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ROI Check-in: What can we improve using Industry 4.0?

ROI Check-in: What can we improve using Industry 4.0?

AnalysisDigital TransformationThought LeadershipTop Stories

Rodney Repullo, CEO of Magic Software, explains the best strategies to implement Industry 4.0 in progressive companies.

Rodney Repullo, CEO of Magic Software

By closely monitoring the KPIs before, during and after the implementation of IND 4.0, the industries could prove the ROI.

KPIs can also highlight areas that have benefited from technology to improve their performance. Even if its implementation does not guarantee a return to the final result, there can still be qualitative advantages for the organization. Qualitatively, Industry 4.0 provides better data on time, which can benefit more than just profits.

Establish the biggest production bottlenecks

Industries want to know the best strategies to implement Industry 4.0 to increase their efficiency. The key is to focus on areas on the shop floor where inefficiency can seriously affect productivity and profit margins.

In Industry 4.0, not everything needs to change at once. By targeting the bottlenecks on the shop floor, you can use actionable data to improve performance while demonstrating ROI for smart manufacturing costs. Short periods of change, such as 90–120-day increments, should be used and measured against these pain points so that you can move towards Digital Transformation without high costs.

What Industry 4.0 means for your employees

The latest US Bureau of Labor Report showed a sharp decrease in new hires in the manufacturing sector since May 2020, and many factories are struggling to maintain employee retention.

This improvement in data accuracy leads to consistent product quality and fewer shop floor complaints. Efficiency and the right technology are crucial for everyone, especially manufacturing equipment operators, as it affects their daily work.

Still, according to Eurofound’s Report (2019) Future of Manufacturing in Europe Research (EU Publications Office, Luxembourg), macroeconomic estimates indicate that a further increase in global overall rates will impact more in the job market in the European Union than in other regions.

It also points to a 0.3% drop in employment on the European continent by 2030. Of all sectors, manufacturing has the most significant decline, at 1.1%. Brazil must also be aware of this but should not renounce investing in innovation and improving industrial productivity.

It also means that industries are likely to be overworked when it comes to labor in the coming years, with production expected to remain high despite fewer work positions.

With Industry 4.0, employees will not have to extract data points with pencil and paper, which improves data accuracy. Improved data accuracy leads to consistent product quality and fewer shop floor complaints.

Implementing plans to ensure ROI

The next step is to adopt the right tools to ensure that the move to Industry 4.0 is productive and profitable in terms of ROI. This process can happen quickly (in a few months) if industries adopt sprint methodologies (Agile-based).

It involves quickly assessing current machine quality and data collection capabilities before incorporating new technologies that facilitate, unify and analyze data across multiple systems. It happens by integrating systems to ensure data quality and greater data synchronization capacity between applications used throughout production, inventory, sales and distribution.

As a result, this process offers a much better range of actionable insights available to the business, which translates into improved long-term ROI.

When implementing Industry 4.0, industries must track KPIs, target weak areas and improve the employee experience to demonstrate a proven ROI. By not implementing the right technology for Industry 4.0, there is a risk of having a Cost of Inaction (COI), which is the cost of a missed opportunity. Historical habits on the shop floor can also affect the results.

Although the process has always been conducted in a certain way, we have to look for new ways to make the task more efficient. Inaction may seem safer, but it does not build a better shop floor and will harm competitiveness.

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