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Revival post lockdown: Value chain and digital adoption

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By Vivek Saha

Global manufacturing and supply chains are continuing to be impacted by the COVID-19 pandemic. Though a lot of factories and logistics providers are seeking to resume operations, they continue to face labour shortage, procurement and transportation delays and regulatory uncertainties.

In this digital era, there has been overwhelming supply of emerging technologies, digital channels, platforms, etc. But its significance across the industry value chain is becoming more imperative now to raise the bar for adoption. Industry functions are re-thinking their investments as we enter into the new financial year.

Lockdown due to the COVID-19 crisis has imposed new challenges with limited and quality labour availability and emerging compliance norms for health and safety.

Key challenges include:

  • Selection of market with respect to demand and financial crisis situation
  • Reduced workforce and production capacity, uncertainty in supply chain (including international) and sales op planning issues that lead to cash liquidity, stock pile-up vs Production restart
  • Pressure for zero-defect / quality assurance and efficient production
  • For auto industry, BS-VI compliance wef April 01, 2020
  • Lack of preparedness for automation and Industry 4.0/cyber-physical.

Before we jump into technologies under the banner of Industry 4.0, we need to understand the demand-supply well. Demands emanate from industry domain/functions. Head of manufacturing/plant-operations/supply chain, etc of large and SMEs rather than IT that only translates it to technology requirements. Having an Outside-in user-centric approach towards understanding the industry demands is key to seed-in any Industry 4.0 led digital transformation.

It’s imperative that supply side that includes service providers, tech-SMEs and start-ups, is fully aligned with use cases within the industry value chain – R&D, supply chain planning, sourcing and procurement, production scheduling/ manufacturing, distribution/logistics and sales/service, product and industry collaboration.

The demand side expects supply side to have innovative, flexible, economical and interoperable solutions across the value chain. There are overarching needs for security and standardisation.

While Industry 3.0 simply was about the automation of isolated machines, Industry 4.0 concentrates on the end-to-end digitalisation of all physical assets and their integration into digital ecosystems with value chain partners. .Maruti For  instance, Suzuki manages seven process shops and five assembly lines with 1,700 robots.

Applied Industry 4.0 through emerging technologies can bring desired outcomes through end-to-end supply chain visibility and optimisation, material flow optimisation, production scheduling and line optimisation, automation and remote monitoring across production lines, intra-logistics material flow optimisation, servicing and spare parts ordering, etc, thereby uplifting KPIs – higher productivity, lower rejection rates, operational cost reduction, enhanced work safety, higher sales reach, etc.

Post lockdown, it will set a ‘new normal’ in which revival or survival will skew around those who plan ahead applying simple solutions across their value chain. ‘Digital Maturity Index’ or whatever we want to call it, is very important and needed by the industry to understand ‘where are they today’ and ‘where they want to go’ to gain immediate benefits.

Recent Digital Health Assessment to benchmark Indian manufacturing industry across OEMs and component suppliers reflects that highest maturity on digital adoption has been in the area of sales and marketing.

The ‘new normal’ – what it means?

  • Decoupling of supply chains: Managing supply chain risk, accuracy, greater visibility and coordination across the supply chain will enable better collaboration
  • Remote work, collaboration and the ‘virtual shift’: Rapid adoption of remote diagnostic, management and collaboration tools, real time data, AI-based insights the virtual shift
  • Revival of automated domestic manufacturing: Governments would promote domestic manufacturing as part of their plan to build up strategic resilience. Automation and robotics will be key components of the effort to revive domestic manufacturing
  • Data infrastructure as a strategic asset: Accelerated deployment of Industrial IoT, including sensing, data visualisation, remote AI-based insights across their operations, control-tower view of data and insights across the whole manufacturing operation
  • Digitisation as a competitive advantage: Companies who embraced digitisation are seeing seven per cent revenue growth advantage

Industry 4.0 could play a key role in boosting the manufacturing sector’s share in the country’s GDP to 25 per cent by 2022 from the current 17 per cent. That said, for the true value of Industry 4.0 to be unleashed, it has to transcend large manufacturing companies and become accessible to enterprises that make up India’s MSME sector, accounting for about 45 per cent of total manufacturing output and 40 per cent of total export.

(The author is the Director – Digital Transformation & Industry 4.0 , NASSCOM CoE)

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