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Industry 4.0, which has democratised manufacturers’ access to advanced technologies, is paving the way for the rise of smart factories underpinned by real-time cyber-physical systems that monitor processes and communicate with internal stakeholders across the value chain.

By Anneliese Schulz, VP, Asia, Software AG.

Asia’s manufacturing industry, in particular, is seen to plunge into smart factory adoption, as diverse customer demands drive manufacturers to shift from the traditional mass production paradigm to a mass customisation approach that leverages digital transformation.

According to a 2018 study by PwC, Asia Pacific manufacturing companies are leading the way in the digitisation and end-to-end integration of their operations. Asian manufacturers were found to have introduced digital products and services and connected new technologies across their organisations at a faster rate than that of companies in other regions. Based on PwC’s study, 32 percent of Asian companies plan to implement mature digital ecosystems in the next five years, compared to 24 percent and 15 percent in the Americas and Europe, the Middle East and Africa (EMEA), respectively.

While automotive and electronics manufacturers are at the forefront of digitisation according to PwC, textile manufacturers are likewise embracing digital transformation and displaying Industry 4.0 leadership. What was once one of the oldest trades in Asia has now become an industry receptive to deploying technologies such as the Internet of Things (IoT), predictive analytics, machine learning and artificial intelligence (AI) to keep up with the increasingly digital world.

Asian textile manufacturers’ digital transformation journey, however, is laden with several roadblocks. In an industry that is built upon the finer details, textile manufacturers are plagued with two main challenges: achieving operational efficiency and integrating technologies across the various parts of the business.

Achieving Operational Efficiency

As a top priority for manufacturing companies, operational efficiency should remain the core of the textile business. Any textile manufacturer needs to focus on producing quality products cost-efficiently and fast – in other words, making manufacturing faster, better and cheaper.

Pacific Textiles, a leading manufacturer of customised knitted fabric, is an example of a textile industry player that wanted to streamline operations, support international expansion and their overarching growth plan, and become an Industry 4.0 front-runner through digital transformation.

However, the manufacturer was largely bogged down by a basic mainframe-based legacy system that not only lacked agility, but also failed to provide an end-to-end view of all processes, which simply caused disconnection and fragmentation across the organisation’s multiple systems. Consequently, synchronising business activities across functions – from sales, engineering, planning and procurement to manufacturing execution, warehousing, quality control, cost controlling, and finance – has become a mounting challenge.

Modernising Legacy IT Environments

Pacific Textiles’ first attempt to modernise their legacy IT environment involved implementing enterprise resource planning (ERP) software solutions to streamline operations. However, the implementation of ERP has led to integration challenges, which simply caused to-be processes to be disconnected further from each other.

Today, majority of manufacturers still continue to grapple with legacy ERP systems that are not well-integrated, cost-effective, or user-friendly. More worryingly, these systems generate large amounts of unstructured data and are unable to meet the complex needs of digital transformation, leading to ‘digital deadlock’.

Modernising the legacy IT environment is the only solution for manufacturers to break away from their ‘digitally stuck’ state and increase operational efficiency. Take for instance the case of Pacific Textiles, which eventually took a platform approach to digital transformation. Since modernising their legacy IT environment, the company has been able to address integration challenges associated with legacy systems and deploy technologies such IoT, machine learning, AI and big data that are able to work together seamlessly in less time.

Industrial IoT And Smart Manufacturing

Digitising and integrating end-to-end business processes is pivotal in driving the manufacturing industry’s industrial innovation. The next step for manufacturers, then, is to look at how they can continue to disrupt and change the manufacturing process, potentially leveraging industrial IoT, which is increasingly seen as a core Industry 4.0 component in smart factories across the globe.

A study by IDC has found that IoT spending in Asia Pacific will exceed US$500 billion, accounting for almost half (47.9 percent) of global spending (US$1.13 trillion) by 2021, with the manufacturing industry identified as one of the top three spenders. Manufacturing companies are now embedding old and new machinery with sensors, switches, and intelligent controls to improve the efficiency and productivity of manufacturing operations, resulting to smarter factories.

Sensors, for instance, play an integral role in a factory’s maintenance plan and operational efficiency through predictive maintenance. Through real-time machine monitoring and continuous analysis of real-time equipment sensor data, companies are able to precisely determine when maintenance will be required, as well as intercept possible failures and provide immediate fixes to avoid downtime. According to a report by Accenture, the ability to predict when a machine needs servicing could reduce overall maintenance costs by about 30 percent, and potentially lead to nearly 70 percent fewer breakdowns.

Putting People At The Centre Of Digital Transformation

The digital transformation journey does not end with modernising legacy IT environments and embracing Industry 4.0 through the adoption of technologies such as IoT. While this is undoubtedly a step in the right direction, manufacturing companies should also factor in efficient change management, which can help prepare employees for their organisations’ digital transformation roadmap.

At the end of the day, business leaders need to realise that change management and digital transformation are not mutually inclusive initiatives. C-suite level executives must take it upon themselves to lead by example and inspire employees across all levels to embrace digital transformation without compromise through helping them successfully adopt and realise changes and transitions across the organisation.

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