Misconception – Industry 4.0 implementation can happen without the CEO
- Aug 31, 2023
Category : Industry 4.0
Dasarathi G V
Director in Leanworx
Dasarathi has extensive experience in CNC programming, tooling, and managing shop floors. His expertise extends to the architecture, testing, and support of CAD/CAM, DNC, and Industry 4.0 systems.
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Industry 4.0 implementation – what is the role of a CEO ?
What is the role of a CEO in implementing Industry 4.0 and keeping it going in an organization ? Does the CEO have to be hands-on ?
This picture is the short answer, which is that the role of a CEO is critical.
If you are the CEO of a manufacturing organization, from the shop floor point of view (i.e. other than the finance, marketing, long term strategy, etc.) you have these key responsibilities:
– Develop, lead and motivate a high performing team.
– Oversee operations to ensure that the organization produces goods with high productivity, to maximize profits.
An Industry 4.0 system collects data directly from machines – production, downtime, uptime, quality, maintenance, HR – and shows it to decision makers or gives it to other software for action. It collects a lot of data, analyzes it, shows it to decision makers at various levels in the organization. Everyone at every level in the hierarchy has to start looking at numbers, different numbers at different levels. These numbers must be used to improve efficiencies. This includes you as the CEO. If the CEO is allergic to production and productivity numbers, everyone down the line will be too.
Industry 4.0 makes your complete operation transparent. It can show you the reality of what is happening in your organization, IF you implement and use it properly. If you do not pay close personal attention during the implementation stage, cooked up data can be made part of the system itself.
In one of the organizations using Leanworx 4.0, for example, the CEO fully delegated the job of Industry 4.0 implementation to the shop head. The CEO played no part in it at all. Leanworx has configurable formulae for calculation OEE, and the shop head made us include ALL downtime as part of the cycle time in the OEE calculations, resulting in ideal ‘world-class’ OEE numbers exceeding 85 %. E.g., if a standard part unload/load time is 1 minute, to be considered as part of the cycle, a 10 minute downtime is considered as part of the cycle instead of 9 minutes being downtime. Same thing with setup times. The firm is fooling itself looking at false productivity numbers and losing a golden opportunity to improve profits.
There are two types of people in every organization, at every level :
1. The transparency lover: Self-motivated people who know they are doing their best, are confident of their ability, and welcome transparency as an opportunity to improve things further. Maybe there’s someone low down in the hierarchy who is feeling frustrated because he knows the solutions to a couple of big problems, but his boss doesn’t want to take any action. He cannot bypass his boss and talk to someone higher up either.
2. The transparency hater: People with sub-par ability and motivation whose survival in the organization depends on feeding false productivity numbers up the hierarchy, because if they feed the reality they will also have to fix the problems, and they do not have the ability to do this.
By being involved in implementing Industry 4.0 and thereafter monitoring it closely, you as the CEO are empowering the transparency lover and making life difficult for the transparency hater, forcing the latter to improve his motivation and skills. So by being involved hands-on in Industry 4.0 implementation and running, you are improving the efficiency of your operations AND improving your team.
You need to be closely involved initially, and then gradually reduce your involvement. You need to look at efficiency numbers, ask people to take action, and monitor the progress of the actions. Efficiency numbers can be whatever you choose to focus on, based on your focus area – OEE, spindle utilization, rejections, downtime, etc.
Here’s an action plan for the role of a CEO in implementing Industry 4.0:
Month 1-2: Every morning, look at previous day’s efficiency numbers. Half hour per day.
Month 3-forever: Every Monday morning, look at past week’s efficiency numbers. 1 hour per week.
Month 3-forever: 1st of every month, look at long term trends of efficiency numbers. 2 hours per month.
In my own experience, I’ve seen that successful installations of Leanworx have see one or more of these benefits: No new machine purchases for 1 year or more even though sales have increased; doubling of OEE, big reduction in consumables cost (energy, combustion gases), switch to working 2 shifts instead of 3 (16 hours instead of 24), reduction in manpower costs. All of these of course directly translate to profits.
Industry 4.0 is a great friend of the CEO, and the role of a CEO in implementing it is critical to its successful implementation.
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