It is really promising to see the Q1 results from the EEF/BDO Manufacturers Outlook 2018 report highlight how ambitious UK manufacturers are defying Brexit uncertainties and continuing to invest in the future of their businesses. Hopefully, some of this uptick in investment also reflects a move towards more automation and increasing use of the concepts of 4IR.
There is a lot of buzz about what the ‘next industrial revolution’ looks like and the potential it holds, but the journey looks different for every organisation, and so may the end destination.
For mid-market firms – the heart and soul of the UK manufacturing industry – revolutionary digitisation can feel aspirational, not inspirational. Cutting-edge technologies like artificial intelligence, robotic process automation or in-line 3D printing might seem like distant dreams for manufacturers that are still focused on migrating to the cloud or just dipping their toes into shop-floor automation.
However, stagnation is a death knell in today’s manufacturing environment. Technology, competition and shifting consumer expectations have changed the game, and mid-market manufacturers can’t afford to sit back and watch how it’s going to play out. Manufacturers in China and India are investing in automation and innovation to better compete on a global scale and cater to growing customer demand for speed, convenience and customisation. And Germany – where the term “Industrie 4.0” originated – has possibly leapfrogged the UK in manufacturing innovation.
Mid-market manufacturers are in a good position to take advantage of the changes that 4IR is introducing. As established businesses, with strong track records and plans for the future – this should mean more funding and resources for innovation (and more room for smart risk-taking); less bureaucracy and red tape than their larger, FTSE counterparts means more flexibility, collaboration and faster decision-making.
But the UK manufacturing mid-market is far from one big homogeneous group; it represents a wide spectrum of manufacturing capabilities deployed in different ways with different priorities and varying levels of technology and supply chain complexity. The keys to success are:
- Establishing a clear, shared vision of the future 4IR value chain environment of your industry and your company in that industry; and
- Developing a tailored, prioritised action plan designed to boost momentum and continued progress. A plan that establishes the right starting point based on a realistic assessment of where you are right now will be critical.
While every organisation has a different implementation trajectory, real and meaningful progress is possible for them all. For some manufacturers, the 4IR journey might be evolutionary instead of revolutionary — and that’s okay. Small, incremental innovations add up over time, and as long as these “incrovations” are aligned with the overarching 4IR vision, what is evolutionary today may be revolutionary when you look back five years from now.
However, manufacturers need stability and certainty in government policy if they are to commit to significant capital investments in 4IR technology and skills. Therefore, it is critical that the Government creates a long-term industrial strategy that avoids the disruptions of the political cycle.
Read more in our BDO US report The Middle Market Manufacturer’s Roadmap to Industry 4.0.
Tom Lawton is Partner and National Head of Manufacturing at BDO.
*Image Source: Liberty Steel 2, taken by Steve Morgan at Liberty Speciality Steels in Stocksbridge, shortlisted in the Professional category of the EEF Photography Competition 2017.