The Last Word
INNES WILLOX – Chief Executive, Ai Group
Australia’s Industry 4.0 potential Innes Willox, chief executive of the national employer association Ai Group and member of the COVID Commission taskforce on manufacturing, explains how businesses are following the COVID crisis.
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N recent weeks, we have seen greater public and political attention to manufacturing than at any time for a generation, with Industry Minister Karen Andrews outlining a positive vision for strengthening Australian manufacturing and with the COVID Commission Manufacturing Taskforce delivering its final recommendations to government. It will be equally important that we develop our capabilities across other industries, which promotes the strength of diversity in our economy and helps manufacturing secure a local supply chain and demand base. Well before COVID-19, Australian manufacturing was evolving into more advanced modes, requiring very different mindsets, business models, skills and capabilities. These innovative approaches built on digital technologies are often referred to as Industry 4.0 or Smart Manufacturing. In Ai Group’s 2019 Fourth Industrial Revolution report, we highlighted the journey of some businesses, especially manufacturers, transitioning to and within Industry 4.0. There has been substantial progress. But the gap between Industry 4.0 leaders and the majority of businesses is substantial – and this current pandemic has the potential to swing that pendulum either way. Local companies are punching above their weight, doing amazing things with new technology and leading the way for others. Some of these are discussed in our report. Indeed, many SMEs are progressing Industry 4.0 strategies without using this label. Instead, their primary objectives are to implement new approaches to enable them to manage their operations, become more energy efficient, improve productivity, lower costs or meet new demands from customers. On the other hand, others are not yet adopting Industry 4.0 building
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blocks under any label. Now, amidst a pandemic-driven recession, businesses are facing challenges greater than any in living memory. The pandemic has also highlighted broader economic vulnerabilities, raising questions about the scope of our domestic capabilities and resilience of global supply chains. This unstable environment presents an opportunity for industry to emerge more globally competitive by taking fuller advantage of Industry 4.0 and digitalisation. Anecdotal reports suggest that businesses who already had digital transformation projects underway have reprioritised and accelerated their projects to respond to the immediate impact of COVID-19, driven by social distancing and quarantine safety measures. Remote working and online collaboration have become a fundamental operational necessity for many, and previously marketed benefits for productivity, efficiency and worklife balance are being realised. This has led to a significant rise in digital technology uptake and digital literacy skills, including increased use of digital teleconferencing, videoconferencing and collaboration tools, and reliance on digital and communications infrastructure. These are likely to be built on, not abandoned, as the pandemic comes under control. The COVID-19 crisis has also brought out the best of our community, inspiring innovative ideas where manufacturing can provide public value. It has seen local manufacturers and others pivot and collaborate to respond to shortages of vital equipment. Striking the right balance between local production capability and reliance on global markets does not mean insulating Australia from international engagement and competition. One of the major
intrinsic benefits of advanced manufacturing is the increased capacity to export to global markets and integrate with global value and supply chains. In this area, Industry 4.0 technologies and digitalisation can also play a role in building resilience in our global network. For example, there are opportunities to shift from slow and complex manual management of supply chains to a more agile approach and improve whole of supply chain transparency to identify weak links and gaps through increased monitoring of global suppliers. Embracing global standards will be an important success factor in enabling this shift. Technologies such as blockchain, Internet of Things (IoT), 5G, AI and automation have the potential to help address these issues. While just-in-time (JIT) manufacturing has helped increase efficiencies and reduce supply chain costs for manufacturers (especially in high tech industries) in recent decades, COVID-19 has highlighted its vulnerability to sudden shocks and supply shortages. Greater use of 3D-printing (also known as
additive manufacturing) can allow faster response to supply shocks and changing demand. Increased attention to local manufacturing and immediate concerns with human social distancing may also spark a renewed conversation about leveraging deeper into automation, AI and robotics to boost our manufacturing capability and resilience. There are many other relevant technologies and applications with new business use cases continually evolving. These innovations are an important piece for solving the larger puzzle of growing Australia’s manufacturing competitiveness. Other areas for action include building a policy environment that incentivises investment in innovation and R&D; lowering regulatory barriers for manufacturers to compete globally; reforming workplace relations to increase flexibility and productivity; developing the appropriate skills and talent to help businesses innovate and compete; and building global competitive advantage through a successful transition to net zero emissions by 2050.
Many SMEs are progressing Industry 4.0 strategies without using the actual label.
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