The digital revolution is knocking at the door

Jeffrey Carbeck is a chemical engineer, materials scientist, entrepreneur and a PhD from the prestigious Massachusetts Institute of Technology (MIT). Acting for Deloitte, he has the responsibility to alert CEOs for the revolution that is there – the so-called Fourth Industrial Revolution. The first was the steam power. The second, mass production. The third, automation. And now? “Internet of Things and machines that perform maintenance by themselves are already a reality” he says. Plants already operate in the dark, non-stop. The emissions of pollutants from the smart industries have dropped dramatically because the waste is minimal. Fed by the response of the digital consumer, adjustments in the products are more agile. In this interview to Mundo Corporativo, Carbeck talks about this reality with no return.

Is the Industry 4.0 a revolution or an evolution?

Strictly speaking, it is an evolution. There are other names for the Industry 4.0 phenomena: “Smart Manufacturing”, “Internet of Things” and “Internet of Everything”. However, there is already a technological convergence sufficient for the combination to be more than an evolution. It is not possible to clearly say that there is a revolution before being overtaken by it. My job is to understand what is happening in the manufacturing and design scenarios outside the factories. My experience shows that CEOs who think that there will be ten years for the revolution to happen are lagging behind. The manufacturing is already three years ahead of them.

The entire manufacturing? Or its forefront?

Different industries have different time cycles. The automotive takes five to seven years from design to factory. The chain between physicians, laboratories and patients is more dynamic. The role of the sector is changing from just treating diseases to providing health. To understand how much an industry found its way to the Industry 4.0, you must analyze how the Internet of Things is transforming it. It is certain that the medical field, for example, is living this revolution.

What pushes companies to Industry 4.0?

Competition and regulation. And survival.

The competition is not between industries, but between chains. What good is an end company to be in the state of the art of Industry 4.0 if its suppliers are late?

There is pressure for suppliers and suppliers’ suppliers to move, and fast, to have systems that are compatible with their customers. Those who hesitate will need to make choices: will I give up of this customer? Will I seek customers who do not need this demand? The tension is immense because evolution is not linear, with all evolving at the same time. However, a few understand that it is not enough to embrace one part of it. Although investments are punctual, the frightening part is that it is not possible to invest in pieces and then put it all together after. It must be a strategy that considers the consequences of decisions, the benefits and risks of what they want to reach.

Which one has more chances? Multinationals or SMEs?

The leading companies get large investments and can justify them since they can measure the return. The new companies do not have commitment to specific operations or infrastructure. It is possible to build a small 4.0 business with a small capital. The companies that end up with difficulties are the medium ones. The medium ones do not have access to capital nor the startups flexibility. One way is to invest together. There is a reason behind for a large part of mergers and acquisitions in companies of this size.

How to reconcile short and long term goals within this concept?

In part, we saw the materialization of 4.0 industrial thought on which only partial gains can be measured. If an expert says to the CEO “I can reduce your energy expenses in such unit by 20% in ‘X’ time”, he can see a direct economic value. The changes may seem to be small, but they are huge when we realize that several of them are being made in different chains worldwide, that the cut costs in a plant requires a vendor to adapt and that the cost cut in a chain causes another to move.

From where should a CEO begin?

Understanding it. They are very concerned about Industry 4.0, but they do not know exactly what it is. My job is to educate them. It is unrealistic to approach a CEO and say: “You need to incorporate the Industry 4.0 mindset; here are the justifications and the economic data showing why. Here is the list of everything that needs to be changed”. It is possible, however, to convince a manager that operations will work better with lower storage cost, for example. That alone requires a lot of new tools and gives measurable results. With that done, we map how other departments can benefit from the same approach. It is a transformation journey.

What can be done to deal with the gaps in training human capital to deal with this reality?

The organizations will provide training because there is a lot of value in it. I believe in the collaboration between private universities and the industry. They will partner and create a new educational organization that will offer on demand training. It will look nothing like the traditional universities and today’s trainings.

Are CEOs aware that the Industry 4.0 is the key to survival?

The majority, yes. They rationalize in two dimensions: the cost/efficiency and human capital. In the short term, they are concerned about reducing the intensity of the capital in manufacturing and increasing efficiency. However, in many industries, the concern is human talent, which is rapidly aging. Today there is no channel capable of coordinating these learning processes at the speed required. Automation and artificial intelligence integrated systems are already causing a crisis to find professionals tailored to specific industries and that are not fit to work in others. It is an increasingly uncomfortable world for CEOs.