Extract from View From Asia, fDi magazine, Financial Times, London, Mar 2019

Industrial revolutions now come with fancy buzzwords. Industry 1.0 was the age of mechanisation, 2.0 was mass production, 3.0 was computerisation with automation and now the evolving 4.0 is digitisation in manufacturing enhanced by smart systems, data and machine learning with a key feature being IoT and the Cloud. Much has been written and touted on the benefits, like a non-motorist walking into a sportscar showroom.

Currently, Asia Industry 4.0 theoretically sounds promising. Almost every IT vendor will sell Industry 4.0 without blinking an eye, hollering the arrival of the IT Holy Grail. It’s like a throwback to the 1990’s when early enterprise resource planning (ERP) suites burst onto the scene driven by the Y2K fear and Euro introduction. Blind implementation then wreaked havoc on decentralized smaller companies with different processes, business rules, data semantics, authorization hierarchies, and decision centers. The promised ROI did not surface but unneeded implementation badly impacted smaller companies who were often instructed by their parent company to ‘just do it’.

For larger centralised companies, they often are more suitable and ready to adopt or are already using Industry 4.0’s four new core technologies like advanced production methods, analytics, human-machine interaction as well as computation power with connectivity.

While Asia remains a manufacturing powerhouse, Industry 4.0 will never be relevant nor beneficial for every Asian company. Much depends on their ability to meet their customer needs without Industry 4.0, the cost-benefit analysis of investing in costly Industry 4.0, and whether any planned shift in this digital infrastructural space aligns with their vision, long-term strategy and core competencies.

There’s always the constant temptation to yield to úpgradenitis’ and new toys blindly. Be forewarned. Study your organisation’s production needs carefully with a detailed cost-benefit analysis, implement slowly on a limited area, monitor for a while, and if the promised benefits of productivity or cost savings don’t appear, be like the non-motorist who was persuaded by the car salesman: just return the luxury sportscar if not needed and cut your sunk costs while they remain small. Hard earned retained earnings can be eroded quickly by unnecessarily comprehensive solutions when less comprehensive and cheaper ones are adequate.

Changing technology infrastructure, platforms and fancy new tools do not drive a company’s vision nor competitive strategy. Potential versus pitfalls. Productivity versus pain. Needs versus wants. Be forewarned. Better be a prudent slow adopter than a fast adopter riding a robotic IoT white elephant!

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