The Industry 4.0 Paradox

Industry 4.0 has not just increased the possibilities for digital transformation, but has made it more important than ever for an organization. To fully understand how companies are undertaking digital transformations to invest in Industry 4.0, Deloitte has put together a global survey of hundreds of executives from across manufacturing, mining, power, oil and gas companies across the world.

The survey showed that there was plenty of enthusiasm and some ambitious plans for future investments, but it also showed there was some disconnect between what companies planned to do and what they actually did. While just about every organization is undergoing digital transformation, there are still some paradoxes surrounding strategy, talent readiness, supply chain transformation, and the drivers for continued investment.

The survey shows that there is a lot of drive for digital transformation, but organizations are still finding paths that balance improving current operations with the opportunities Industry 4.0 presents for transforming business models and overall innovation.

1. The Strategy Paradox
Nearly all respondents (94%) indicated that they considered digital transformation to be a strategic objective for them. However, just because an industry seems to understand the strategic importance of digital transformation, not many of them actually understand what it can do for them. They don’t understand the strategic possibilities digital transformation presents. Only 68% of respondents said that they consider digital transformation to be a way to increase profits.

2. The Supply Chain Paradox
Many executives believe that their supply chain is a key area for current and potential digital transformation investment, including considering supply chain initiatives to be a top priority. However, the supply chain executives and people outside of the C-suite, the people actually directing day-to-day business operations and with the “touch and feel” involvement in implementing digital technologies – don’t appear to be the decision makers when it comes to investing in digital transformation.

3. The Talent Paradox
The talent paradox appears relatively unchanged from the last such survey. Many executives are confident that they have the talent they need to support a digital transformation, but many of them also admit that talent can be a complex challenge to overcome. Only 15% of respondents said that they need to make a drastic change to the composition of their talent and skill sets. With that said, executives still consider finding, retaining, and training talents to be their main cultural and organizational challenge.

4. The Innovation Paradox
Executives indicate that the main driving force for digital transformation initiatives are improving productivity and reaching operational goals. It’s basically about taking advantage of advanced technology to do what they’re already doing, but better. This is in line with previous studies and it suggests that there is a greater pattern around using advanced technologies to reach near-term operational goals – at least at first – rather than use it to truly transform an industry. Even so, there are plenty of chances for innovative operations and these opportunities shouldn’t be overlooked. Organizations that are motivated by other factors, such as increased need for innovation and a focus on internal strategy, reported having similar returns on their investment.

One of the key factors for taking full advantage of Industry 4.0 is being able to harness information and connected assets and be able to use them to make informed decisions. This is also one factor that several organizations haven’t been able to properly put into practice. As executives look to further transform their organizations and create interconnected enterprises that are able to survive in the increasingly digital age, they have lots of opportunities to build more intelligent, responsive, and connected operations – and find a path that embodies what the Fourth Industrial Revolution can offer.