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Get ready for Industry 4.0, three things to consider By Hanno Elbraechter, Head Business Unit Technology

Industry 4.0

Asia is set to lead the global machine tools industry growth with China projected to account for more than two-fifths of market demand through 2019. 

Though the idea of Industry 4.0 (I4.0) may seem massive and constantly evolving, from my point of view, it simply depicts the new way we connect, automate and manage things more smartly.

The global machine tools industry is set to grow at 5.5% per year through 2019 reaching USD 181 billion. I4.0 will certainly be a driver to propel the growth of the industry. Only by combining the optimized automation process and data digitization, manufacturers can ensure its business sustainability and catch the growth wave.

In McKinsey’s second edition of its Industry 4.0 Global Expert Survey, it shows that nine out of ten technology suppliers and manufacturers see I4.0 as an opportunity rather than a threat. Having devoted most of my career to the machine tools industry in Asia, I recognize that there is a growing interest by manufacturers to get themselves ready for the “revolution” ahead.

Here are three key things to consider:

The machine tools sector was historically spearheaded by Europe, specifically Germany. However, in recent years, Asia, led by Japan, China and South Korea, have swiftly stepped up government-led programs. These include dangling incentive-based initiatives to spur manufacturers to adopt I4.0.

In China, the country’s I4.0 plans are highlighted by its Made in China 2025 program. The 10-year plan is designed to transform China from a manufacturing giant into a world manufacturing power. Among the key sectors to drive this forward include robotics, aerospace equipment, ocean engineering equipment, new energy vehicles, medical devices and agricultural machinery.

In Thailand, the government’s I4.0 initiative is to push for the country to be an innovation-driven economy over the next 20 years. The five key industries designated to drive this program include mechatronics, biofuels, logistic, medical and artificial Intelligence.

It is crucial for government to support these programs to create a more integrated approach and to establish common standards across the manufacturing industries. By understanding these policies and knowing what are the available government-led initiatives such as tax rebates, subsidies and funding options, it will help you make the right decision when investing in I4.0 systems and applications.

The study of Industry 4.0 Global Expert Survey also revealed that though more than half of the companies in Asia Pacific expect that the adoption of I4.0 will help them reduce costs of more than 20% over the next five years, only 39% of the respondents expects revenue gains of over 20% over the same period. These findings show that instead of focusing on short term revenue gains, companies need to focus on the long run to benefit from the evolution.

In Japan, DKSH recently helped a wood flooring manufacturing company by providing integrated automation solutions. Over the years, it has proven that the optimized automated process has significantly improved plant efficiency in terms of cost and production. The new process required only one third of labor, achieved 60% reduction of required machines, increased production volume by threefold and produced 5% increased yield. The decision that our customer made years ago has set them apart from the competitors and be I4.0 ready.

In my view, this increasing awareness shows that implementation of I4.0 will become a “qualifier to compete” and is also likely to be seen by investors as a “qualifier for funding” over the next few years. This should be a key impetus for manufacturers to embark on getting themselves ready to remain competitive in the years ahead.

There is no cookie-cutter solution for manufacturers to apply I4.0. It is important for companies to first evaluate current business operations and manufacturing processes. For machine tools manufacturers, it is crucial to focus on process optimization and to increase the efficiency of operations.

The next critical step is to map where you would like to be in the next three to five years; and finally, build a tailored solution that works best for your organization to close the capability gap.

DKSH has successfully introduced numerous customized technical and engineering system solutions after having evaluated different types of machine tools manufacturers, which are involved in critical areas such as automation, process engineering, CAD/CAM integration, tooling and fixtures. These include:

  • FMS (Flexible Manufacturing Systems), which offers high flexibility with maximum automation
  • In-process quality control to manufacture and check the quality within the system and adjust the production machine automatically
  • Linkage of CAD/CAM and ERP Systems to industrial automation solutions
  • Leverage automation solutions to produce RV reducer gears

While I am uncertain if robots will ever completely take away all our jobs or that 3D printing will ever substantially replace the quality and craftsmanship of traditional production processes, Industry 4.0 is undoubtedly well upon us and its impact on machine tools manufacturers around the world will surely be immense. The key now is to turn this abstract into a reality with all of us doing something concrete to contribute to this evolution.

Hanno Elbraechter

About the author

Hanno Elbraechter joined DKSH in September 2014 as Head Business Unit Technology across 18 countries. He has been transforming sales and service organizations over the last 15 years across Asia to set new standards when it comes to systematic market development, industry specific market penetration and after-sales services combined with state-of-the-art CRM systems. After living for 13 years in China, he recently moved to Singapore with his wife and three kids.