It’s a funny old world, says Malcolm Knott, MD of Middlesbrough’s ITS. Having spent around 50 years in the pharma, chemical and automation industries, learning and then applying “my trade”, you bump into people who stick.
Way back in 1999, ITS employed John Robinson in our sales team. John spent five years with ITS but was destined for bigger things even then and is currently responsible for the development of SAP’s Industry 4.0 go to market strategy in EMEA (Europe, the Middle-East and Africa) North. Prior to joining SAP in June 2019, John’s career after ITS included senior roles at EY, Atos and Schneider Electric, but some people you sort of stay in touch with because your thoughts on certain things match. You see things in a similar way, but not the same way, and bouncing ideas off these people helps clarify and articulate your own thoughts.
John and I keep in touch and recently we were discussing why Industry 4.0, which has been around for a while, hasn’t really delivered what either of us think it could have.
Our musings led to a conclusion that while Industry 4.0 offers manufacturers enormous potential value, on our current path, investments in Industry 4.0 will often fall short of our expectations.
Our respective companies (a multinational and an SME) and manufacturers will be involved in investments that again underdeliver against both their potential and promise.
Why is that the conclusion? Because customers and suppliers have different requirements of the process: customers think one big supplier will give one bum to kick if it goes wrong and suppliers want all of the pie to themselves. Suppliers operate in different silos and the silos are still largely intact. All of the players still want to follow their established business models.
Industry 4.0 is blurring the lines between the silos and making things more difficult for manufacturers by introducing more technologies, more vendors and more complexity. An audit of a typical facility today will illustrate the large number of suppliers that currently influence customer performance. Each supplier has significant value to bring but they are often fighting to retain or grow their share in preference to any other consideration.
There will usually be some overlap in capability, but there is no real reason not to cooperate. The mandate for collaboration has to be driven by the end customer demanding it from its suppliers.
Surely that is in both the customer and supplier’s best interests. Achieving this goal is challenging but not impossible.
We must break down the competency silos and the competitive arms-length way of working. How can we expect manufacturing to successfully execute a paradigm shift while the ecosystem of suppliers remains fundamentally unchanged? The successful recovery we all need can only be delivered through a major change of approach in the supplier ecosystem. It should be an approach based on collaboration and co-opetition.
Of course there are risks – breaking the status quo has its risks and these are often seen as the reason not to change. These risks are real if not dealt with properly and controlled. If they are allowed to be reasons not to make the change then they should be dealt with, and that is where customer focus and the customer strategy for collaboration needs to be strongest.
• Outcomes need to justify the time and resources invested.
• Flexibility in working practices needs to be monitored.
• Decision-making needs to be clear and unbiased.
• Scope creep or drift needs to be avoided.
• Damage to brand and reputation needs to be avoided if the responsibility is not clear.
As Henry Ford said: “If you do what you’ve always done, you’ll get what you always got.”
At the end of our conversation John made this point: “I don’t have all of the answers, none of us does. What I do have are lots of ideas, a desire to make a difference and a willingness to listen.”
I’d agree, none of us, not SAP, not ITS or any other individual supplier, has all the answers. But John’s premise that “…an approach based on collaboration and co-opetition …” that is driven by the customer has to be a better model for the future. There are models out there people can follow that I believe offer us all a better “new normal” and the chance to turn the Industry 4.0 myth into magic. Those models, however, are not based on one supplier or one size fits all.
Obviously, this is not something we in the manufacturing supply chain can impose. Ultimately the process has to belong to the customer, but our aim should be to encourage the collaboration and we in the manufacturing supply chain need to change our ways – less adversarial, less out for ourselves and more collaborative in our approach too.
So what might the future hold? The Covid pandemic has forced a major rethink of global manufacturing supply chains in what is being termed the new normal. Our contention is that radical change and the new normal should not just apply to manufacturers or customers in general. It should and must go much further and apply to the entire ecosystem of suppliers.
In the final analysis, we need to work together to break the traditional silos both within organisations and those in the external supplier ecosystem. The fact that people from different organisational types, people like John and I, can discuss it and find common ground and we can see it as a light at the end of the tunnel, should give us all reason to be optimistic.
Malcolm Knott, managing director, Industrial Technology Systems, with thanks to John Robinson, strategic client advisor – manufacturing Industry 4.0 – digital supply chain EMEA North for his valued input.