The fascination of technology has disappointed the organisations
As long as the modern production is run by conscious people there are no threats towards it. Unfortunately, because of the pressure to keep the highest profitability the Lean rules meaning the right production process organisation, have been distorted and financiers and accountants began to ‘tinker’ around them with the help of Excel only to improve the financial result as far as at least half percent. The pandemic time has denuded the failure of chart savings and verified those, who treat the organisation development with short-term profit orientation. Aspiration of modern technologies and the highest sales returns has shown that staff are not prepared to manage against rapid changes.
Can stronger do more?
One of the very first symptoms was the transfer of production to factories which are money competitive but are very often located in the other part of the world – in China, Vietnam or Madagascar. The production principals often have not taken into consideration the idea of sustainability and social business responsibility or environment protection.
Secondly, the globalisation has led to the so called scale effect. Mass production in a big plant, which specialises in production of only one component made it the cheapest and consequently the only producer of a given item all over the world.
The third disturbing symptom, which could have been noticed even before the spread of SARS-COV19 epidemic is the pressure of ‘bigger’ market players against smaller producers and the harsh forcing of unfavourable solutions on them – long payments dates, global contracts or directing problems connected with logistics onto them under the belief that stronger is always right. With that in mind the idea of just in time logistics has been warped. I personally have been a witness of a situation in which long lines of trucks with production components were queuing and the drivers were forced to wait for their turn because according to the requests and expectations of a big recipient the delivery must have happened exactly every four hours, without the possibility to leave the freight in the warehouse or buffer zone.
Industry 4.0 so the new conceptions
The approach of industry 4.0 with flexibility concepts, new technologies and digitisation has brought the change of business models. So far companies which led at innovative production – from aviation to automotive industries – have only tried pilot solutions. At this point it is worth mentioning Elon Musk casus and his trial to completely robotise Tesla Motors plant which turned out to be a failure. Nevertheless this does not change the fact that robotisation and automation have made a great step forward. Still, it is similar to services, the business models of which have been completely changed due to the development of social media and the internet.
Pandemic which verified it all
The world of business evolving gradually in terms of production as well as trade and services had been functioning well more or less until the beginning of the previous year. It is when COVID-19 pandemic showed up, which verified the reality in almost all its areas painfully. The coronavirus epidemic caused the global chain of deliveries to fall. The production processes stopped because a lot of employees had to undergo quarantine. Those who were able to switch to distant work did so but at the same time big problems arose while considering preparing it and supervising the work of people. Therefore the production processes as well as deliveries stopped mainly due to the lockdown of administrative limits.
Described example as well as others including the blockade of the Suez Canal because of a ship which got stuck on a shallows and caused gigantic logistic interferences for Europe or the microprocessors plant fire in Japan which was literally the only supplier of that item, show how sensitive and unprepared the world of global production is even considering the smallest slips.
The situation of some big players who had been forcing unfavourable work conditions on subcontractors changed as well. Facing the bigger demand for electronical items because of the development of IoT (Internet of Things) connected with the increased demand for simple, electronic medical equipment such as pulse oximeters, the subcontractors have switched from the production of car chips to… fridge processors. Such a ‘rebellion’ resulted in the situation when one of the car manufacturers closed its plant in Turkey for 3 months because of the lack of semiconductors required for the assembly process. The manufacturers who were used to negotiating with stable position got stuck in a difficult case: they stopped dictating the conditions and they themselves were in the crossfire.
The stage of how painfully have we all suffered from the coronavirus pandemic and how sensitive for even the smallest changes the world of business has become could be explained – the managing staff failed. The aim however is not to point out certain companies or boards but to chart some global problem. Although being fascinated with modern technologies, the present organisations are not and were not ready from human and managing perspectives for such rapid market changes. To changes connected with digitisation the pandemic was added which denuded the lack of flexible approach towards managing and focusing the managing staff on short-term KPI from the previous era.
The relish of technologies led to the fact that many organisations chose the investment in new machines as their priority instead of changing their structures, visions and strategies. Still, it is a key factor for the managing staff of the new era. The role of teams, staff and human capital at the time of Industry 4.0 transformation and pandemic are not to be overestimated. It is dependent on them of how the organisation will manage in dynamic realities and facing unpredictable changes. The holistic look on business, development of new methods and managing styles as well as finally the use of modern technologies require thorough preparations. This is what the Industry 4.0 Institute together with Warsaw University of Technology Business School and Kaizen Institute deal with. During MBA Kaizen Industry 4.0 studies at Warsaw University of Technology Business School we want to teach and make people aware of how to deal with digital revolution, being in progress during the pandemic time.
Tomasz Haiduk, MD, Industry 4.0 Institute, Lecturer, MBA Kaizen Industry 4.0 at Warsaw University of Technology Business School
Last Updated on July 14, 2021 by Łukasz