Driving i4.0 value with your supply chain

Integrating smart manufacturing software, AI applications, data analytics and connected products to drive business value.


Doug Gates

Doug Gates

Global Sector Chairman, Industrial Mfg., KPMG US

+1 404-222-3609


Dave Grimmer

Dave Grimmer

Vice President, Thermal Group America Center, DENSO

Howard Heppelmann

Howard Heppelmann

Divisional Vice President and General Manager, Connected Operations Solutions, PTC

Eric Logan

Eric Logan

Principal, Corporate Strategy, KPMG US

+1 216-875-8191
Joseph Wyrzykowski

Joseph Wyrzykowski

Purchasing Industry 4.0 Lead, Ford Motor Co.

Jono Anderson Left to right: Doug Gates, Joseph Wyrzykowski, Dave Grimmer, Eric Logan, Howard Heppelmann

Industry 4.0 (i4.0) is more than a collection of smart manufacturing software, AI applications, data analytics, and connected products, according to Doug Gates, the global sector chairman in Industrial Manufacturing at KPMG. “It’s about integrating that information together to drive business value.”

Panelists from major auto and component manufacturers joined KPMG strategists to discuss clearing the hurdles to benefit from i4.0.

First step: Defining the value of i4.0

Joseph Wyrzykowski, head of i4.0 for procurement and purchasing at Ford, said the company is focused on data analytics and how it can lead to an unprecedented level of connectivity and transparency in building their supplier network—and even to new purchasing models. The industry has “done things the same way for a long time, and we want to do them differently in order to take advantage of what these advanced manufacturing technologies have to offer,” he said. 

“What that really gives us, especially in a sharing scenario with our partners, is an unprecedented level of connectivity and transparency in building a supplier network.”

At PTC, one of the largest CAD/PLM and Manufacturing IoT and Augmented Reality (AR) companies, the effort is on what Howard Heppelman calls the “physical-digital convergence,” leveraging i4.0 to help manage the workforce crisis of increasing retirements and a shortage of new hires. Like Ford, the company also sees opportunities to improve data usage, “looking across the enterprise at what insights can be driven to be handed back to the plant managers, workers, and maintenance teams that are responsible for squeezing every ounce of productivity out of the plant.”

Heppelman added that over the last two years, he has finally seen a number of organizations move from i4.0 technology pilots into implementation. “Companies are recognizing that… there is in fact a big opportunity at the end of the rainbow, and they're now shifting to, ‘how do we organize to go take advantage of that?’”

That top-line vision for what i4.0 can do “has to be flexible, because the technologies are changing. It can't be something that's rigid,” according to Dave Grimmer, who leads i4.0 research and development at Tier 1 automotive supplier, DENSO. Starting small allows you to learn and fail quickly in order to decide which efforts will truly add value, “so that when you build your vision, you're building it on data points that you can rely on.”

Eric Logan, Principal, Corporate Strategy, KPMG (US)

However, KPMG’s Eric Logan said he still sees organizations placing a lot of effort into individual use cases, but failing to take a holistic approach. “Remember, you're solving for a business problem, not a technology problem. The technology is an accelerator to help solve the business problem.”

To that point, often there’s too much focus on “electronic eye candy,” Grimmer said. “We can create a lot of things in the IoT space that look pretty on dashboards, but are they really creating the value to change the speed and the quality of your decision making? If it isn't doing that, you’ve got to stop doing it and take a look back.” DENSO has tried to standardize its evaluation of new technologies to make sure they’re unique and add value, he noted. 

The necessity of top-down transformation

Meanwhile, collaboration up and down the supply chain is the goal, but industry efforts remain fragmented, Grimmer said. “You can imagine how complex that is,” he said, adding that his company often steps in to help tier two and three suppliers. “They don’t have the resources or the expertise to even tackle this in a way that would make sense.”

Indeed, trying to institute an i4.0 initiative across thousands of suppliers around the world is a huge undertaking, Wyrzykowski said. “A vehicle has 30,000-plus parts, times whatever skews of that vehicle there are… plus a global footprint. How are you going to have an Industry 4.0 initiative around that large of a supply race and that big of a network standardization? Data analytics, machine learning and moving all the way into AI is really what we're using to get over some of those barriers.”

Internal culture also can get in the way, Wyrzykowski added, which is why it’s important to work outside the organization as well. “Since a lot of these technologies are in their infancy, you've got to make the right partnerships and get the right technology,” he said. “It’s not just the typical, ‘let's go hire that skill set.’”

Logan also emphasized that i4.0 implementation and governance needs to come from the top but acknowledged that the purse strings for such efforts are typically controlled by the functions, and responsibility and accountability are often fragmented. “Somehow you have to break down the silos and make sure that you’re working cross-functionally.”

Heppelman agreed. “Digital transformation, if done correctly, happens at the company level,” he said, adding that some in the industry get it. “They're saying we understand this is life and death, and so now the CEO is owning the project.”

He also echoed Wyrzykowski on the need to bring in expertise. PTC has “gone through an amazing transformation to become an IoT and CAD and PLM and AR and digital physical convergence company,” he said. “But every time we had to pivot, we pulled in somebody from the outside, because it’s not in our value network to be able to pivot on our own and move with the sense of speed and urgency that we need to.”

At the same time, the existing workforce has to buy in to the i4.0 transformation and build its own knowledge base. A recent KPMG survey assessing organizational maturity for i4.0 indicated that the most mature organizations had already established a collaborative culture, Logan said. One company he interviewed rolled out a 3D printing approach that was originated by the engineers on the shop floor, rather than by management. “In those organizations, maturity flows through quickly because they've already established a culture that really believes in innovation.”

Doug Gates, Joseph Wyrzykowski, Dave Grimmer Left to right: Doug Gates, Joseph Wyrzykowski, Dave Grimmer

Wyrzykowski added that technology can make an inexperienced workforce almost instantly more experienced. “You may have someone on the job for 30 years who's leaving, and you can enable your two- or three- or five-year hire using some of the technologies that we talked about to become a more capable worker.”

Finally, Heppelman reminded the audience that there’s not just one but multiple disruptive technologies at play, “any one of which should be concerning to a manufacturer’s business,” he said. “I would be concerned if my company was still asking the question about how serious it is.”

To access the latest KPMG whitepapers on this topic, please click on the links below.