Manufacturing ERP Software
Getting Started on Industry 4.0 – Step 1: Conduct a Self-Assessment

Getting Started on Industry 4.0 – Step 1: Conduct a Self-Assessment

By Scott Phillips

This post is the first of three in a series dedicated to helping small and medium manufacturers (SMMs) get started on their Industry 4.0 journeys. In this post, I will focus on the task of conducting a self-assessment. In the second post, I will explain how to identify organizational constraints, and in the third, I will demonstrate a method for building your own Smart Manufacturing Roadmap.

When working with SMMs, I am often asked these three questions about Industry 4.0:

  1. What is it?
  2. Why should I care?
  3. Where should I start?

Regarding the first two questions, many SMMs are beginning to educate themselves by attending webinars, industry trade shows, or local association events. For a quick primer on the first two questions, you can check out this blog post: Key Questions to Start Your Manufacturing Journey. This assessment process will also be very helpful for any SMMs that are in the process of considering or choosing an ERP business system.

Get started with a “Smart Manufacturing Roadmap”

The biggest challenge facing many manufacturers in the assessment process is getting started. I always recommend beginning by building your own “Smart Manufacturing Roadmap” (SMR). Building and taking ownership of your own SMR will provide your organization the guardrails it needs to keep on track over a multi-year journey. It will also prevent your organization from being “sold” solutions or building your Industry 4.0 capability in a piecemeal fashion.

When building your SMR, the first step is to understand your current state of readiness and how your organizational capabilities compare to benchmarks or peer groups. A readiness assessment is also useful for prioritization of alternative investments in different aspects of your business. This is important since all organizations have limited financial resources and human bandwidth. The SMR will help to highlight trade-offs and provide a set of requirements to be factored into future investments in information technology (e.g., ERP), lean process training, factory floor automation, and organizational development.

Choose an Industry 4.0 readiness assessment tool

There are a number of Industry 4.0 readiness assessment tools that have been developed over the past few years by government organizations, consultants, and industry associations. One of the best assessment tools I have come across is the Smart Industry Readiness Index©1 developed by the Singapore Economic Development Board, in partnership with TUV SUD. I believe this framework of three building blocks, eight pillars, and sixteen dimensions is both comprehensive and applicable to all industrial organizations, particularly manufacturers. Read an overview of the readiness index and download a copy for your use.1

Conduct your assessment

Connected Factory Global has used this tool with several assessments, and it always generates great discussion, which results in organizational alignment. My recommendation is that you choose at least three people to independently score your Smart Industry Readiness Index assessment for your organization. Some sections will be more relevant to the HR leader, finance leader, head of operations, or head of engineering, but this is not a concern. Each independent scorer should assess both the current state and future state for each of the sixteen dimensions in the index. An easy way to do this is to print out and make copies of pages 23 through 38 for each assessment scorer on your team.

Next, for each dimension, draw a circle around the band (0–5) which best represents your current state on this dimension. Label that circle “CS” for current state. Then draw a circle around the band (0–5) which best represents your future state on this dimension. Label that circle “FS” for future state. Generally speaking, there will often be a gap of three to four bands between CS and FS.

The last step is to write a number down at the top of the page for each dimension. This number will represent the relative importance of each dimension as it relates to your organization’s ability to achieve your short- and long-term goals. Use the following scale:

  1. Low importance – “we’ll get to it when we can”
  2. Moderate importance – “important to long term success”
  3. Critical importance – “essential to short-term survival”

I highly recommend that you force rank these dimensions in terms of importance by having an equal amount of ones, twos, and threes. This will help you prioritize your action plans and resources for later steps as you build the Smart Manufacturing Roadmap.

1The Singapore Smart Industry Readiness Index, March 22, 2018, www.edb.gov.sg. All trademarks and copyrights are the property of their respective owners.

Scott Phillips

About the author

Scott Phillips is the founder of Connected Factory Global (CFG), a research and consulting firm that helps manufacturers develop Smart Manufacturing Roadmaps to drive their future competitiveness. Scott is a veteran of product innovation, business development, marketing strategy and entrepreneurship. He has experience across many industries and has held leadership positions with Whirlpool Corporation, Fortune Brands and Burger King Corporation. Scott received his M.B.A. from Wayne State University and his B.A. from Michigan State University.

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