Siemens Financial Services (SFS) released a new research paper which investigates the key challenges facing manufacturers across the globe, as they look to adapt to Industry 4.0.

A digitalized, automated, Industry 4.0 world offers the ability to digitally link people, machinery and systems. For manufacturers, this provides a number of benefits such as improved efficiency, pre-emptive maintenance to improve up-time and closer collaboration as a result of digital data flows.

Implementing a successful business model to adapt to Industry 4.0 is likely to be achieved in a series of steps. SFS interviewed manufacturers and expert management consultants in order to understand the hurdles associated with this transition. Of the six key challenges identified in the paper, manufacturers ranked the issue of developing digital skills and access to finance as the two most important issues they face.

The following four key challenges – in order of importance - comprise creating a culture of collaboration; overcoming data and cyber security concerns; gaining comprehensive access to a broad enough volume and range of proof points and specialized strategic management capabilities to create a clear, phased plan to adapt to Industry 4.0.

Building a practical plan cannot be reduced to a single, simplistic formula; each company’s circumstances are different. Nevertheless, respondents agreed that a robust methodology is essential for building a sustainable plan for digitalization and automation. The consensus methodology emerging from this study covers six key inter-related areas: assessing obstacles; evaluating opportunities; measuring efficiencies; recruiting and training talent; developing digital management; and integrating strategic finance.

Respondents repositioned finance as an early consideration in building a practical plan for Industry 4.0. Considering financing possibilities as a first step in plan-building serves to open the range of technology investment options available to adapt to Industry 4.0.

Financial experts have developed a set of financing tools – ‘Finance 4.0’ - that enable the transition to next-generation digital technology in a way that is affordable, sustainable and is designed to alleviate the manufacturer’s cash flow and working capital pressures. The paper explores these financing methods, including financing for technology upgrades and updates, software finance, pay for outcomes, transition finance and working capital solutions.

“Considering financing in the very first stages of strategy and plan development will give manufacturers a wider range of options when managing the acquisition of next-generation digital technology,” comments Gary Amos, Head of Commercial Finance Americas for Siemens Financial Services. “Only financiers with deep industrial expertise have the understanding of today’s digital transformation and Industry 4.0 challenges. Private funding is uniquely positioned to enable technological advancements, while alleviating manufacturers’ cash flow and working capital pressures.”

Over sixty manufacturers and expert management consultants were interviewed over the phone in October and November 2017. They were asked to identify their main challenges (ranked in order of importance) to digitalisation and automation in practice and what the interrelationships between those challenges are. In addition, they were asked how a successful strategy is built, what skills are required and how it can be financed to produce the best return-on-investment.  Interviewees came from the following countries: China, France, Germany, India, Poland, Russia, Spain, Sweden, Turkey, the UK and the US.