Industry 4.0 and the future of metalworking companies

The race to adopt elements of Industry 4.0 is already underway among metalworking companies and it has been discovered that the fourth revolution will bring benefits in three main areas:

• Productivity: Over the next five to ten years, Industry 4.0 will be adopted by more companies which increases productivity in all sectors. Productivity improvements in conversion costs, which exclude the cost of materials, will range from 15 to 25 percent. When material costs are factored in, productivity gains of 5 to 8 percent will be achieved. These enhancements will vary by industry. Metalworking companies can achieve some of the biggest productivity gains (20 to 30 percent), for example, and auto companies can expect increases of 10 to 20 percent.

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• Revenue growth. Industry 4.0 will also drive revenue growth. Demand from manufacturers for improved equipment and new data applications, as well as consumer demand for a broader variety of increasingly personalized products, will drive additional revenue growth.
• Employment. Given the growth it stimulates, Industry 4.0 will lead to a 6 percent increase in employment over the next ten years. And the demand for employees in the mechanical engineering sector may increase even more, by as much as 10 percent over the same period. However, different skills will be required. In the short term, the trend toward more automation will displace some of the often low-skilled workers who perform simple, repetitive tasks. At the same time, the growing use of software, connectivity, and analytics will increase the demand for employees with skills in software development and IT technologies, such as mechatronics experts with software skills.

It is important that, as a metalworking entrepreneur, you understand how you can employ technologies in new use cases to offer the greatest benefits to your customers. These technologies can be leveraged for different offerings such as enhancement of network embedded systems and automation, development of new software products, and delivery of new services such as analytics-based services. To create these offers, they must establish the correct foundations:

• Define which business model to leverage for your new or improved offerings.
• Build the technological base, such as the base of tools for analysis.
• Develops the right organizational structure and capabilities.
• Develop partnerships that are essential in the digital world.
• Participate in and shape technological standardization.

In parallel, systems vendors must build a scenario-based view of long-term industry evolution and ensure that their strategy prepares them for the most likely scenarios.

You must not fall behind!

Here are three ways metalworking organizations can get all stakeholders even more interested in Industry 4.0 projects.

<<< Digital revolution: how it is affecting your company >>>

Technological change is creating several new opportunities and challenges for the metalworking industry, with artificial intelligence (AI), big data, the Internet of Things (IoT), and other Industry 4.0 projects (the current trend of automation and data sharing and the exchange of information in manufacturing technologies) that have an impact on the way manufacturers operate, automate and remain profitable.

According to Grainger's new Metalworking Industry report, 17% of metalworking companies have high-speed machining (HSM) programs while using 5-axis/universal machining and multi-task equipment (e.g., dual turret, turning mill) by 13%, respectively. Ten percent are using 3D/additive for prototyping, while 5% are using it for product parts.

Automation is also important to metalworking, as the most popular automation equipment currently in use includes unattended operations (18%), quick-change tooling/fixtures (17%), flexible manufacturing systems (12%), and CNC tool presetting (12%) In addition, 21% of companies are using CAD/CAM file revision control/management tools, 14% rely on tool inventory systems, 10% use verification software of tool paths and 8% use digital tools.

Three ways to start tech conversations

Right now, 48% of metallurgical companies are concerned about whether their companies can keep up with these technological changes, while 44% are concerned about their ability to afford such technology. Most feel that the need to stay on the cutting edge of technology must be balanced against the cost of those software tools and platforms.

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Managers and other stakeholders who want to see their organizations keep up with new technology can use these strategies to start those important conversations:

• Create a clear alignment between the technology in question and your return on investment. Your plant needs that new “connected” piece of machinery explaining the benefits, these can provide real-time alerts and feedback needed to reduce waste, lower costs and improve customer service.
• The investment will increase profitability. According to Newman, advanced algorithms are transforming the way the manufacturing industry collects information, performs skilled jobs, and predicts consumer behavior. "Smart factories with integrated IT systems provide relevant data to both sides of the supply chain more easily, increasing production capacity by 20 percent," she writes. "Digitizing the industry means lower cost of production, faster delivery times and more efficiently meeting customer demand." Combined, these benefits result in a healthier bottom line and better customer retention.
• Involves “champions” from across the company. Building capabilities, adapting processes and IT, and driving the necessary cultural change will take years. Providing clear leadership from your senior management is critical, but equally important is convincing key stakeholders that they will need to support the company. "One way to align champions across the organization is to educate stakeholders early on, for example through technical presentations and visits to innovation hubs," PwC advises.

Metalworking organizations need to invest wisely not just for today, but for the future.