Managing Organizational Change
Industry 4.0 is a further evolution of technologies which had continued to impact the manufacturing efficiency in particular from long times back in past till the date. ‘The age of steam’ had moved to ‘the age of electricity’ and ‘the information age’. Now, the recent development is in the form of ‘The Age of Cyber-Physical Systems (CPS)’. The age of CPS is about generating the large-scale data by connecting physical thing with internet on the Internet of Things (IoT) platform (Lee, Bagheri and Kao 2015). A lot is being said about the evolution and the developments; however, academic scholars are claiming that the change is just a logical advancement in the manufacturing process. Therefore, this study is aimed at understanding the fourth industrial revolution and the reasons which are driving the change. This study also aims to highlight how organizations are dealing with the changes.
As stated earlier, the fourth industrial revolution is a transition of the manufacturing process and the services from the 1st, 2nd and 3rd to the 4th industrial revolution which is the age of CPS. According to Lee, Kao and Yang (2014), the age of CPS can be defined as advancement in the existing manufacturing process and services by means of generating the large-scale data through the shared network of physical thing and internet. It means that physical devices can be shared with the internet by embedding into a sensor. Sensors are the programmed chips which can track the data over the shared network.
As opined by Stock and Seliger (2016), the prospects of manufacturing process and services look brighter in the era of Industry 4.0. Firms across the globe, especially in the European countries, are expected to be at maximum benefits provided that the process involved in Industry 4.0 is effectively handled. The changes are happening majorly in the manufacturing process and the supply chain operation. Changes are in the form of 3D printing or Additive Manufacturing, Cloud or IoT Driven Analytics, Demand-Driven Supply Chain and Distributed Manufacturing. Hence, a mass production is expected with the distributed manufacturing and 3D printing. ‘Big Data’ which is an essential part of Industry 4.0 may expectedly reduce the wastes as it promotes a demand-driven supply chain operation.
As argued by Bauer et al. (2015), the automation or the fourth industrial revolution is a result of several factors such as needs for mass production, industry-based competition and the aging population. The whole world especially the European countries face certain issues which have impacted their manufacturing capabilities. The aging population and rising labor costs have been identified as the few reasons for the stated fact. As a consequence of these, constant pressures are building upon manufacturers in terms of employee shortage and operational costs. Hence, the authors suggest these as the reasons for automation as this can bring down the operational costs and become an alternate option to humans. Notably, the manufacturing sector holds a major part of the GDP generation in Europe (Qin, Liu and Grosvenor 2016).
Literature Review
According to Erol et al. (2016), organizations can face an immense change in the manufacturing process from 3D printing. 3D printing enables an ability to deal with complex shapes while consuming relatively less material than traditional manufacturing. Moreover, it speeds up the production rate and lowers down the production cost. The overall impact will be on the entire operational costs. In the opinion of Mosterman and Zander (2016), distributed manufacturing is the future of manufacturing. It ends up the need to switch to global locations for relatively reduced manufacturing costs. It promotes a network where best in the world can work on the single project. Hence, logistic cost and environmental impact of manufacturing will decrease. This will also remove the limitations of locations and cost of full-time employees. Agile manufacturing will be achieved without making investments into permanent facilities. Workloads get distributed across multiple suppliers which consequently reduces the risk of failure. An excess of capacity can also be utilized over the supply chain network. As stated by Zezulka et al. (2016), ‘Big Data’ enables the ability to act according to the demands. Moreover, the supply chain will be more demand driven. According to Rennung, Luminosu and Draghici (2016), IoT enabled network can enhance the analytical capabilities of firms. Maintenance departments, for example, will now have the data showing the exact issue. Hence, real-time information will be generated.
Technology: As opined by Roblek, Meško and Krapež (2016), resource efficiency and sustainability are increasingly becoming a focus of the design for smart factories to support mass production, reduced operational costs and faster delivery to end-users. Smart factories are in existence to support a constant need for agile manufacturing which is a result of rising market competition, unpredictable customer demands and needs for production at competitive pricing.
As opined by Lee, Kao and Yang (2014), society is shifting in terms of nature and form, under the influence of several undeniable factors such as aging population, unpredicted economic state, globalization and more. In a likewise manner, an aging population is an issue in the manufacturing and supply chain sectors. It is relatively a bigger problem for countries which draw a significant part of its total GDP from manufacturing industries. Hence, there are apparently two solutions either calling staffs from various parts of the world or introducing automation into industries. Recruitment & selection is indeed a very complex and time-consuming process which also require a significant spending on the process. On the other hand, automation of manufacturing process is suggestive because it supports an increased work-efficiency and a reduced operational cost. Hence, the issues highlighted by the authors Lee, Kao and Yang (2014) create a platform for introducing the fourth industrial revolution.
