The disruption caused by COVID-19 pandemic has shaken every business in the world, however, it would not be too wrong to say that MSME driven labour intensive Indian manufacturing has been shattered the most. It was because of the very nature of the virus which kept people masked and at a distance. However, some positive changes manufacturing leaders have experienced are: collaborative remote-analysis and decision-making, transforming business processes for enhance product flow velocity and manpower productivity, integrating new technology, automating non-value-added routine activities, digitizing operational activities and focusing on periodic health-checks.
MSME wing of Indian manufacturing has been known for its continued contribution to employment generation (high), healthy share (>33%) to manufacturing output and attractive export (> 45%) delivery. The Aatmanirbhar Bharat and Digital India initiatives along with focus on Industry4.0 (I4.0) in the National Manufacturing Policy is expected to provide a booster direction to manufacturing growth which aims to improve its contribution share to GDP from 16% to 25% and create 100 million jobs.
Manufacturing has covered a long journey encompassing Industry1.0 that witnessed mechanization using steam engine, Industry2.0 that created assembly lines utilizing electricity, Industry3.0 that saw IT led automation through computer systems and PLC, and today, we are witnessing I4.0 knocking the growth door of the economy.
I4.0, as commonly understood in manufacturing, create a high-tech digitalized ecosystem for enhanced safety, responsiveness, efficiency, effectiveness and profitability in the factory shop-floor.
Their six key dimensions are: Data capturing and analytics, Digital Technology, Artificial Intelligence (AI), Industrial Internet of Things (IIOT), Talent pool and Cloud computing. Big operational data capturing and analysis is key to decision making in complex manufacturing shop-floors. Digital technology integration is for efficiency and effectiveness through automation, robotics, sensors, AGVs and 3D printing. AI is to provide safety and predict failures from temperature, noise and shape sensing information to prevent shocks and optimize value-adding processes. IIOT connects machines for granular data sharing to factory Heads to see the big-picture and take smart decisions. Today’s Talent pool with virtual leadership characterizes itself with creativity, innovation, problem-solving and designing smart systems. Cloud computing supports the futuristic technology playing with large data and needing accuracy and remote operations.
I4.0 is changing the very face of manufacturing in the world for good. However, Indian manufacturing has the following big challenges in its implementation, needing understanding and solutions:
- Socio-economic pressures of low employment / job-loss when 2/3rd of its population is still young seeking jobs,
- Weak Industry-Academia and Industry-Vocational institute engagement for talent pool generation,
- Less relevant professional course content. Design courses around smart-factory, smart-operation, smart-product, smart-logistics and smart-services in academic institutions,
- Paradox of high-investment when cheap-labour is available. Low financial viability of technological investments in SMEs,
- Low-scale capacities leading to unhealthy economies of scale and barriers to new technology application. Size does matter. An aggressive export orientation plan keeping make in India drive under focus can make I4.0 tick. Inter-dependence led trade policies can accelerate exports,
- Lack of motivation in SME leadership for digital technology. Government and many national industry bodies will have to accelerate incentivized exposure with action-oriented follow-ups,
- Evxxen after a leap in ease of doing business the ecosystem needs a major reform at ground level – transportation and IT infrastructure, land and labour laws, labour skill pool, government clearance systems and legal systems,
- Dearth of application orientated competencies in Data analytics, ML, AI, Robotics, IOT, Cloud computing and Cybersecurity needs a major relook through an action-oriented Industry-Institute-Government partnership route,
- Inherent limitations of AI & technology-based decisions. Indian decisions are often based on common sense, empathy, adaptability, ethics, beliefs and humour,
- Lack of standardization in hardware used in manufacturing floors raises compatibility issues,
- Critical data hacking and other operational cybersecurity related risks.
In summary, Indian manufacturing with large number of MSMEs and looking for job creation, in initial years of post-pandemic period may not find I4.0 attractive. However, next 5-10 years should trigger its smooth transitioning towards smart manufacturing. Government should continue providing attractive platforms for I4.0 integration. Academia (engineering and vocational) should reform their course structure for making it I4.0 relevant, equip teachers with new learnings and modernize their workshops. Industry, the end-customer should engage more productively with academia and government for a better talent pool delivery for their future.
Furthermore, SMEs should start measuring their readiness index to embrace I4.0 and gradually move forward. The six proposed I4.0 strategic journey enablers for SMEs are (i) Academia engagement (ii) Process Mapping, (iii) Business-partner integration, (iv) End-to-end digitization, (v) Data analytics, and (vi) Automation and AI. A periodic enabler progress assessment on a scoring scale of 1-5 and actioning, is recommended. Anything that can be measured will be done.
To observe the impact of the enablers on the business, six measures are proposed: (I) Lead time reduction, (ii) Value-added per person, (iii) New business developed, (iv) Export fraction in business, (v) Customer satisfaction index, and (vi) People productivity.
Dr Ravindra Ojha is a Professor – Operations at Great Lakes Institute of Management Gurgaon.