Without access to appropriate and sustainable third-party finance, manufacturers face a challenge to make the digital transformation needed to remain competitive
Siemens Financial Services (SFS) has released a new research paper that investigates the key challenges facing manufacturers across the globe as they move to implement Industry 4.0.
A digitalised, automated, Industry 4.0 world offers the ability to digitally link people, machinery and systems. For manufacturers, this provides a number of benefits such as improved efficiency, pre-emptive maintenance to improve uptime and closer collaboration as a result of digital data flows.
Implementing an Industry 4.0 model, however, is likely to be achieved in a series of steps, rather than a wholesale and sudden change. SFS interviewed manufacturers and expert management consultants to understand the hurdles associated with the transition.
Of the six key challenges identified in the paper, manufacturers ranked the issue of developing digital skills and access to finance for the scale of investment – as the two most important issues they face.
The following four key challenges — in order of importance — comprise creating a culture of collaboration, overcoming data and cyber security concerns, gaining comprehensive access to a broad enough volume and range of proof points and specialised strategic management capabilities to create a clear, phased plan to achieve Industry 4.0.
Building a practical plan for Industry 4.0 cannot be reduced to a single, simplistic formula; each company’s circumstances are different. Nevertheless, respondents agreed that a robust methodology is essential for building a sustainable plan for digitalisation and automation.
The consensus methodology emerging from this study covers six key inter-related areas: assessing obstacles; evaluating opportunities; measuring efficiencies; recruiting and training talent; developing digital management; and integrating strategic finance.
Respondents repositioned finance as an early consideration in building a practical plan for Industry 4.0. Considering financing possibilities as a first step in plan-building serves to open the range of technology investment options available as part of strategy development in the quest for Industry 4.0.
Specialist financiers have developed a set of financing tools – Finance 4.0 — that enable the transition to new-generation digital technology in a way that is affordable, sustainable and is designed to alleviate the manufacturer’s cash flow and working capital pressures.
The paper explores these specialist financing methods, including pay-to-access/use equipment and technology finance, technology upgrade and update, software finance, pay for outcomes, transition finance and working capital solutions.
“Considering financing possibilities early on and in the very first stages of strategy and plan development will give manufacturers a wider range of options when managing the acquisition of new-generation digital technology,” comments Brian Foster, Head of Industry Finance at Siemens Financial Services in the UK.
“But only specialist financiers have the understanding of Industry 4.0 technology, and how it is implemented, to enable investment while alleviating manufacturers’ cash flow and working capital pressures.”
The research has been launched as part of Siemens Finance Week. Siemens Finance Week 2018 provides a discussion platform and seeks to demonstrate how financing solutions can help businesses to meet current and future challenges.