Summary
The digital wake-up call is ringing out ever louder across the globe, yet for many small and mediumsized enterprises (SMEs), it has come to represent a call of terror. Industry 4.0 hype has reduced
SMEs to a state of shock. The necessary investments are lacking, as they are believed to be so far away from cyber systems, sensor technology, big data and the cloud.
This article firstly explains why many medium-sized companies currently know little about where to begin with new technological developments. It then goes on to discuss how every single mediumsized
company needs to consistently digitalise their infrastructure and business procedures within their respective clusters of sizes and sectors. In doing so, they can improve how effectively and
efficiently their business runs, as well as making sure they stay connected, as suppliers, for example.
From continuity to disruption
From purchasing to logistics, manufacturing to sales, and even customer relations management; the steps of value-added processes have been steadily digitalised over the past years. After this stage of
technology developing at a relatively steady pace, chances (and risks) are now emerging from unprecedented leaps in the way technology is progressing: affordable sensor technology, the
Internet of Things, creating and storing almost unlimited amounts of data – all of these developments open up possibilities to use autonomous, decentralised intelligence in manufacturing
(industry 4.0), as well as to create newer and smarter products and to share and use data in realtime.
Here’s what this means in more detail:
Smart factory: “liberated” materials and machines will know and be aware of their identity, as well as the meaning and purpose of their existence – from the order being placed through to logistics,
manufacturing all the way to being used by the customer. Machines and component parts can act independently, aiming for the overall optimum turnaround times, machine performance, quality and
individuality of products.
Smart connected products: even products themselves can gain sensor-based intelligence, helping to create new ways of functioning and therefore improving customer benefits. Digital devices and apps
can be used in numerous fields, including communications and entertainment, mechanics and road traffic and even healthcare.
Big data: almost unlimited amounts of data can be acquired in manufacturing processes or from customers using smart products. Theoretically, this opens up new avenues for optimising procedures
and services.
Objections and risk assessment from the point of view of medium-sized companies
Medium-sized companies often have the following objections about this visionary wonderland:
First objection: the principles self-regulatory, efficient production, including the “batch size one” option in smart factories, are important to part of the medium-sized industrial sector with the
appropriate structures and processes. A large majority of the medium-sized sector is represented by craft businesses and small companies, as such craftsmanship belongs to the essence of their business
and contributes to their own special features which lead to their success. A key ingredient in the winning formula to achieve customer loyalty has always been individualisation in manufacturing for a
large part of the so-called “hidden champions” with the status of global market leader in the medium-sized sector. The vision of “batch size 1” is already part of their business model.
Second objection: The expense involved in connecting capital or consumer goods in such a way that data regarding the product’s use and physical state can be acquired still doesn’t mean that customers
are also ready to pay for this additional benefit.
The possibility of deducing pointers to help design new services from user data, as well as that of developing new app-based functionalities, is seen as a chance for the high-tech industry, but not as a possibility for grassroots medium-sized companies.
Third objection: Processing and using large amounts of data, as well as storing it in the cloud is seen as a problem in two respects: for one, datasets must be sorted and analysed with correctly
formulated questions and strategic objectives. Resources are often lacking in medium-sized companies. Daily affairs take precedence. For another, there is considerable anxiety about data being
stolen and misused in the medium-sized sector.
These three examples set out above detailing objections to an industrial world 4.0 must be taken seriously. Provided that conventional business models are profitable, a digital transition in product
development, manufacturing and provision of services comes with considerable risks: expenses are difficult to calculate, and these must be juxtaposed with usage that is even more difficult to predict.
There’s a dangerous time lag between existing (and successful) business models and digital options for the future. I say dangerous, as medium sized-companies may be understandably cautious today,
but this may mean they could miss out on being connected to future technologies in the world of tomorrow. In doing so, they may no longer be compatible with the industry as suppliers, as this
industry is in involved in the digitalisation of its processes and products.
Medium-sized companies have to shake off their state of shock and make digitalisation, as well as options for a philosophy of industry 4.0, top of their strategical agenda. With internal strengths and
external support, they have to find future avenues to suit their business.
Prof. Dr. Wolfgang Krüger:
teacher and researcher in the management section with the focus on staff and organisation
as well as entrepreneurship and company succession at the Fachhochschule des
Mittelstandes (FHM) technical college in Bielefeld and Hannover. Current key issues are
digitalisation and Industry 4.0.
