Matt Kirchner: The Group That’s Totally Missing the Industry 4.0 Train

With Industry 4.0 thought leader Matt Kirchner, Host of The TechEd Podcast

Back when I was about 13 years old – and that is some time ago now – I was cross country skiing with one of my very best friends. We live in the state of Wisconsin. You need to find creative things to do to make it through the winter. So we’re cross country skiing, southeastern Wisconsin, along the railroad tracks, and we get to the beginning of a long railroad bridge. And we’re looking down the bridge and really, really faintly off in the distance, we think we hear a train whistle, but we’re not sure. Pretty sure we can make it across the tracks. 13 years old, not the brightest kids on the black. We went for it. So we’re skiing along the railroad tracks on this bridge, not a lot of room for error. And that train whistle blares across the tracks again, a little louder this time. And then not long thereafter, a little louder. And sure enough, the train was coming down the tracks.

We started skiing faster across the bridge. And the train got louder, we looked over our shoulders, and we could see that bright light shining down the tracks. Faster yet, skiing faster, train getting closer. Finally, it becomes clear to both of us that we’re not going to make it. And so we bail out and we huddle as close to the side of the bridge as we possibly could, as the train with its whistle blaring goes blazing past us now. It took what seemed like forever for that train to go by. And then we saw the caboose start to fade down the tracks and we both started laughing hysterically having cheated death, having made it through this daunting experience of this train coming at us as we’re skiing down the railroad tracks. 

Industry 4.0 and the Exponential Economy

Well, today we’re going to talk about a train of a different sort. It’s a train coming down the tracks. Now it’s no laughing matter. The whistle is faint, but it’s getting louder. Not everybody hears it. And that is the train we call Industry. 4.0. So let’s start here. We’ve been in the age of the exponential economy for well over a century. Now we talked about this often on The TechEd Podcast. Thinking back to the 1890 census, saw Herman Hollerith’s electric census machine. You see it took the US Census Bureau nearly eight years to tabulate the data from the 1880 census. And as 1890 came along 10 years later, time to do the next census. They needed a faster way to do it. Herman Hollerith, a young man who grew up in Buffalo, New York, went to Columbia University, taught at MIT, came up with the electric census machine. And his machine didn’t take eight years to tabulate the results of the 1890 census; it took only five and a half hours.

And since then, going back to the 1890s, the speed at which we process information through means other than human means doubles every 12 to 18 months. That phenomenon has been going back all the way to the late 1800s. A man named Gordon Moore identified this phenomenon in the year 1865. He published an article in which he noted that the number of components on an integrated circuit – components like resistors and capacitors and diodes – that the number that they could fit on an integrated circuit doubled every single year. He later amended this observation to about every two years, but that idea became what is now known as Moore’s Law. Now Moore didn’t stop there. In 1968, he founded a company called Intel, the world’s largest semiconductor manufacturer by revenue even today, 53 years later. $77.8 billion in revenue last year, 2020. So Gordon Moore – his whole idea behind Moore’s Law created this huge, huge company that exists still today and products have been doubling in price performance every 12 to 18 months since he came up with that idea called Moore’s Law and long before.

So this explains why I have to replace my iPhone every couple of years. Cameras get better, processing speeds get faster. I was watching some sporting events this weekend. Now we’re getting a barrage of these 5G compatible phone commercials. I’m sure you’ve seen them. I read on that 5G is fast enough to download a two-hour movie in fewer than 10 seconds. That compares to seven minutes with 4G. That’s the exponential economy. That’s more than doubling in price performance every 12 to 18 months. Continues to change everything. So there’s no slowdown coming in advancing technology. It’s one thing when the exponential economy affects the way that we communicate – our iPhones, our telephones, which high definition TV we put in our living room, the graphics on our video games. But it’s not just phones and it’s not just televisions; it is everything, including and especially manufacturing technology. 

Large Manufacturers are Ready for Industry 4.0

The exponential economy in manufacturing, it is what has brought us this whole idea of Industry 4.0. It is a train barreling down the tracks. Many see it, but there is one large group that is not preparing for it. That large group isn’t the big companies. You hear them on this podcast – people like Blake Moret from Rockwell Automation; Peter Anderson from Cummins; Rick Anderson, no relation to Peter but ran a huge healthcare company here in the United States…one of the people that was on the ground floor at WebMD showing that this technology is coming to the way we manufacture advancing medical devices…Mike Cicco, he’s the President and CEO of FANUC America; Todd Wanek, CEO of Ashley Furniture; Wes Saber from HARIBO. All of these people see Industry 4.0 coming and they are preparing for it. They’re training their workforces. They’re buying and they’re partnering with companies that are leading in this space. 

