Industry 4.0: Building the digital enterprise

The India highlights report on Industry 4.0: building the digital enterprise is part of PwC’s 2016 Global Industry 4.0 Survey, the biggest worldwide survey of its kind, with over 2,000 participants from nine major industrial sectors and 26 countries, including India.

In this report, the term ‘Industry 4.0’ stands for the fourth industrial revolution. Industry 4.0 concentrates on the end-to-end digitisation of all physical assets and their integration into digital ecosystems with value chain partners.

At the end of this transformation process, successful industrial companies will become true digital enterprises, with physical products at the core, augmented by digital interfaces and data-based, innovative services. These digital enterprises will work together with customers and suppliers in industrial digital environments. These developments will fundamentally change individual companies as well as transform market dynamics across a whole range of industries. And that is true in countries all around the world—in both developed and emerging markets.

The study explores the benefits of digitising a company’s horizontal and vertical value chains, as well as building its digital product & service portfolio. Industrial leaders are digitising essential functions within their internal vertical operations processes, as well as with their horizontal partners along the value chain. In addition, they are enhancing their product portfolio with digital functionalities and introducing innovative, data-based services.

Some of the key highlights of the India report are as follows:

• More than a quarter (27%) of the industrial companies in this survey have rated their level of digitisation as high, and this value is expected to rise to 65% within the next five years
• Through Industry 4.0 adoption, more than 80% of the respondents in India are expecting a greater than 10% improvement in efficiency gains. Also, more than 60% are expecting an over 10% reduction in costs from operations and an over 10% improvement in additional revenue in the next five years.
• Data forms the core of Industry 4.0 and embedding data analytics in operations workflow will make organisations truly digital enterprises. 53% of the industrial companies in India are using data analytics and more than 90% expect data to have a significant impact on their decision-making in five years.
• Industrial companies have not been able to utilise data analytics effectively in their operations. More than half of the companies either rely on the selective, ad hoc data analytics capabilities of individual employees or have no significant data analytics capabilities at all.
• 39% of the companies plan to invest more than 8% of their annual revenues in digital programmes in the next five years.

To move forward with Industry 4.0, digital capabilities are all-important. These take time and concentration, and a step-by-step approach is important.

Real breakthroughs in performance will happen when companies actively orchestrate their role within the future ecosystem of partners, suppliers and customers through digital interventions.

With India emerging as the fastest growing economy, we expect the industrial products sector to embrace digitisation which will transform the entire manufacturing value chain resulting in increased operational efficiencies and better customer interface.

-By Sudipta Ghosh, Partner, PwC India