What is driving adoption and advances for Industrial 4.0 technologies across Asia?

Karel Eloot, senior partner in our Shanghai office, discusses what is driving adoption and advances for Industrial 4.0 technologies across Asia, and shares how leaders should think about the future of manufacturing in region.

The drivers of the adoption of Fourth Industrial Revolution technologies in Asia are similar to those in other parts of the world. These drivers include: increasing customer centricity, fostering innovation, a more productive workforce, environmental sustainability, and of course, maintaining a competitive advantage.


These drivers and the benefits of embracing these technologies are for the most part relevant, regardless of the size of the company, its geographical location, and also its sector. We see this everywhere.

What brings Asia together is the immense growth potential of the region. And to fuel that growth, building technology-enabled manufacturing ecosystems and resilient end-to-end supply chains will be key. What makes Asia particularly interesting is that there is no one-size-fits-all approach for the adoption of these technologies across the whole region.

On the one hand, you have countries like Japan, Korea, and Singapore, that are at the forefront of industrialization. On the other hand, we have countries such as China and India, who are starting this, on average, from a lower base. But they are very enthusiastic to use digital transformations to close the gap – and to close it quickly.

What are the key takeaways for lighthouse organizations?

Lighthouses are leading-edge manufacturing sites implementing technologies of the Fourth Industrial Revolution to generate compelling financial, operational, and environmental returns. Our first takeaway from our lighthouse research is that digital is no longer optional. If you look across these lighthouse organizations and across the world, we see that lighthouses have been more successful in adapting to the challenges posed by COVID-19 and capturing the opportunities related to the pandemic.

Second, digital transformation is possible regardless of a business' size. And the resulting growth is sustainable. The network that we now have of these lighthouses is made up of companies that range in size, from blue chip companies to companies with fewer than 100 employees. And it also includes new greenfield builds, as well as brownfield sites that have been upgraded. For example, Tata Steel in Jamshedpur, India, is a plant that is 110 years old, and it has deeply-rooted cultural and technology legacies. But they were able to deploy multiple Fourth Industrial Revolution technologies, such as predictive analytics in production and dynamic logistics planning to reduce the cost of serving their customers by around 20 percent.

If we look at the performance of the lighthouses, and particularly during the pandemic, we see that achieving Fourth Industrial Revolution at scale is central to the long-term sustainable growth for a company. But the majority of the organizations that we surveyed have yet to achieve this virtual cycle.

What is interesting is that the number of companies that report being stuck in what we call the “pilot trap” has gone up again in 2020 to 74 percent. And that is following a decline from 70 percent in 2017, to 56 percent in 2019. Clearly, there is an impact of the pandemic on how companies are able to scale these technology-enabled transformations.

To derive meaningful value and bottom-line impact, it is of course critical that companies take a holistic approach. And that this approach includes a balance between business impact, technology transformation, and also interventions in human capital – that is, human resources.

Leaders always keep their eye on impact – this is really number one. But at the same time, it's very important that they don't underestimate the massive reskilling that is needed for the whole organization. And that they also focus on a redesign of the technology architecture and the ecosystem in which they work.

So, the future of manufacturing is already here. The lighthouses in Asia move faster and they scale more on the adoption of Fourth Industrial Revolution technology – and they are already reaping the benefits. We encourage the followers and the laggards in this space to learn from the leaders, and to act quickly to keep up with those leaders to avoid being left behind.