I look back at what Blake Moret’s Rockwell Automation is doing in the world of industry 4.0. Their huge investment in a company called PTC, which is innovating in the world of augmented reality and other technologies. Their acquisition of Emulate 3D to launch them into the world of digital twins. Their recently announced acquisition of cloud software, smart manufacturing platform Plex systems in Troy, Michigan. So big companies are leading in the world of industry 4.0, they’re investing, they’re acquiring, they’re developing, they’re innovating. And they’re deploying smart technology, industry 4.0 technology. And the reason they’re doing this is they understand that this is the future of manufacturing. So know this, our large employers, our large manufacturers are making huge investments in industry 4.0. 

And by the way, it’s not just in what they innovate. It’s not just what they acquire. It’s not just what they develop themselves, but the equipment they buy from their suppliers as well. You buy a new CNC machine today. It has sensors on it that measure vibration, they measure temperature speed, they measure current, and they use all of that data or send that data to the cloud, where it is used to predict future failure of the equipment catching potential quality issues, potential reasons for rejecting product, rejecting producted units before those rejects ever happen. The same thing is true of material handling robots, turret presses, press brakes, lasers, weld robots, smart sensors that measure things like force and disturbances, pressure, humidity, and moisture. All of this what we call embedded smart technology, sensors and devices that communicate with each other that make their own decisions, send informational data to a data collector and up to the cloud, where artificial intelligence crunches all the data, analyzes it, and uses it to predict and project and improve future performance. 

This isn’t just a theory, this isn’t just something that we’re thinking about in the future. I’ve seen this firsthand. And I’ve seen this technology at work in large manufacturing operations across America. It’s the future of manufacturing; not the distant future, but the near future and in many cases, the present. So big companies get it. 

Educators are Preparing Students for Industry 4.0

Big companies see Industry 4.0 and the transformation that is taking place in their markets, and so do so many leaders in education. And you’ve heard them on this podcast as well. Mark Mone, Johannes Britz from the University of Wisconsin-Milwaukee making huge event investments in their Connected Systems Institute. Former wisconsin Governor Tommy G. Thompson, now the Interim President of the University of Wisconsin System advancing in this arena. I have a family member who’s actually enrolled in the data science program at the University of Wisconsin-Madison. We’ve talked with people like Annette Parker from South Central College in Minnesota; Katherine Frank, the Chancellor of the University of Wisconsin-Stout; Sue Ellspermann, former Lieutenant Governor of the state of Indiana, today the President of the statewide Ivy Tech system, Indiana’s technical and Community College System; Morna Foy, the President of the Wisconsin Technical College System. 

All of these people are making huge investments in their program. All of them are investing in the future of industry 4.0. And it’s truly an investment. It is expensive to teach this stuff. The cost of teaching Industry 4.0, the cost of teaching advanced manufacturing is exponentially higher than the cost of teaching things like English, or history, or philosophy because of the huge investment in advancing technology that needs to happen. It is expensive to make these investments, but leading educators are finding ways to make the investments. They’re building partnerships with their local employers, building partnerships with organizations that have available grant funding, figuring out ways to get dollars into their budgets to fund these advancements. So as we’ve seen, big manufacturers are planning for the future of Industry. 4.0, leading educators are planning for the future of industry 4.0. 

The Group That’s Missing Out On Industry 4.0

But there is a group that isn’t, and this is what worries me. Who is that group? Well, hang on. We’re getting there. Before I tell you, I need to share that I spend a ton of time with technical educators. As we’ve said, we have them on the podcast; I visit technical colleges, community colleges, universities, as part of a personal mission to secure the American Dream for the next generation. Meeting with chancellors and presidents and vice presidents and deans of some of the greatest advanced manufacturing, some of the greatest STEM-related programs across the United States. We talked about the importance of Industry 4.0, we talked about the importance of Industry 4.0 certifications – I’m a huge fan of the work that Jim wall is doing at the Smart Automation Certification Alliance in partnership with some of the largest industrial employers across the United States and across the globe.

Now, educators are talking about approaches to industry 4.0 technology and how we teach it. Many have been leading on this, some are waiting, some are still watching, some haven’t gotten going. But more and more every day, we have more and more educators who understand that they need to bring their technical programs into the era of Industry 4.0. But we’re getting closer to what worries me. Like we said, the big companies are all over Industry 4.0, so are educators. But I can’t tell you how many educators, when I encourage them to make investments in Industry 4.0 learning and in their programs, I can’t tell you how many educators tell me that there’s a group of constituents, a group of stakeholders in their organizations that don’t see the train coming down the tracks. 

