Reality check: from technology to value in Industry 4.0

Can you run your factory from your smartphone? Do you have an army of AI-enabled bots analysing your data and optimising your processes? Do you even want those things?

Discussions about the Fourth Industrial Revolution tend to concentrate on the high-end, visionary solutions that sound similar to science fiction. That’s exciting, but it can be dangerous too. In real-world industrial applications, it’s not the technology you use that counts, it is the results you achieve.

That’s why any conversation about digital, whether internally or with external vendors and service providers, should begin with a clear business goal in mind. Which KPIs are we trying to improve? How much do we want to move the needle? What is that worth to our business.

Take maintenance, for example. That’s familiar ground to us at SKF, since we’ve been offering advice, support and service to our customers on maintenance topics for decades. Once, conversations about maintenance would focus on the activity itself and we’d propose maintenance contracts or consultancy agreements. 

Yet maintenance isn’t really the big issue for most of our customers. They are interested in the outcomes: greater uptime and fewer unplanned stoppages. Today, our conversations with customers are much more likely to be about maximising asset performance and availability for long-term resilience. That leads to different solutions and service offerings, which just happen to take advantage of advanced digital technologies.

Our work with one large pulp and paper company in Sweden, for example, is focused on operational efficiency. To address frequent unplanned stoppages, we installed condition monitoring technology across the company’s plant. Not only has this move to predictive maintenance saved the paper mill several hundred thousands of euros in terms of downtime reduction, but the monitoring system is delivering real-time noise, temperature and vibration data that allow SKF to predict and mitigate future problems. 

Focusing on the actual impact of technology on real KPIs also allows companies to change the business models underlying their products and services. SKF, for example, increasingly shares the risks and benefits of technology investments with our customers. They may pay a monthly subscription fee for remote monitoring technology, for example, along with a periodic bonus which is payable only if agreed service improvement targets are hit.

A case in point is a mining operation where SKF has placed 8,000 sensors on the production lines, monitoring 2,400 critical assets, such as pumps, fans, gearboxes and large rotating grinding mills. A continuous service agreement is in place with the mine owners and as a result of digitalisation, SKF has been able to document that the predictive maintenance measures being carried out are saving the company almost €8 million per year.

As everyday operations increasingly become digitalised, connectivity is also happening at a supply chain level. End users, OEMs and suppliers such as SKF are beginning to work in ever closer partnerships to take out costs, increase efficiencies and add more value. At present, SKF is helping various OEMs work more closely with their own customers by incorporating SKF algorithms into monitoring tools.

Industry 4.0 technologies have evolved at a remarkable rate over the past few years. That evolution will continue, with digital tools and approaches becoming ever cheaper, more flexible and more capable. As that evolution continues, the details of specific technologies are going to matter less and less to end users. People who run factories, or who buy and operate equipment, don’t want to worry about how digitalisation works, they want to know how much it is going to help them meet their business objectives. And increasingly, they’ll want to pay for technology on the basis of the real-world value it delivers.