Reasons for the Changes
Economic state is unpredictable for its volatile nature. It is so volatile that companies nowadays face the immense pressure to keep up the momentum going in each quarter of a fiscal year. According to Mather III et al. (2013), a volatile economy can impact the manufacturing costs, costs incurred on imports & exports and the product quality. In such circumstances, Companies with higher abilities to remain both cost-effective and quality-oriented will have a competitive advantage. Hence, the key to remaining successful is to be competitive all the time. This is why firms are in a constant hunt for the latest technologies to have the competitive edge. The fourth industrial revolution can really turn things in favor of an increased manufacturing and supply chain efficiency. However, Lee, Kao and Yang (2014) have argued that firms with better ability to communicate over the shared network will enjoy the advantage.
In the opinion of Roblek, Meško and Krapež (2016), the increased globalization of world trade has influenced the competency of industry and the country as well. For example, Germany is constantly losing its manufacturers especially in the automotive industry. An increased labor cost is one of the reasons for manufacturers to relocate their factories (Sommer 2015). As argued by Qin, Liu and Grosvenor (2016), automation of Industries can repair the damages being done by the globalization of world trade. Automation can reduce the dependency on foreign locations for the low labor costs. This will also replace humans with machines that can work faster with more accuracy.
Customer & Market: According to Sheth (2011), the marketing strategy needs to move from a colonial mindset to the global. The size of consumer markets in emerging nations such as China and India has constantly been the point of attraction for multinational firms. The author highlights a fact that there are evident differences in the mindset of people in both emerging and developed nations. Hence, marketing strategies for the Asian people had required the ‘Big Data’, so that, relevance could be attained.
As stated by Sanders, Elangeswaran and Wulfsberg (2016), changing perception of customers for the products’ quality and pricing have forced manufacturers to think out of the traditional manufacturing. Traditional manufacturing had aimed one product as the solution to millions of customers. Now, the changing perception has forced to gather a large-scale of data to offer the relevant products. Consumers are now connected with industries by means of social networks, data analytics and consumer interactions. This generates large-scale data in real-time. Hence, manufacturing can be customized according to the customers’ preferences for both price and quality.
Impact of technologies: As opined by Bauer et al. (2015), industries in developed countries have identified the needs to be technologically advanced. For example, European industrial companies are expected to invest €140 billion annually by 2020. Investments will further the usage of Industrial Internet applications. More than 80% of companies will have their value chain digitized. Productivity and resource efficiency will increase expectedly by 18% in the next five years. However, an appropriate usage of data and an integrated work over the Industrial Internet platform will be the key to success. As argued by Monostori (2014), policymakers and the integrated body of government & organizations have not worked yet on how to improve the communication on the shared network. They should be able to differentiate between a large-scale data to avoid the wastes. Unless and until data is minutely checked, industries will make the least difference in the changed environment.
Prospects for Industry 4.0 are there; however, a very least focus is being given to its feasibility with organizational capabilities. Required skills to respond to the change are not yet analyzed. According to Schuh et al. (2014), managers mostly lack the competent skills required to identify the places to put into automation. There must be a justified balance between the humans and machines. Humans will always remain the integral asset of organizations. Hence, policymakers, the government and organizations must work jointly to identify the managerial skills required to promote and implement the technological advancements.
Impact of Customer & Market: According to Wang and Wang (2016), there have been notable changes in regards to customers’ approach to products. The industry 4.0 is here to make a difference in most of the industrial aspects. The narrative of the past or the age before the CPS was more about the relationship between quantity and quality. Now, it has transformed more into meaning. What customer wants now matters the most. Products and services should be meaningful to their lives. Customers are actually inspiring the process of co-creation and collaboration, so that, they get the specific products and services. Companies in the era of the fourth industrial revolution are asked to play the role of crucial actors, so that, they can help customers on many levels.
According to Gentner (2016), product life cycles have become shorter. Pressures in the form of costs and competition are rising. There is a need to respond on an immediate basis to retain the competitive advantage. Industrial companies have actually reacted to it. The biggest impact of industrial automation is in Germany and Japan. Forecasters suggest that Germany will improve its productivity by 30% in the next ten years to come. The United Kingdom for its rare breed of innovation and engineering can make a good use of Industry 4.0. The country can adopt the Industry 4.0 in & across high numbers of its manufacturing businesses and support an increase in the national productivity.
Conclusion
In summary, market competition, unpredictable consumer behavior and the use of latest technologies have all created the environment for the fourth industrial revolution. The fourth industrial revolution is a solution to many industry challenges such as uncompetitive labor costs, economic instability and increased globalization of world trade. It produces a very new kind of environment where physical things are connected to the internet over the IoT platform. It can really speed up the manufacturing process while keeping the production costs lower. It can also enhance the ability to produce the customer-specific product. However, relevant managerial skills are required to embrace an appropriate use of Industry 4.0. It is necessary to identify the areas to put into automation while keeping the others intervened with the humans.
References
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