The Industry 4.0 Business Model is Agile and Iterative

Eric Davis, Automation Alley
February 24, 2023
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Photo by Andy Beales on Unsplash

Photo by Andy Beales on Unsplash


Industry 4.0 doesn't just call for digital transformation and the adoption of new technology. It calls for a restructuring of the manufacturing business model itself. Building a business with an agile and iterative structure will see more resiliency in times of duress and greater adaptability in times of rapid change.

As we progress through the first quarter of 2023, companies are pressed to find ways to become more resilient. According to the National Federation of Independent Business (NFIB), its January 2023 Small Business Optimism Index was 90.3, below the 49-year average of 98.  

"Owners have a negative outlook on the small business economy but continue to try to fill open positions and return to a full staff to improve productivity," NFIB Chief Economist Bill Dunkelberg explained.  

In times of distress, companies that find the will to innovate can live to fight another day. However, our focus won't be just on product innovation, but using a combination of technology and strong business culture to transform your business model.  

In the short-term, small manufacturers may face many issues, yet let's focus on two: increased competition over skilled labor and a decline in inflation-adjusted (real) sales. A low-cost, Industry 4.0 solution to the former could be using online education courses to upskill current or new workers. For example, Coursera's online platform of manufacturing courses can resolve issues for new hires, like not understanding terminology or the big picture of how tools work.  

After coaching for eight years in high school football, I've learned a practice can go downhill when no one is on the same page. And while it may not resolve all of your issues, it's a small bet that may lead to a breakthrough at your company. That transformation may expand your offerings and customer types, impacting how you do business.  

We see other small businesses taking agile steps towards rectifying the decrease in sales. Engineering and design firms are utilizing unused commercial space to 3D print new and spare parts. Michigan-based manufacturer Metalmite invested in real-time quoting software to drop lead times. Larger companies like Schneider Electric take it one step further with their online platform that allows customers, suppliers, and vendors to collaborate in the same space, reducing lead times and limiting supply chain disruptions. The customer experience is more pleasant and efficient if done effectively in both scenarios. It also requires that all stakeholders provide visibility into their supply chain, a trend that isn't likely to go away anytime soon.

Industry 4.0's ability to change business models also creates new competitors. Suppliers compete with their customers, now using 3D printers to get spare parts. New players are even coming from seemingly unrelated industries. For example, insurance companies are using 3D printers to create spare parts for their customers, reducing the insurance company's liability by extending the life of a machine. Shipping companies like UPS offer small businesses 3D printing services, leveraging its delivery service to produce and ship parts faster than their competition. Companies need to see these market shifts and be flexible enough to adapt.  

Not only is it changing how we make products, but also our approach to making financial decisions. The investment focus of manufacturing and many industries will be less on equipment and space, and more on digital assets and new types of skilled labor. Technology like 3D printing moves more of the skill into the design process, allowing more customization with less need for special equipment and inventory. So as owners look to sell their company, buyers may be reluctant to take on legacy equipment. However, companies may be able to find more buyers and funding opportunities like HEVO has through investment crowdfunding platforms like Wefunder.

There is a lot to tackle now and in the future. However, becoming stagnant in an ever-changing environment will make it overwhelming. Take a step back to see the bigger picture and see what small steps you can take to resolve your revenue, cost, cash flow, or funding needs using Industry 4.0. It may not be the perfect solution, yet it might be the difference between thriving or surviving. Also, a more strategic perspective enables manufacturers to adapt to environmental changes rather than scrambling to meet customer or vendor requirements.

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Eric Davis, Automation Alley
Eric Davis, Automation Alley

Eric Davis is Automation Alley’s Governance Lead and Analyst. In this role, he helps improve collaboration across the various business units of Automation Alley. Davis also manages the Industry 4.0 Readiness Assessment program, which provides in-depth analysis and insight to help small to medium sized businesses understand how Industry 4.0 will impact them in culture, finance, and technology. Davis also manages the investment process for Automation Alley’s pre-seed fund, which supports companies in Automation Alley’s Industry 4.0 Accelerator. Davis has an extensive background in performing due diligence on public and privately-held companies as the Chief Investment Officer of Revalue, an independent Investment Advisory Firm. Davis also implements icube™, a leadership system designed to help companies reduce human friction and build trust to maximize teamwork & profit.

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