Economy

Indian firms moving fast on road to Industry 4.0

ksenia kondratieva Mumbai | Updated on February 25, 2019 Published on February 25, 2019

Most of the companies experimenting with digitisation of manufacturing processes are not able to integrate Industry 4.0 technologies at a scale to realise significant economic and financial benefits   -  istock.com/onlyyouqj

Right management mindset and talent are key to go digital

Although India is yet to have a solid footprint on the global map of digital manufacturing transformation, a dozen-odd companies in the country are moving fast in this field, according to the World Economic Forum white-paper released last month in collaboration with McKinsey.

The WEF-McKinsey study has identified 16 “lighthouses” — manufacturing sites across the world — serving as positive examples of adopting digital manufacturing and benefiting from Industry 4.0.

Europe, China ahead

These 16 sites (selected out of 1,000 sites scanned) are mainly spread across Europe and China where five such “lighthouses” were identified.

Although none of 16 lighthouses is located in India, Tata Steel’s IJmuiden plant in the Netherlands was labelled a lighthouse for building up employee skills in the area of advanced analytics.

“I don’t think that India is behind when it comes to digitisation. There are a number of leaders in India moving fast in this field and who could aspire to be joining these 16 lighthouses soon, considering that lighthouses have an advantage of 12-18 months over others,” Michel Van Hoey, Senior Partner in McKinsey's Luxembourg office, told BusinessLine.

Scaling challenge

Most of the companies experimenting with digitisation of manufacturing processes are not able to integrate Industry 4.0 technologies at a scale to realise significant economic and financial benefits of digitisation, McKinsey’s last year’s research revealed.

According to Mumbai-based Rajat Gupta, Senior Partner, McKinsey, only 10-20 per cent of companies undertaking digitisation activities in India – be it projects around automation using robotics or implementing advanced analytics and artificial intelligence to improve quality and productivity – are out of this so-called “pilot purgatory.”

According to Gupta, while in the heavy processing industries such as steel and mining, power, oil and gas and refineries in India “everyone is thinking about digital manufacturing”, just a few companies are actually willing to take the plunge and experiment.

“I’d say there are 10-15 companies in the heavy industries segment that are on the journey towards transformation of their business processes, none of them have completed the journey,” Gupta said.

He, however, believes that in a couple of years, the ratio of successful pilots scaled up to digitisation projects that had a meaningful impact on companies’ bottomline can grow to 70 per cent.

Human capital

Building the right mindset at the top management level and finding the right talent to support digitisation projects are some of the key aspects of succeeding in the digitisation journey, Gupta says. In manufacturing and process industry sectors that operate modern equipment with millions of in-built sensors generating ample amount of data, digitisation projects are rather about human capex than real capex, Gupta added.

The way forward

Experts believe finding the right business opportunity and having a “bottom-line-value backward” rather than technology forward approach, which means solving a business case using technology rather than implementing technology for the sake of it, are some of the most important factors of being able to harvest the benefits of digitisation.

Assembling the right people’s teams, which would include both IT professionals, process people and data analysts, and making them work together as one brain is another challenge underestimated by companies embarking on the digitisation journey.

Published on February 25, 2019
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