When adopting Industry 4.0, manufacturers should always consider a positive return on investment.
For manufacturers, return on investment (ROI) is a hot topic. Whether a team plans to invest $1 or $1 million in digital transformation, the expenditure should have a positive impact on profits. Recently, manufacturers' factory investments have revolved around an even hotter topic: Industry 4.0. The Fourth Industrial Revolution uses computers and sensors on the factory floor to acquire valuable data that can be used to improve efficiency and profits.
For manufacturers, the return on investment in Industry 4.0 may not seem immediately apparent because improvements depend on better utilization of data. Industry 4.0 relies on modern smart technologies to acquire data that can be transformed into actionable insights, rather than simply adding new automation. Ultimately, if data is not accurately measured, there can be no improvement.
When considering the potential return on investment for Industry 4.0 implementation, companies should ask three questions:
What are Key Performance Indicators (KPIs)?
Manufacturers will see a return on investment from Industry 4.0 implementation in four areas: product quality, machine availability, efficiency (metrics such as cycle time and labor), and energy consumption. By closely tracking KPIs before, during, and after implementation, manufacturers can demonstrate proven ROI.
What is the biggest pain point in production?
Manufacturers want to understand the best strategies for implementing Industry 4.0 to improve efficiency. The key is to target areas in the factory where inefficiencies and lost costs are hindering profit margins. Industry 4.0 can start small or be implemented on a small scale; not everything in the factory needs to be changed immediately.
By targeting the biggest pain points in the factory floor, manufacturers can use actionable data to improve performance while demonstrating the return on investment in smart manufacturing. These pain points should be measured in short-term increments, such as 90 to 120 days, so that manufacturers can gradually transition to digital transformation without harming business revenue.
What does Industry 4.0 mean for employees?
A recent report from the U.S. Bureau of Labor Statistics shows a significant decrease in new manufacturing hires since May 2020, with many production lines struggling to retain employees. Implementing Industry 4.0 means employees no longer need to use pencils and paper to capture data, thus improving data accuracy. Increased data accuracy leads to consistent product quality and fewer production line complaints. Efficiency and the right technology (tools) are important for everyone, especially factory equipment operators, as they impact daily workflows.
When implementing Industry 4.0, manufacturers should track KPIs, target weaknesses, and improve employee experience to demonstrate proven ROI.
