Thailand
Thailand: Unlocking the potential of Industry 4.0
As the Fourth Industrial Revolution (Industry 4.0) expands the possibilities of digital transformation, business executives foresee sweeping changes. A new Deloitte Global report finds that businesses plan to invest heavily in digital transformation, but strategic and operational paradoxes threaten to hamper these efforts.
The survey of more than 350 executives in the manufacturing, power, oil and gas, and mining industries explores how organisations are investing in digital transformation, the challenges they face in making such investments, and their technical and organisational strategies for digital transformation.
While organisations are enthusiastic about the potential of digital transformation, there are disconnects between plans and actions in four key areas: strategy, supply chain transformation, talent readiness and drivers for investment.
“As organisations seek digital transformation they must consider a range of questions — from what they hope to transform, to which advanced technologies best suit their needs,” said Tim Hanley, Deloitte’s global industrial products and construction practice leader.
“But it is also critical to understand that digital transformation cannot happen in a vacuum. It does not end simply with implementing new technologies and letting them run. Rather, true digital transformation becomes central to the organisation, touching on every aspect of the company.”
Digital transformation is not a one-size-fits-all process, said Mark Cotteleer, managing director of Deloitte’s Center for Integrated Research. “Organisations are striving for balance between improving current operations and unleashing the transformative capabilities afforded by Industry 4.0,” he said.
“To successfully align planning and investment with action, digital transformation should be baked into an organisation’s strategic outlook and operational framework.”
In Southeast Asia, there has been a mix of enthusiasm and ambitious plans for future investment in digital transformation, noted Ng Jiak See, leader of the energy, resources and industrials practice for Deloitte Southeast Asia.
“However, with an ever-proliferating list of technologies, it can be challenging for players to determine, prioritise and invest in the tools that can best help them meet their strategic objectives,” he said.
“As a result, many organisations remain frozen in place, fending off competitive pressures by isolating their technology usage to defending and maintaining their current positions.”
As Industry 4.0 takes shape, the study reveals four core paradoxes:
The strategy paradox. Nearly all respondents (94%) indicated that digital transformation is an organisational imperative, yet only 68% of all respondents and 50% of CEOs see it as an avenue for profitability. So while respondents may associate operational improvements with strategic growth, they do not necessarily associate digital transformation with revenue growth resulting from R&D-driven new products or business models.
Many seem to view digital transformation as a “defensive” investment to protect, rather than grow their business. Starting small and expanding beyond defensive spending can unlock new capabilities and pave the way for innovation.
The innovation paradox. Executives say digital transformation initiatives are primarily driven by productivity improvement and operational goals — that is, using technology to complete existing tasks more efficiently. However, organisations should also view increased desire for innovation as a driver likely to bring positive return on investment.
The supply chain paradox. Executives identified the supply chain as the top area for future investment, but only 34% view the supply chain as a driver of innovation. Surprisingly, only 22% of chief supply chain officers (CSCO) reported playing a key role in digital transformation decision-making. Organisations should look to elevate the CSCO role and align their supply chain function with broader strategic objectives.
The talent paradox. Respondents generally believe they have the right talent in place to support digital transformation — only 15% indicated they need to dramatically alter the composition and skill sets. Finding, training and retaining the right talent was still the most widely cited challenge. Interestingly, the results revealed that the more respondents use transformative technologies, the more likely they are to be satisfied with the current state of their talent pool.
At its most polarising, those who interact with these technologies on a daily basis believe their organisation has the proper talent in place 92% of the time, while those who have little to no interaction with digital technology see the greatest gap in talent and development (only 42% believe the right talent is now in place).
Since digital transformation deeply affects talent, organisations should make upfront investments in talent development and involve employees in the digital integration process.
The key to unlocking the potential of Industry 4.0 is fully harnessing information from connected assets to drive decision-making, a process known as the physical-digital-physical (PDP) loop.
Ninety percent of survey respondents said their organisations gather data from the physical world, but far fewer report the ability to analyse this information and only about half say they can act on data in real time. Closing the PDP loop should be a primary objective of organisations.
Deloitte’s research shows that organisations across manufacturing, power, oil and gas, and mining understand the opportunities Industry 4.0 presents. Building more connected, responsive and intelligent operations will enable them to overcome barriers and find a path that truly embodies the promise of Industry 4.0.
To view the full report, “The Industry 4.0 Paradox: Overcoming disconnects on the path to digital transformation”, go to https://bit.ly/2Ql7igP
Source: https://www.bangkokpost.com/business/news/1589394/unlocking-the-potential-of-industry-4-0