Pierre-Olivier Bedard-Maltais - Industry 4.0: are Canadian SMEs ready for the new industrial revolution?
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20-21 February 2018, Mexico City: Workshop on building business linkages that boost SME productivity. http://www.oecd.org/cfe/smes/workshop-on-building-business-linkages-that-boost-SME-productivity.htm
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Pierre-Olivier Bedard-Maltais - Industry 4.0: are Canadian SMEs ready for the new industrial revolution?
- 1. Industry 4.0: Are Canadian SMEs ready for the new industrial revolution? Pierre-Olivier Bédard-Maltais, Economist, BDC February 20, 2018
- 2. Industry 4.0 2 Industrial revolutions over the ages
- 3. 3 39%Of Canadian small and mid-sized manufacturers have implemented Industry 4.0 projects. Manufacturers are in the early stages of digital adoption. A good start
- 4. Industry 4.0 4 Industry 4.0 adoption rates vary by industry sector Industrial goods 43% Materials 40% Food and Beverage 28% Consumer products 32% Customizable products 46%
- 5. Industry 4.0 5 60% 50% 42% Manufacturers who adopted Industry 4.0 saw real benefits Boosted their productivity Reduced operating costs Improved overall product quality
- 6. Industry 4.0 6 A brighter outlook Digital adopters have better growth forecasts than non-adopters Companies who predict annual revenue growth of 10% or more over the next three years 29% 16% Non-adoptersAdopters
- 7. Challenges in implementing Industry 4.0 Barriers mentioned by respondents Advanced understanding of digital issues Generic responses, applicable to any major manufacturing project Lack of expertise Challenges identified by SMEs reflect their low actual exposure to digitization. 39 36 32 30 24 22 17 11 10 8 6 Difficulty knowing where to start Data integration Cybersecurity Meaningful data analysis Financing Technology’s complexity Unclear return on investment Other Excessive costs Lack of qualified employees Employees’ resistance to change Underlying needs Awareness Financing Specialized support Support in the process
- 8. Identify best areas of opportunity Suggest solutions for action Recommend experts to help with implementation Getting started in Industry 4.0 How BDC helps entrepreneurs Scale up fastBuild the strategy Start small, but think big 1 2 3 How BDC can help
- 10. 10 Benchmark your performance on 5 levels Overall level of efficiency Revenue per employee Profit per employee Labour productivity Capital productivity 1 2 3 4 5
- 11. Industry 4.0 11 7 5Financial indicators required Minutes to complete $0 Can be accessed online at no cost An easy-to-use tool for Canadian entrepreneurs
- 12. $ 11,210,000 2015 3261: Plastics product manufacturing 40 $1,730,000 $1,100,000 $1,040,000$132,000
Editor's Notes
- Buenos día señores y señoras, Soy Pierre-Olivier Bédard-Maltais y trabajo como economista al Banco de Desarrollo de Canadá. Es con un gran placer que voy a presentar los resultados de nuestra encuesta sobre la industria “cuatro punto cero” en las empresas canadienses de fabricación. Ahora, para que sea más fácil para todos, voy a seguir en Ingles. On behalf of BDC, I’m please to be with you this morning to speak about the impact and challenges of digital adoption in the manufacturing sector.
- As you all know, new digital technologies such as the Internet of Things, Big data, 3D printing, and advanced analytics have a tremendous potential to change how we produce goods. These technologies will make the manufacturing sector more agile, flexible and responsive to customers. The changes that are coming are so important that Industry 4.0 is often referred to as the fourth industrial revolution. Like the other industrial revolutions that came before, it will have a profound impact on all sectors across the economy.
- Our survey indicates digital technologies are gaining traction in many Canadian factories. Almost 40% of Canadian small and mid-sized manufacturers have implemented Industry 4.0 projects, including 3% that have fully digitized their production. Another 17% are in the planning phase. Taken together, this data are encouraging, but Canadian manufacturers still have a long way to go in their digital transformation. This is underscored by the worrisome finding that 42% have yet to get started at a time when competitors in the U.S., Europe and Asia are moving full steam ahead
- Our survey also reveals significant disparities according to the sector. Here, we see that close to half of manufacturer production customizable item, such as jewelry, medical devices or sport article have adopted advance technologies to digitalise their operations. On the other end, only a quarter of food manufacturers have done the same.