As some of you know, technical colleges, community colleges, they have advisory boards for their programs. I’ve served on many of these throughout the years. We advise faculty on changes in technology, we talk about trends in manufacturing, we approve changes to course content, and changes to curriculum, and we provide consent on investments in training equipment and programs. If you don’t know it, advisory boards have a huge influence on the entire program at a university or at a technical college. Now we could go on for hours about the importance of being involved in those advisory boards, and many of you are, and many more of you are not. 

It’s interesting. It’s typically not the big companies on the advisory board, by the way, in my experience, and I think this is good. It’s your local contract manufacturer, your local metal fabricator, an injection molder, maybe a smaller original equipment manufacturer that manufactures their own end-use parts. There are exceptions, but I don’t see a lot of the billion dollar companies on the advisory board. It’s usually the smaller to mid-size manufacturing companies. But I can’t tell you how many times I’ve sat down with deans, with program directors, presidents chancellors and had conversations around Industry 4.0 technology and how they’re building it into their curriculum.

And they say this – and this is the problem – they say, “We get it; we as educators understand it. You’ve shared with us how this is going to change manufacturing. We agree with you. We know what’s coming. But our advisory board, the people we look to advise us on changes in technology trends, manufacturing, changes in course content. These people, when we talk about Industry 4.0, they don’t see it. They don’t think Industry 4.0 is going to affect their business, and they don’t see a need to adapt their businesses or for that matter, their technical or community college programs.”

Folks, if there’s one reason to be pessimistic about the future of American manufacturing, if there’s one thing that could kill all of the momentum in manufacturing, thinking about the reshoring products in manufacturing coming back to the United States that’s been exported to other countries for years. One thing that could kill the current momentum, it’s this: it’s the fact that these manufacturers don’t see Industry 4.0 coming down the tracks. We have proved in the last year or so, maybe a little bit longer, the danger of a global supply chain, what happens when we source product all over the globe. Manufacturers and public policymakers are seeing the need to produce product closer to the point of consumption. There is max positive energy right now for us manufacturing. And yet a huge segment of our manufacturers have their heads in the sand on the current the fourth industrial revolution. 

The Consequences of Ignoring Industry 4.0

Now we in manufacturing, we’ve seen this film before. Think back to standardized quality in the 1990s. As companies were implementing standard operating procedures, implementing programs like ISO registration, like in those days, TS and QS. And we’re integrating these standardized quality systems. Do what you say, say what you do, create repeatability in your process, understand where you have variations in that process, take that variation out. The same thing happened with Kaizen in the early part of this century. Kaizen or continuous improvement employment, employee engagement, getting your employees to the shop floor, having them look at problems sharing with leadership sharing with people who could make a change the things that were standing in the way of advancing throughput of taking care of bottlenecks of improving efficiency. Kaizen was a huge effort, a huge transformation in the zeros, as we call it.

And many manufacturers got on board with these trends. They got on board with standardized quality, they implemented standardized quality systems, they understood Kaizen, they figured out how to get their employees engaged. Those companies gapped everybody else. If you missed one of these two – standardized quality, there’s a chance you didn’t see it through to the end of the next decade as a company. If you missed them both, it’s almost guaranteed that you’re no longer in business. 

Why is this? The answer is pretty simple. What happens to a manufacturer when its competitor avoids downtime by predicting future lines down and avoiding those lines down together, predicting future shutdowns on production lines, and taking care of the root cause before the shutdown ever happens? What happens to a manufacturer when others in its market deploy collaborative robots that can improve throughput on a production line by 10, 20, 30, 40%? What happens to a manufacturer when its competitor cuts part rejects by 50% by using smart sensors and smart devices to monitor quality in process and improve its yield on its production line? What happens when a competitor avoids downtime? What happens when a competitor deploys collaborative robots? What happens when a competitor cuts part rejects by 50% is this:

What happens is the competitor cuts lead time and steals your customers before you know what’s even taking place. What happens when your competitor cuts that time by 50%? What happens when your competitor deploys collaborative robots and cuts part rejects? They reduce costs. They reduce the cost of producing product and they make more money, and they either reinvest the proceeds in growing their business, or they cut prices to take less efficient competitors out of the market. That is what happens. That’s why this is serious. That is why when people missed the movements of standardized quality missed the movements of Kaizen, they ended up out of business. The same thing will happen with Industry 4.0, and small to mid-size businesses are telling their technical educators they don’t see the train coming down the tracks. They don’t hear the whistle.

