The UK’s manufacturing industry produces more than 18% of GDP, The Manufacturer says, but 96% of employees at major manufacturers think they’re not doing enough to embrace new digital technologies.
The UK is playing catch-up: 94% of UK manufacturers say the industry has fallen behind the US through lack of digital investment. And 93% believe underinvestment will lead to many organisations going out of business in the next decade.
The situation is clearly at crisis point. Forward-looking organisations are urgently having these conversations, exploring strategies to embrace Industry 4.0. But this journey doesn’t only involve new technology – there are also major workforce considerations.
HR leaders can play a valuable role, working alongside business leaders to overcome early challenges and reap the rewards of transformation.
Keep reading to explore:
- What is Industry 4.0?
- What are Industry 4.0 technologies?
- How does Industry 4.0 impact employees and talent leaders?
What is Industry 4.0?
Industry 4.0 – also called the Fourth Industrial Revolution, or Industrial Revolution 4.0 – refers to the current phase of evolution happening in industry, which transforms how we produce, manufacture, test and distribute products.
Industrial evolution has followed this loose timeline:
- First industrial revolution: transformation from hand production to mechanised production using water and steam power
- Second industrial revolution: transformation of manufacturing using electricity and mass assembly production
- Third industrial revolution: adoption of limited automation with computers and programmable controls, integrating robots into many parts of production
- Fourth industrial revolution: applying technological advancements like machine learning, AI, Internet of Things (IoT), cloud computing and analytics to create smart, near-autonomous facilities and operations
In essence, Industry 4.0 refers to the myriad ways new technology has evolved to impact manufacturing processes. But what are Industry 4.0 technologies?
What are Industry 4.0 technologies?
According to SAP UK, Industry 4.0 is built on nine main technology pillars, which ‘bridge the physical and digital worlds and make smart and autonomous systems possible’.
- Big data and AI analytics
- Horizontal and vertical integration
- Cloud computing
- Augmented reality
- Industrial Internet of Things
- Additive manufacturing/3D printing
- Autonomous robots
- Simulation/digital twins
SAP also emphasise that organisations and supply chains might use only some of these technologies, but the ‘potential of Industry 4.0 comes to life when they’re used together’.
This sweeping digital transformation can bring huge advantages. For example, IBM UK share some examples of how Industry 4.0 technologies can benefit manufacturing:
- Using IoT devices in smart factories to achieve higher productivity and improved quality
- Replacing manual inspection with AI-powered insights to reduce manufacturing errors and save money and time
- Monitoring manufacturing processes and handling quality control from anywhere through a smartphone connected to the cloud
- Applying machine learning algorithms to detect errors immediately, rather than later when repair and rework is more costly
Integrating Industry 4.0 principles and technologies into manufacturing organisations is powerful because it empowers efficiencies, reduces errors and rework, increases productive output and improves quality.
There’s also, of course, a major workforce consideration.
How Industry 4.0 impacts employees and talent leaders
Industry 4.0 is changing workers’ roles, sometimes dramatically, either through widespread business automation or by introducing new technologies that create new skills needs.
McKinsey’s comprehensive global analysis of 2000 work activities across 800 occupations found that 60% of occupations consist of at least 30% automatable tasks, for instance.
And that’s an average. Within operations-heavy organisations, those figures could be much higher given the type of activities involved. (The processes most viable for automation are ‘tasks that are high volume, recurring, time-sensitive, involve multiple people, need compliance and require audit trails’.)
The upshot is, the employees and skills that manufacturing organisations need are changing, as production facilities and processes evolve.
The Industrial Strategy Council frame this as a ‘skills mismatch’ across the UK, which ‘reflect[s] both a skill shortage and a skill surplus’. The report expands:
‘The spread of automation and AI could boost productivity in some sectors but also displace some lower skilled jobs, while the demand for highly skilled labour will increase, as R&D and innovation become critical in a future tech-led economy’.
This duality has huge ramifications for talent leaders within industrial organisations, as it raises questions across the end-to-end talent lifecycle.
New questions for talent leaders
From strategic workforce planning to talent acquisition; learning and development to HR support: every talent professional faces new questions to help them build, mobilise, engage, develop and retain the right workforce to navigate the fourth industrial revolution.
- What does the future of work look like for our organisation?
- Should our organisational structure change and if so, how?
- Which people and skills are most critical to our success?
- How do we focus on hiring, growing, keeping and elevating those people?
- How can we create development programmes to build the right skills?
- What future skills do we need? Should we hire, develop or contract capability?
- Where can we move, repurpose and retrain talent to avoid job losses?
- Where job losses are unavoidable, how do we handle them fairly and sensitively?
- How can we mitigate the impact of evolving roles on employee engagement?
- How can we mitigate any potential increase in burnout and stress?
People leaders can add value with incisive HR strategies that clarify and answer these questions.
New HR technologies to handle new challenges
We’re also likely to see continued growth in investment into HR technologies, to support HR professionals to meet these new demands. (The global HR technology market is forecast to grow at a CAGR of 6.09% from 2023 to 2030).
- People analytics and workforce intelligence software, for example, provide much-needed visibility to guide evidence-based HR decision-making
- Employee feedback software (a market forecast to grow at a CAGR of 12% to 2029) shines a light on emerging engagement and well-being issues
- Skills assessment and development platforms help HR understand and grow the skills they need for the future
- HR support software frees HR’s time to work on these value-add tasks, rather than providing repetitive, manual support
A bigger-picture perspective on early talent
There are also bigger questions around how we grow, nurture and hire early talent – both at an organisational level and across industry.
Industry associations can play a critical role in attracting talent into the industry as a whole. For example, the global not-for-profit skills body for the energy industry, OPITO, invests heavily into future talent development through their ‘Inspiring the Future’ hub. This is a common story across industry bodies.
At the organisational level, leaders could see value in cultivating early talent attraction and engagement programmes, like outreach with schools and apprenticeships or traineeships. There were 14% more apprenticeships started in 2021/2022 than the year before, for example.
Industry 4.0 demands HR 4.0
Industry 4.0 builds on the communication and IT innovations we saw in Industry 3.0 but change has come so hard and fast that, for many industrial organisations, operations have become almost unrecognisable.
This has some major benefits – namely, increasing productivity, quality, and efficiency. But it also brings major challenges from a workforce perspective, as it creates a skills mismatch that threatens some jobs while transforming others.
Instead of ‘what is industry 4.0?’, perhaps a better question is ‘what is HR 4.0?’. Industry is changing dramatically: people leaders must help the workforce adapt, evolve, and thrive throughout those changes – to help manufacturers evolve for the future.