- Our survey found that companies who adopted digital technologies reaped impressive rewards, including improved productivity, lower operating costs and better product quality. The main driver of productivity growth is the capacity to predict and prevent downtime, and to optimize equipment effectiveness and maintenance. Cost savings come from: Real-time production monitoring and quality control to reduce waste and rework Predictive maintenance to prevent costly repairs and unplanned downtime Higher automation to save labour costs and improve throughput The use of 3-D printers to achieve faster prototyping, reducing the cost of engineering and accelerating time to market Meanwhile, improved quality comes from technologies such as real-time quality controls.
- Another way to look at the positive impact digital technologies have on a business is to compare the growth outlooks of adopters and non-adopters. Our study indicates adopters of digital technology tend to forecast a much brighter future than non-adopters. 29% of digital adopters in our survey predicted annual revenue growth of 10% or more over the next three years. Only 16% of non-adopters predicted revenue growth of 10% or more over the same period.
- We also asked entrepreneurs to identify the biggest challenges they’d faced when implementing digital technologies. At the top, we find issues related to talent and financing. These kind of challenges are common with all major manufacturing projects. A clear policy response would be to focus on awareness and financing programs. Then, we have challenges related to the lack of expertise to tackle technology investment. Entrepreneurs find it too complex or don’t know where to start. Government can play a role here by supporting companies in their digitization processes. For example, helping them to select the right technology. Finally, we see that only a few companies were challenged by advanced issues such as cybersecurity or integration and making sense of a growing flow of data. It is not because these issues are not challenging. It is because most entrepreneurs are still in the early stage of their digital transformation. Most of them are still investing in their digital marketing transformation, not on company-wide digital transformation.
- It’s better to get started with digitization than to do nothing because you can’t go all-in right away. This is a process that is best taken in steps. Build your strategy Start by identifying areas with the highest impact potential Focus on increasing your competitiveness and adding client value BDC can help companies identify the best focus areas for their business 2. Start small, but think big Break up big plans into small components Start with a well-defined goal and a team to drive actions toward achieving it BDC can help companies find solutions to turn ideas into a plan of action 3. Scale up fast Move quickly from pilot to full implementation Then, move on to the next pilot BDC can recommend experts to help companies implement thier plans
- At BDC, we want to help more entrepreneurs take the first step in their productivity journey and start benchmarking their business. That’s why we have launched Canada’s first ever business productivity benchmarking tool. This free online tool allows businesses to quickly compare their productivity levels to those of other companies in their sector.
- In just a few minutes you can see how the business compares within your industry in terms of: Overall level of efficiency Revenue per employee Profit per employee Labour productivity Capital productivity
- The tool is confidential and very simple to use. Once a business has its federal tax records in hand, it will just have to plug in 7 financial indicators to obtain their results in minutes. They are then able to download a detailed report containing their results, as well as a list of recommended reading and information about best practices.
- Helping Canadian companies improve productivity has been top of mind at BDC for several years. We have a solid financing and consulting offering around operational efficiency. We also offer free resources such as e-books and free webinars to entrepreneurs who want to improve impact. This year, in collaboration with Statistics Canada, BDC has created an easy-to-use, completely free online productivity tool. It’s available now on our website, so we can all take the test today and break the Internet. How does it work? It’s easy. By just entering six data points into the system, any entrepreneur in the country can receive measurements of their business’ productivity. Every company in Canada is in our system, so we can benchmark your business’ productivity numbers against other businesses in your industry sector. Sandwich shops aren’t measured against drill manufacturers. They’re measured against other small restaurants. Tech companies are measured against their peers. So are professional services and any other company that’s listed under an industry code. With this tool, SME owners can get a sense of their productivity and find out how they compare with their competitors. The tool shows you four indicators: Revenue per employee Profit per employee Level of labour productivity Capital productivity The tool highlights which numbers indicate the strength of the business and which indicate opportunities for improvement. Again, the tool is both easy-to-use and free.