Leapfrogging into the future: Plug-and-play industry 4.0 tech is helping MSMEs step-up manufacturing efficiency and grow quickly

The digital-first approach by businesses in the wake of the global health pandemic Covid-19 has seen significant changes in the manufacturing sector in India. While established corporations with new-age production capabilities have been able to drive the digital agenda at a faster pace, India’s micro, small and medium enterprises (MSME) industry continues to play catch-up.

Largely, legacy manufacturing practices and limited access to investments and technical know-how are the biggest impediments to Indian MSMEs leveraging the advantages offered by Industry 4.0 solutions.

Accelerating growth

Playing an imperative role in promoting the socio-economic development of the country, the MSME industry in India accounts for 37.54% of the country’s GDP.

However, to fast-track growth and stay competitive globally, MSMEs in India need to adopt digital technologies at scale by deploying Industry 4.0 solutions. The digital-first approach would further help the MSME industry grow the country’s economy through employment generation, innovation, and exports.

Deploying Industry 4.0 solutions, Indian MSMEs can take the lead in transitioning vertically and integrating manufacturing systems and processes.

According to the management consulting company McKinsey, a more strategic and value-driven digital approach towards manufacturing could see businesses including MSMEs increase production capacity and reduce material losses, improve customer service and delivery lead times, achieve higher employee satisfaction, and reduce business environmental impact.

Manufacturers in the MSME sector can realize significant value from data and analytics, artificial intelligence (AI), and machine learning (ML) in the following areas:

Higher output and improved product quality

Digital tools and automation technologies like generative design help manufacturers create defect-free products, increase raw material efficiency, and reduce wastage.

AI and ML-powered machines can detect minor defects in products leading to precision manufacturing lowering error rates and product failures helping manufacturers lower overall production costs.

Customization at scale

For manufacturers, especially those in the fashion space, customizing garments and accessories at scale is a major challenge. With data-driven machinery powered by the internet of things (IoT), manufacturers can affect customization parameters across production lines.

Digital tools can help manufacturers in the MSME sector meet consumers’ personalization requirements with agility.

Flexible operations and a lean supply chain

Automation can help manufacturers connect supply-chain with a cloud-based infrastructure, and monitor and run flexible production lines remotely.

Higher customer satisfaction

Pivoting to a digital business model organizations can work to enhance consumer satisfaction through reduced manufacturing lead times, quick and timely product launches, and timely communication strategy.

Reduced costs and improved margins with preventive maintenance

IoT systems through connected machines help in identifying bottlenecks in the manufacturing system. AI and ML-powered systems can flag technology issues helping MSMEs take preventive measures and save costs in repair and maintenance, and avoid loss of production days.

Accelerated sustainability goals

Digital transformation driven by AI and automation has an instrumental role in helping manufacturers achieve their sustainable goals by promoting a circular economy and facilitating reuse practices. The deployment of efficient machines leads to reduced environmental impact with lower emissions and reduced waste.

Embarking on digital transformation

MSMEs have a strong business case for transforming their manufacturing practices by leveraging plug-and-play industry 4.0 technology solutions. According to McKinsey, following digital transformation businesses see 30 to 50% reductions in machine downtime, 10-30% increases in throughput, 15-30 improvements in labor productivity, and 85% more accurate forecasting.

As MSMEs embark on their digital transformation journeys by piloting Industry 4.0 solutions they face several challenges in rolling out these solutions across manufacturing plants and geographies. These challenges are related to leadership and employee buy-in and establishing connected IT infrastructure across production lines.

Consulting firm McKinsey recommends that businesses address the following barriers to get their plug-and-play industry 4.0 technology rollout right and maximize return on investment on digital investments.

Siloed implementation: Many businesses fail to succeed with their digital transformation journey beyond pilot projects due to siloed implementation. Often the strategy is decoupled from company leaders, site operations, manufacturing excellence, and central IT teams. Leadership’s focus on merely replicating a single site experience results in their failure to acknowledge wider network complexities and design customized solutions.

Failure to appreciate geographical and cultural diversity: Every geography, manufacturing plant, and employee is different and unique. A one-size-fits-all approach can be ineffective and fail to deliver desired results. Leadership needs to take the lead in understanding the complexities and challenges represented by each factory site.

Struggle with leadership buy-in: Leaders’ failure to present a clear business case for digital transformation to key stakeholders creates challenges in target setting and goal accomplishments. Close engagement is key to motivating site leaders and encouraging them to get the project execution right.

It is essential for MSMEs & fashion brands to move forward with the digital agenda by developing a technology platform that is agile and responsive to changing business needs.

Getting their plug-and-play industry 4.0 tech strategy right by putting together systems and processes that are responsive and scalable can help Indian MSMEs lead global markets.

(The author is Mr. Jamil Ahmad, Co-Founder & CBO, Fashinza and the views expressed in this article are his own)