementations of the Industry 4.0 technology including Cyber Physical Systems, IoT and Virtualization:

Figure 3.2 Industry 4.0 Potential Implementation in my organization

4.    Implications to my career during Industry 4.0 evolution

My role as the general manager in my organization is considered not easily replaced by AI or computer, because this position needs unique human ability including a broad range of soft skills and management skills, strategic and critical thinking as well as coordination between collaborates. Despite the low probability by displacing, further personal and professional development is critical to my career as Industry 4.0 evolve.

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Soft Skills development

Refer to the Future of Jobs Report from the World Economic Forum (2018) indicated the competence in advance technologies is imperative and indeed one important element of the 2022 skills equation. However, according to the surveyed employers, soft skills and human skills are still crucial requirements when choosing their employees, such as creativity, negotiation, human resource management, which are difficult to be replaced by computer and robotics. To maintain high adaptability in the workplace, not only the technical skills development is critical, but also personal development in terms of superior soft skills such as interpersonal communication skills and negotiation skills are also very important.

Personal brand imperative

With the AI and data analytics advancement, digital matching platforms between employees and potential or exiting employers for new employment opportunities will play an important role in the job market (Evans & Schmalensee 2016). In the future, the demand for traditional recruitment such as job posting online or newspaper will diminish, whilst the digital matching platform will appoint the right candidate to the organization automatically and directly, or vice versa. Both employees and organization will require to provide in-depth information about personal skills and job details respectively. Therefore, a strong personal branding and superior online image are the critical success factor to be matched by the digital platform.

Self-directed career behavior

To secure the professional identity and maintain unique value in the job market under the ever-changing industry 4.0 evolution, self-directed career behavior suggested in the social cognitive career theory act as an imperative and essential role (Lent & Brown 2013). These include continuous personal and professional skill development through formal education and life-long course, active networking among professionals, mentors, industry leaders inside or outside of the organization. Together with the technological skills learning, this could be a challenge and critical to me, however, this may drive my motivation to become a better me and improve self-management holistically.

5.    Recommendation

To better adapt to industry 4.0, it is recommended to plan earlier than your competitor. Research to attain management support and technology trends is crucial to showcase the benefits including higher efficiency and competitive advantage. This can leverage the concerns and barriers related to the adoption of Industry 4.0.

Investment in IT development and IT talents is specifically critical as the IT department can determine how and what an organization integrate the industry 4.0 technology and capability into its business operation. However, soft competencies including communication, cooperation, networking, branding, and teambuilding are still essential, as these elements are difficult displaced digitally through machine learning and AI. Therefore, the company should continuously train and educate the workforce to improve and adapt to the rapid change environment.

SME is recommended to start with easier and lower-cost implementation of industry 4.0. Through learning the challenges from trial and error, which can enable employees to adapt to the changing technological trend and utilize the new technology progressively, and finally develop a culture to embrace the holistic Industry 4.0 environment in the organization. This motivates employees, not only designers but also skillful technicians like engineers, programmers as well as sales and marketers to think out of the box and create extraordinary solutions when facing complicated problems in different circumstances, which benefits effective problem-solving in a different perspective.

6.    Conclusions

“The Fourth Industrial Revolution is not just about technology or business. It’s about society.” (Joe Kaeser, President and Chief Executive Officer, Siemens AG)

Industry 4.0 as the foundation to lead an organization to establish a dynamic and broader innovative strategy. When industry 4.0 applications could be successfully implemented throughout the organization, not only the productivity, profitability, number of innovative and better quality products, but also the employees’ satisfaction and engagement would be improved. This could bring benefits to business owners, employees, partners, suppliers, and customers. As a result, the industry 4.0 strategy could help an organization to build a smart business operation to sustain growth and increase the organization stakeholder values. Ultimately, it creates a better quality of life for the workforce and build a better society.

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