Step #1: Wake Up to the Reality of Industry 4.0

So what is the fix? the fix is pretty simple. Number one: small to mid-size businesses need to pull their heads out of the sand. Telling your technical educators that you don’t see Industry 4.0 coming? Wake up. You know in a prior life I coached what we call the Eight Steps to a Financial Turnaround. If you’ve watched the show Restaurant Impossible with Robert Irvine, you know a little bit about what this is about. Of course Robert Irvine did this with restaurants. He would find these tired or ineffective or underperforming restaurants and poor concepts and recreate them, make them successful. I even wrote a magazine column about this a few years ago called Manufacturing Impossible. I said, wouldn’t it be awesome if we had somebody like Robert Irvine in manufacturing who worked with underperforming manufacturers to improve their manufacturing operations; we could even have a television show about it. So some guy, some guy sends me an email and he says this. He said my idea was stupid because Restaurant Impossible had done a show on a restaurant in his hometown and he hated the new concept. As if this one guy’s opinion of one restaurant would impune a whole television series, or for that matter, the idea that a struggling manufacturer should get their act together and get some help. 

But for a number of years, I did similar things in manufacturing. I worked with manufacturers to help them improve their operations, make them more efficient, improve yield, improve their customers experiences. And I had the Eight Steps to the Financial Turnaround. I traveled literally all over the country delivering this presentation, and how to turn around a manufacturing company, eight steps. And you know what step number one was? Step number one was: face reality. I even had a big photo of an ostrich in it, in the presentation with its head in the sand as an analogy for industrial manufacturers who are struggling to make money but hadn’t yet realized that they were in trouble. Number one is to face reality and face the truth and that is what has to happen in the world of manufacturing. Small to mid-size manufacturers have to see the Industry 4.0 train coming down the cracks and have to start getting ready for it or miss the opportunity altogether. 

Step #2: Large Manufacturers Should Bring Their Supply Chain Into Industry 4.0

Number two: big companies must usher the smaller ones into the era of Industry 4.0. We’ve used the examples of standardized quality; we’ve used the examples of Kaizen and continuous improvement. What drove those efforts in small to mid-size businesses in many cases was manufacturers forcing their supply chain into that world, requiring their supply chains to be ISO, to have a standardized quality system, requiring their supply chains to engage in regular Kaizen and continuous improvement events, even inviting themselves into their suppliers’ manufacturing facilities to help facilitate Kaizen and CI events and teach companies how to do it. When your supplier calls and offers help on Industry 4.0 – if you are a small to midsize manufacturer – take the help. They are trying to help you. And if you are one of those big companies that is already making the huge investments in this technology, make sure that you’re bringing your supply chain along for the ride as well. 

Step #3: Start Small, But Start Now

Number three is to recognize that an Industry 4.0 implementation is not a step transformation. I can’t tell you how many times I speak on this topic, and I have people say is how do I take my company into the industry 4.0 environment? Or how do I make my company Industry 4.0? You don’t make your company Industry 4.0. You start with a project, you start with a simple problem and you bring Industry 4.0 technology to bear on solving that problem. Getting started in the world of Industry. 4.0 doesn’t require a million dollar investment; doesn’t even require a $50,000 investment. As my friend John Carrier from the Sloan School at MIT will tell you, you can buy a smart sensor, you can buy a smart device and deploy it on a manufacturing line for less than $100. That wasn’t true a couple years ago, but thanks to the exponential economy – which as we know doubles price performance every 12 to 18 months – a sensor solution that was $10,000 a few years ago is $100 today. But you don’t have to make your company Industry 4.0.

My friend John Lowry just rolled out of a stint as the Assistant Secretary of Labor in the Trump administration. John was a gentleman, former guest on The TechEd Podcast, good friend. I used to work with him when he was the General Manager at a Harley-Davidson plant. And what John will tell you is that Industry 4.0 is not a step transformation. It is a lean tool. It’s technology that we use to drive out waste from our operations, just like, or as part of, a Kaizen or continuous improvement event. In order to implement it, though, we have to understand it. 

