Is Indonesia ready for industry 4 0

Industry 4.0 has not yet arrived in medium-sized companies - are medium-sized companies oversleeping the new era?

Thanks to many new digital technologies, the technical framework conditions and possibilities have made a huge leap in development in recent years. Digitization has become a hype that affects and permeates all areas of life.

Industry has now also been caught up in the megatrend, and hardly any company can now avoid dealing with the topics of digitization, in particular Industry 4.0 and the “Industrial Internet of Things”. As a result, the entire value chain in industry, trade and administration is being scrutinized: Far-reaching transformations are forecast in almost all industrial sectors over the next few years.

Brief overview of the content

Industry 4.0 - too big a challenge? 
The challenges of digitization and Industry 4.0 are omnipresent and on everyone's lips, but the solutions and answers presented have so far sometimes been sobering. In discussions and presentations, the same technical “buzzwords” of digitization are listed over and over again. In addition, competitors are brought into the field who react faster, more agile and more successfully to the challenges and the "omnipresent threat" - of being left behind by the competition. There is talk of an "unstoppable process", which one or the other may almost give up due to the listed successes of the competition and the question of how one can keep up with the pace of progress at all.

How do you deal with Industry 4.0?
So it's no wonder that in many German medium-sized companies there is a predominance of uncertainty as to how the issue should be dealt with and that little initiative has been identified in this regard so far. Where should the impulses for the digital solution come from? Is Industry 4.0 just a passing hype? Or has the train already left, have you been left behind? In view of the powerful Californian pioneers of digitization (Amazon, Facebook / WhatsApp, Uber, Apple, Google, ...) quite understandable questions. But how do you deal with these questions? What is really relevant for your own company? Is digitization a threat to your own company or is it more of an opportunity for innovative, digital business models?

Demand and reality - the drivers of digitization
In a survey carried out at the end of 2015, the Federal Ministry for Economic Affairs and Energy identified the most important drivers of digitization. In addition to digital sales and information channels, increasing efficiency and quality is assigned the greatest role. This finding is not really surprising. But as a result, the industry is linked with digital information and communication technology. Industry 4.0 is fundamentally changing the way industrial production works. The information page "Plattform Industrie 4.0" describes the demand for Industrie 4.0 formulated by the federal government as follows:

“This can create intelligent value chains that also include all phases of the product's life cycle - from the idea of ​​a product through development, production, use and maintenance to recycling. In this way, on the one hand, customer wishes can be taken into account, from the product idea to recycling, including the associated services. This is why it is easier for companies than before to produce customized products according to individual customer requirements. The individual production and maintenance of the products could become the new standard.

Overall, the profitability of production can be increased, the competitiveness of industry in Germany strengthened and the flexibility of production increased. " (PLATFORM INDUSTRY 4.0, 2017)

In addition, there is talk of reducing costs despite individual production, optimizing the entire value chain and largely self-organized production thanks to intelligent, digitally networked systems. “People, machines, systems, logistics and products communicate and cooperate directly with one another in Industry 4.0. Production and logistics processes between companies in the same production process are intelligently interlinked to make production even more efficient and flexible. " (PLATFORM INDUSTRY 4.0, 2017)

So far, little progress for manufacturing companies
But does reality coincide with the claim? Launched about six years ago as an initiative for German medium-sized companies, Industry 4.0 is currently being driven primarily by factory equipment suppliers and research - after all, they are the biggest beneficiaries at this point in time. In practice, however, little significant progress has been made in manufacturing and production companies. Although numerous products are already labeled with the “Industry 4.0” label at trade fairs, the focus is usually on increasing the efficiency of production processes.

One insight can therefore already be derived from this:

-> There is no such thing as ONE Industry 4.0. Rather, different technologies and solutions will prevail in many industries and companies, depending on the product complexity, the degree of automation, the production technology and many other factors.

Technology as the main driver of digitization
However, the real, comprehensive driving force behind digitization is not industry: It is the rapid technological development, the ubiquitous networking and collection of data and also the consumers themselves. Four major trends are penetrating almost every area of ​​our society with all their might: Digitization , Mobility, networking and analytics. Young people grow up with these technologies and go into professional life with corresponding demands. And digital technologies will certainly no longer disappear, but on the contrary will have a lasting effect on and change our lives, both privately and professionally. At the same time, however, many companies are still far behind the given technological possibilities. Also and precisely because of this technological gap, digitalization is said to have enormous potential. The optimization of processes, structures and business models with modern digital technologies promises a significant improvement in added value.

Even if the practical implementation of Industry 4.0 will have different forms, experts agree that companies - similar to previous industrial revolutions - will quickly be pushed out of the market if they fail to recognize and ignore the need for progress in terms of digitization.

-> It will be crucial for companies to establish a profitable position in the increasing data-based business models.

The new groundbreaking business models are always created through a novel combination of digital technologies, which in turn results in many new, previously unknown business opportunities.

