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    Industry 4.0 – when and where to invest

    It is safe to say that no company in the industrial sector has been able to ignore the discussion regarding the fourth industrial revolution. Investments in new technology are also a clear indication of the prevalent trends: among other developments, investments in IoT solutions have been predicted to increase by 15.4% from the previous year.

    This is no surprise as technologies such as IoT and artificial intelligence provide businesses with a golden opportunity to optimise material and raw material consumption as well as production efficiency and pricing – not to mention entirely new business opportunities enabled by the latest technology.

    A situational picture helps to define the actual benefits

    How exactly, then, does one take advantage of the benefits brought about by Industry 4.0? Rushing headlong into reformation projects is obviously ill-advised. First, you need to figure out which technological investments will promote the strategic goals of the company: how the company wants to develop and what market position it wishes to reach. It is also important to assess new technology with a degree of criticism. The nature of the technologies that yield the most significant operational advantages is highly case-specific. What works in one company may not generate any added value whatsoever in another.

    In order to determine the benefits, it is easiest to start with forming a situational picture, as this deepens your understanding and helps to identify the production elements that yield greater efficiency or commercial benefit. This can involve optimising production and managing wastage, among other measures. For example, Kemira’s plant in Äetsä has achieved substantial cost savings and increased production efficiency through the smart maintenance of electrical automation.

    It also pays to consider how the new technologies influence the flexibility of product and responsiveness. The relationship of these factors and the development of the market position can be difficult to calculate and predict but advances in electronic trade and speedier purchase dynamics necessitate ever-faster reactions to market trends.

    Only once investment targets that align with the strategy have been found will it be possible to determine the appropriate investment price and the schedule for the updates.

    Correct timing is critical

    With regard to technological shifts and new developments, the future is difficult to predict with any semblance of accuracy. Despite the uncertainty, it is key to make investments in new technology at precisely the right time: when productivity, the maturity of the technology and market demands are balanced.

    In determining the correct timing, one of the pitfalls is comparing your own situation to that of your current competitors only. Since new technologies provide entirely fresh opportunities, new actors can emerge that use technology in unexpected ways. As an example, if the video rental shops of yesteryear only looked at one another to gauge the markets, they may have been oblivious to Netflix preparing a meteoric rise outside their frame of reference. Ultimately, the new competitor leveraged its own technology to leave everyone else in the dust.

    It is usually easy to notice surprise successes such as Netflix if you keep a close eye on technological developments and your own field. More importantly, it is essential to consider how the signals in the radar are interpreted and whether or not they are taken seriously. The best way is to integrate scenario planning into strategic efforts. This can involve linking field-specific technological trends to megatrends that shape society at large, analysing the resulting scenarios that may impact your field, and deciding on how to react to these scenarios.

    For companies springing forth from small domestic markets, operational digitalisation may be the only opportunity to bolster competitiveness. In the absence of alternatives, it is important to ensure that your company is not among the last to adopt the new technologies. There is still plenty of untapped potential in terms of artificial intelligence and digitalisation, so now is a great time to shift your perspective and challenge your competitors with the help of fresh innovations.

    The companies with the ability to follow technological developments and make correctly-timed decisions will be the most successful going forward.

    Towards a smart factory of the future – how to get started

    1. Take stock of the current situation.
    2. Identify the production elements that yield greater efficiency or commercial benefit.
    3. Ensure correct timing.




    Henry Nieminen