Industry 4.0—also known as the Fourth Industrial Revolution or “smart manufacturing”— refers to the digital transformation of the manufacturing field, including the integration of technologies such as artificial intelligence, Internet of Things (IoT), cloud computing and analytics, and machine learning (IBM). While large manufacturers have access to the funding and resources required to embrace Innovation 4.0 fully, small and medium-sized businesses may find it more difficult to adopt the latest technologies due to funding and staffing restraints, among other concerns. However, there are ways that small and medium-sized manufacturers can integrate elements of smart manufacturing without breaking the bank.
Challenges
- Funding and resources: Many of the technologies included under Industry 4.0 require significant initial investment, something that may be unrealistic for smaller manufacturing firms. Current economic uncertainty and rising production costs add to financial concerns for smaller companies.
- Staffing issues: Small and medium-sized businesses often lack the specialized staff needed to operate the new technologies. As a study entitled “Industry 4.0 – opportunities and challenges for SMEs in the North Sea Region” points out, “there is a shortage or lack of proper access to people with the right skills and at the level of systematic engagement with the skills education/ training that could sustain these fast-moving changes.”
- Security concerns: Many companies worry about the cybersecurity risks involved in adopting Industry 4.0 technologies, and the costs and resources required to manage these risks. Smaller companies tend to have limited resources to dedicate to cybersecurity measures.
Solutions
- Start small: Many sources indicate you don’t have to start with a major overhaul that disrupts operations; progress can be made in phases and by doing more with the equipment you already have. Smart manufacturing solutions are scalable and can be added gradually to a company’s tech stack. Platforms can be expanded and developed over time as your company’s budget allows.
- Focus on low-cost technologies first: Consider how AI and machine learning can address pain points in your business. Try using free AI programs to help you with a variety of everyday tasks, from marketing to scheduling, tracking receipts for expense reporting, and more. And, if you can, take advantage of AI enhancements to your current systems, equipment, and operations. The Manufacturing & Technology Enterprise Center (MTEC) in a 2023 article discussed several lower-cost automation options for small manufacturers, including: collaborative robots (more affordable than industrial robots), programmable logic controllers (PLCs), automated conveyor systems, automated guided vehicles (AGVs), automated packing machines, and other technologies.
- Collaborate: Small manufacturing firms can partner with larger, well-established institutions to make smart manufacturing more attainable. An article published by RIT’s Golisano Institute for Sustainability spotlights one small business in Ontario, NY, that uses collaboration as a strategy to support its Industry 4.0 initiatives. The company, OptiPro, partners with government agencies and research universities to access funding and conduct research related to new technologies. Businesses can also gain access to valuable expertise through these partnerships.
- Focus on employee training: To adopt Industry 4.0, you will need to prioritize training your employees on new technologies. Upskilling and reskilling your existing staff is generally the most cost-effective solution to the skills gap problem.
- Implement affordable cybersecurity measures: net discusses several low-cost strategies for improving cybersecurity, including implementing password policies, multi-factor authentication, mandatory cybersecurity training for employees, and utilizing affordable external resources (listed here).
Small and medium-sized manufacturers don’t have to be left behind in the race to Industry 4.0. While you focus on integrating the latest technologies into your business model, you can rely on RBT CPAs for all of your accounting, tax, audit, and advisory needs. Contact us today to learn more.