What are the pioneers of digitization doing differently?
But what is the recipe for success of the great American pioneers Apple & Co. in digitization? The striking commonality is that they are based on a horizontal way of thinking, i.e. develop their business models from the customer's point of view. The companies do not fight for market share with products, but with a new, comprehensive concept. Airbnb, Uber or Tesla are ideal examples of this. The German middle class, on the other hand, is still too much in love with details and especially technology. While American companies often think globally and across industry boundaries and react agilely to customer requirements, the focus of innovations in German medium-sized companies is mostly on the technical level. The product and the features are improved and perfected. And this is also the reason why Industry 4.0 has not yet arrived in German medium-sized companies: The companies simply see no sense and no added value in adapting their own processes. Due to progress, however, the products offered on the market are becoming more and more similar, and technical differences can hardly be discerned.

Tesla stirs up the automotive industry
The best example here is actually the automotive industry. While the majority of German automobile manufacturers seem to be “screwing” on less advanced details and optimizations, Tesla is completely shaking up the market and converting the classic car into a service that can be configured using software. On the one hand, the future is planned with long-term concepts and strategy-finding processes, while Tesla orders massive numbers of cars that have yet to be produced and whose technical software features have yet to be developed.

Progressive companies generate new markets
The focus in German medium-sized companies lies in the technical optimization of the product, in the implementation of complex interfaces, but the really progressive companies generate whole new markets. While most companies are asking, "How do I get this working?", Innovative companies are asking, "What business can I do with this?" In short, digitization or Industry 4.0 is still approached in a way that is far too technical and too nationally limited. However, Industry 4.0 takes a more comprehensive approach: business models are to be optimized and reinvented.

 -> This change of perspective is seen by many experts as inevitable for German medium-sized companies in order to be able to remain competitive in the long term. It is not (only) about the optimization of products and processes, but of entire business models. The strong technical focus of many German companies has to give way to thinking from the perspective of society and the perspective of the company, the market. After all, unlike in previous industrial revolutions, society is a key active driver.

Digitization swallows old business models - flexibility is the focus
Digitization is changing companies, changing medium-sized companies and changing entire business models. At the moment, nobody can fully estimate what the digital future will actually look like. However, companies must be aware that the digital transformation is inevitable; there can no longer be talk of "wanting", but rather of "having to". Companies have to ensure that their business model and thus their company is not swallowed up by digitization. The future reality will probably not be black and white, but will be far more complex. Probably the truth will turn out differently for every company and every industry, the digital development will perhaps take place contrary and asynchronously, a decision without an alternative for one way or the other may not be absolutely necessary.

-> It will be crucial to consciously deal with technological developments and to ask the right questions for your own company in all different forecasts and to draw the logical conclusions from them. Due to the rapid progress and the associated uncertainty, companies will be forced to be more and more flexible.

Why ERP systems are the basis for digitization
Digitization without technology or without IT is not possible. Therefore, the IT in every company should go along with digitization and thus enable new business models and optimization of processes and structures. In many companies, ERP systems are the central core of IT. You control all applications and processes across the board. Of all sectors, the manufacturing industry will benefit most from smart networking: Operational processes will be optimized, costs will be saved and systems will be better utilized.

But with digitization, the demands on the ERP system also increase. The speed and dynamics of the digital transformation demand a high degree of flexibility from the ERP solution used. Modern ERP systems are the prerequisite for companies to gain added value from the digital networking of products and machines and thus to develop the full potential of digitization. Instead of monolithic mega-suites, agile, adaptable application landscapes are required into which new systems and technologies can be flexibly integrated. A complex challenge that will determine the success of the digital transformation. 

Ready for digitization with abas ERP
abas ERP accompanies companies in digitization - as a flexible, agile platform that supports companies in topics such as big data, the Internet of Things or internationalization and manages the balancing act between "state of the art" and low operating costs. Abas ERP is also flexible with regard to the growing demands on scaling, e.g. with regard to new branches, supply chains or partner networks.

But new ERP software alone does not increase sales and profits, nor does it automatically make companies more competitive. Lean, smooth and flexible processes, on the other hand, can do it - and the untapped potential that lies in process optimization is gigantic! abas BPM enables the simple optimization of processes: operational processes are modeled with the help of a user-friendly editor on the digital drawing board, without the need for programming knowledge. New workflows and processes are rolled out at the push of a button and integrated into the users' dashboards.

Communication between smart workpieces and machines leads to a rapid increase in the volume of data and a wide variety of partners must be networked via a common technological platform. This is where the cloud comes into play as a future-proof infrastructure for Industry 4.0. Therefore, abas offers the possibility to choose between traditional on-premise solution, cloud computing or hybrid solution.

Sources: Paul Samulat (2017): The digitization of the world; PLATFORM INDUSTRY 4.0 (2017)