The manufacturing sector is South Africa’s fourth largest sector and a key driver of economic growth. However, industrialisation challenges in recent decades and the relatively slow adoption of new technologies have hampered the true potential of this industry. Smart Manufacturing is fast becoming the direction of development for the country’s manufacturing sector, and adopting Industry 4.0 (I4.0) tools will be a defining and growth-enabling game changer for it. New research from PwC’s Insights into the I4.0 Readiness of SA Manufacturing 2022 report shows that I4.0 tools have the ability to increase the quality, flexibility, performance, and overall competitiveness of the manufacturing sector.
This report explores the local manufacturing sector’s readiness for I4.0 by gaining an intimate understanding of the value proposition of I4.0 across various sectors. PwC conducted in-depth interviews with 31 senior leaders across nine manufacturing sectors from April 2022 – May 2022. Key themes and insights that emerged from the study show that through the incorporation of I4.0, manufacturers can increase innovation and decrease production costs which results in effective Manufacturing Strategy Outputs (MSOs).
Vinesh Maharaj, Smart Manufacturing Leader for PwC in South Africa, says:
“For manufacturing sectors to leverage the value of I4.0, they need teams who understand the data to be able to translate it into findings that would benefit them. Digitalisation has created the possibility to adopt the progression of information and communication technologies within a limited period, which ultimately increases operational efficacy and sustainability. The integration of I4.0 has revolutionised the human resource processes and companies who merge the digitisation process with traditional approaches achieve the most benefits.”
The data indicates six key insights:
- Leaders behind the 4IR agenda
Twenty-seven percent of survey respondents identified the CEO as the person responsible for staying up to date with the latest developments and embracing the 4th Industrial Revolution (4IR) way of thinking. CEOs are seen as the person responsible for challenging current methods used in the business, exploring new technologies that align with a reduction in costs and increases in productivity. However, technical role players are also identified as key in assisting leaders to drive digital transformation.
- Uncertain returns
Literature investigating manufacturers’ investment in the 4IR revealed that more than two-fifths of companies in South Africa have made solid investments, with more than a third expecting these to provide a payoff on productivity. However, more than half (57%) are yet to make any investments in 4IR technologies as a result of certain barriers such as skills and technical challenges.
- Data-driven decision-making
Data formed a very important part of the decision-making throughout all the businesses. While some leading manufacturers in SA use analytics to their advantage, most manufacturers are still in the early stages of adoption and have great potential to further increase their state of analytics readiness.
- Degree of 4IR implementation
Despite low investment in the 4IR, we found that the majority of the participating manufacturers were aware of, and have implemented, 4IR technologies in some form. The top three 4IR technologies that were implemented were condition monitoring (48%), followed by connectivity or Industrial Internet of Things (39%) and Robotic Processing Automation (29%).
- A 4IR workforce
While new technologies can create new jobs, they can also nullify and replace existing jobs, creating a newfound need to upskill and re-skill employees to ensure they remain relevant in the workplace. Manufacturers say they are eager to upskill employees to complete more fulfilling tasks while being open to the idea of automation and digitisation paving the way in terms of repetitive and laborious tasks.
- Challenges of implementation
Twenty-three percent of participants identified uncertain return on investment as a barrier to integrating digital innovation, while 15% saw resistance of worker councils or labour unions as a challenge. Thirteen percent of participants said their workforce lacks the skills needed to implement and manage digital solutions.
Maharaj says: “South Africa’s manufacturing sector must embrace and adapt to the uncertainty of I4.0 to fully harness its potential. Developing countries, such as ours, have the potential to exponentially grow their economies and combat various resource-related challenges, and the institutionalisation of I4.0 would contribute to the sustainability of developing countries specifically within manufacturing industries as the economy is heavily affected by a lack of proper sustainability measures.”
PwC has found that the main purpose of 4IR adoption is to increase the capability and diversification of the manufacturing industry by consolidating labour intensive and manual tasks. For the financial benefits to translate to industry, the South African workforce must be adequately prepared and open to partnerships to enhance digital transformation. This way, the manufacturing industry, which is currently following the lead of global sectors to make decisions on what would work best when implementing 4IR, can start to transition themselves as innovators and work towards creating sustained outcomes for their organisations and the economy.