Step #4: Understand Industry 4.0 Technologies

Number four, is that in order to implement it, we have to understand Industry 4.0. What are smart sensors and devices? How do we get data into them? How do we get data back out? It’s not all about Industry 4.0 technology. It’s been four years now since I authored a white paper on preparing students and learners for the world of Industry 4.0. That white paper we’re proud to say became the benchmark for ushering educators into the world of Industry 4.0 and advanced manufacturing technology. It was adapted by school districts, adopted by community and technical colleges around the United States. I even had one of my partners who was spending some time in Saudi Arabia, listening to a presentation on how Saudi Arabia was going to become an Industry 4.0 manufacturing world. And he had to sit through references to my white paper in Saudi Arabia about how we get people ready for the world of Industry 4.0, how we teach students and learners about this technology. But it’s not all Industry 4.0 technology. We start out with industrial success skills, learning things like quality, and throughput and safety. Then we move on to base manufacturing technology. It doesn’t do me any good to monitor a welding system or a robot or a CNC machine if I don’t know what welding and CNC and industrial robotics are, or for that matter, electrical systems, mechanical drives, and electric relay control is. 

Step #4: Train Your Employees on Industry 4.0 Technologies

We also have to teach, after we’re done with base manufacturing technology, the smart sensors and smart devices of Industry 4.0. We have to talk about industrial control systems, the control systems that monitor and measure all of the smart systems and smart devices, connectivity and networking and cybersecurity now that all of these systems are being connected. And then what do we do with all of the informactionable data that is flowing out of this technology? Number four: we have to get started and train ourselves and our people. I earned two certifications from the Smart Automation Certification Alliance last year; one in basic operations and one in advanced operations and Industry 4.0 technology. It absolutely changed the way that I looked at manufacturing advanced operations. 

I write a couple of magazine columns every month, one for Production Machining, one for Products Finishing magazine. I wrote about this last November, that if I had to do it over again, as a manufacturing executive, I would have taken those courses 20 years ago, because what it taught me about manufacturing, advanced manufacturing, and then Industry 4.0 would have made me a much, much, much better executive. But the truth of the matter is that there are training opportunities that abound for learning Industry 4.0 technology. Separate from The TechEd Podcast, I’m involved with a couple companies who this September are running two days of seminars on how to implement transformative learning programs in the Industry. 4.0 learner era. Teaching Human Resources professionals, teaching manufacturing professionals, manufacturing executives, how we implement training programs internal to our manufacturing operations for our incumbent employees in the era of Industry 4.0. 

Step #5: Don’t Sit Still and Be Buried by the Competition

So number five on this list, and the final item on the list is don’t sit by while others in your same business, your “competitors” in quotes, whatever that business is, figure this stuff out. They will figure it out. They will use Industry 4.0 to drive down cost; they will use it to improve yield; they will use it to improve customer experience. And they will bury the companies that do not. There is a train coming down the tracks at American manufacturing. The horn is blaring an alarm, it’s letting us know that it’s coming. Just like those two kids on the train tracks those many years ago. though, small to mid-sized businesses aren’t listening. Or if they’re hearing that faint whistle they’re not paying enough attention. The big companies hear it. But most small to mid-size businesses – they don’t hear it. And I know this because so many of them are telling their educational partners that they don’t see it. 

Now I’m dating myself here with this last story. But I remember life before email, when businesses sent fax messages back and forth, and we thought that technology was amazing. Then along comes email and almost overnight, the fax machine became obsolete. So fast forward five years from then, and nobody, nobody after the advent of email is using the fax machine. So in the late 90s, I had this business associate, a supplier of one of my companies, who didn’t use email even long after everybody else. He liked doing business as he put it “the old fashioned way.” When someone told him to send an email, he would laugh. And he would say, “Email? I’m still amazed that the fax machine works!” And then he would laugh again. He was the only one laughing. I finally had to say to him, “Robert, when you say that you sound like an idiot. Nobody thinks it’s funny. But they all think that you’re too clueless or too lazy to figure out how to use email. And that isn’t helping you and your business.” 

Business owners, manufacturers, industrial employers who tell their employees, their customers, their suppliers, their educators that they don’t think Industry 4.0 technology will transform their industry are the Roberts of 2021. You sound like him. You think like him, and just like him that is not helping you in your business. So face reality. Answer the call of your larger customers and suppliers when they make it and invite you into the era of Industry 4.0. Don’t be intimidated by the technology or by the price. It is simpler than you think and less expensive than you believe. See it as a tool for continuous improvement in your business. Learn about it, train your team about it, and get going on implementing it. Your employees, your customers, the future of your business and the future of American manufacturing depend on it. They’re depending on you. 

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