Why are there so many failed Industry 4.0 projects?

INDUSTRY 4.0

Digitalisation and technology are on everyone's lips...

Digitalisation and technology are on everyone's lips, and the industrial sector is no exception, where it is also recognised as a great opportunity to improve the efficiency of operations in its broadest sense: Production, Productivity, Quality, Warehouse Management, Maintenance, Planning..., not in vain is it currently the most strategic project to undertake in the industrial sector, and for this reason it is the main destination of European, state and regional aid, and any Department Head is interested in the subject. On the other hand, technology is part of our lives: mobiles, tablets, PCs, apps, games, web in general..., everything instantaneous, at the click of a button, a lot of "free" offers, we find it easy and, therefore, we want it now.

Why then are there so many failed Industry 4.0 projects?

The question verbalizes exactly the feeling of the sector and one of the reasons why Industry 4.0 is growing too flat. There are many questions, a lot of interest and everyone is clear that digitization is the future, but, when it comes down to it, although the applications of Industry 4.0 are many, the projects do not meet expectations, something that happens in most projects. 

There are many things and in the end it boils down to one thing: the digital transformation of small and medium-sized enterprises requires a paradigm shift that goes beyond technology (which is a necessary condition, but clearly insufficient). The problem lies in this starting point, in this technological focus together with an excess of optimism or, why not, of oversized commercial discourse, to give an example: either you talk about predictive or you seem to be a "pringao". The reality is that something fundamental is being overlooked: Legacy, the technological definition of which is software or hardware that is difficult to replace due to its widespread use. In the case of the industrial sector this definition is extended, identifying 5 main chapters: MACHINES, PEOPLE, SYSTEMS, PROCESSES AND CULTURE.

The success of Industry 4.0 projects requires being 100% aware of these "tenants" and orienting all actions, technological and non-technological, to favour the transition from the current situation to the digital management of factories. The success of this task requires a lifelong industrial project management: diagnosis, drafting of a functional and, of course, Team and Project Plan with tasks, milestones, responsible and dates. Industrial digitisation is about gaining confidence based on facts and reaching concrete results, milestone by milestone, building on previous achievements. There are no shortcuts.

This is the only way to make technologies such as artificial intelligence, big data, machine learning, internet of things, edge computing, etc. effective, but it is not possible to define when, we are too far away from their practical application in the industrial sector, you can't work with data if you don't have data, obvious, right?

1. Resistance to change and the wrong approach to Industry 4.0

One of the biggest obstacles in this type of project is resistance to change and the wrong approach. At MESbook we tend to divide it into two common positions that we often encounter:

St. Thomas-type perspective: the one who needs to get his finger on the pulse of the project and is a total sceptic.
Early Adopter type perspective: the one who wants everything as soon as possible and approaches Industry 4.0 projects from an over-enthusiastic perspective.
The truth is that Industry 4.0 projects need to avoid the subjectivities mentioned above. You can't be too sceptical, because you get paralysed by analysis, but neither can you be an "I want it all" and become a digitalisation Kamikaze.

2. In Industrial Digitalisation, things are not done at the snap of fingers

Like many things in our lives, in Industry 4.0 projects everything seems easy, until you get down to doing it. It's the kind of scenario that seems simple, but where our dear friend Pareto comes into play, the famous 20%, but which happens every day, which nobody sees in the hype frenzy of digital transformation and which causes projects to fail. Let's take a parallel example from our daily lives: Google Maps. Has anyone thought about the complexity behind something that we have for free on our mobiles: mapping of roads, any roads, including regional roads ;), and their respective speed limits, connection to mobile devices to evaluate traffic, speed camera maps, communication of mobile speed cameras, access to information on incidents, tolls, all the algorithms underneath to calculate the most optimal route, recalculations to offer alternatives... surely we didn't mention even a small part of it.

This image leads us to understand the complexity of what factories need: which is nothing more or less than moving from running the factory with paper/excel (road map) to managing it digitally (Google Maps).

Industry 4.0 projects, in addition to the in-depth analysis they require, have the aggravating factor that they have to be built on existing resources. You enter a very complex environment where there are many things already in place that have to continue working, such as machines of all types and ages, IT systems such as ERP or processes such as the Quality System; but also other aspects that need to be reinvented, such as human resources that will need help to get out of the comfort zone, undoubtedly the biggest challenge of the Digital Transformation.

Let's take another example: setting up a new production line in a factory requires thinking about and fitting out the space, designing and implementing infrastructures, defining the processes, training the workers, commissioning and multiple adjustments until Quality standards are achieved. No one in the factory is oblivious to this complexity, yet current Industry 4.0 proposals practically do not even contemplate it

The Industrial Digital Transformation is very complex and for things to work, to be useful to uswe must take the definition of the Industry 4.0 project very seriously, going down to the detail of the process to be improved. We are talking about real-time connectivity, multi-machine, multi-person, multi-device..., and interconnection of all of the above. Due to this complexity and the need for the intervention of multiple internal actors, fundamental because they will be the future users, the figure of an internal leader is key, with the influence to make things happen, a Digital Transformation leader within the organisation who defines, coordinates and ensures compliance with the project milestones and the roadmap for digitisation.

3. In Industry 4.0 we ask for the WHAT, but the HOW is not always clear.

Digitalisation is not an end in itself, but a means to achieve an efficiency objective, and on too many occasions the transformation process remains anchored as the end to be achieved. For this reason, in Industry 4.0, asking the WHAT is undoubtedly the first step, and in most cases it is usually very clear: to be more efficient. Or if you prefer: to manufacture MORE, BETTER and CHEAPER. But HOW TO GET IT is not given the necessary attention.

So the first thing to do is to make a complete and sensible diagnosis that takes into account the necessary resources, but above all the strategies to combat the enemies of digital transformation. What are they? None of them are technological:

  • Resistance to change
  • Frustration arising from over-commitment: "Don't tell me we're going to make it tomorrow, because I might believe it".
  • Inadequate partner: You need method and someone to accompany you on this journey. The "Sherpa of digitalisation" is required to guide from the experience and industrial know-how after hundreds of projects. The partner must, at the very least, speak the language of the factories. Of course, the focus must be on generating tangible savings that have an impact on the P&L, otherwise Industry 4.0 will be irrelevant. This brings us to one of the mantras of all industrial projects: PAY BACK and/or return on investment. This is key to understanding why most projects fail: there is no return, but they do not even meet the minimums, such as eradicating paper, and in the end the illusion of the beginning disappears. The following equation should never be lost sight of: Satisfaction equals Results minus expectations.

As mentioned before, this is not only about technology, although this is a necessary but clearly insufficient condition. The main challenges and reasons why Industry 4.0 projects often fail go beyond the technological field. If you are thinking about digitising your factory, it is time to work on the resistance to change, on the approach your team has to projects of this scale and on the partner you should choose to achieve the desired results. 

4. R(evolve) industrial project management

The success of Industry 4.0 projects requires assertive industrial project management: with diagnostics, tasks, milestones, responsible parties and deadlines. Industrial digitisation is about gaining confidence based on facts and achieving tangible results, it requires the application of agile methodologies/Lean Startup: DEFINE-SAMPLE-TEST-MEASURE, building on QUICK WINS that manage to weaken organisations' resistance to change and are perfectly identified: Eradicate paper, update standards in BOM/Scandals and Routes, Digital Quality Management, Manufacturing Altas and, above all Real Consumption, introduction of basic LEAN routines (TOPx) and first simple Improvement Projects (not OEE by Speed), all very "terrifying" but essential steps on the road to Digital Transformation, there are no shortcuts.

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