Smart and intelligent systems for business process management

Dr B K Mukhopadhyay

(The author is a Professor of Management and Economics, formerly at IIBM (RBI) Guwahati. He can be contacted at m.bibhas@gmail.com)

Dr. Boidurjo Rick Mukhopadhyay

(The author, international award-winning development and management economist, formerly a Gold Medalist in Economics at Gauhati University)

It was back in 2011 at the Hanover fair, that the German group of scientists Acatech presented the term "Industrie 4.0", a synonym of the Fourth Industrial Revolution a.k.a. Industry 4.0. Since then, industry 4.0 has expanded globally and quickly. When understood in simple terms, the fourth industrial revolution is the introduction of modern ICT in production. Industry 4.0 combines production, information technology, and the internet, and moves toward a digital-physical system in manufacturing. In essence, the '4.0' includes the big four we use and embed almost everywhere – cloud, automation, intelligence, agile. According to PwC, companies deploying Industry 4.0 initiatives expect to see a 2.9% increase in revenue and a 3.6% reduction in costs by 2020.

With the 'predictive analysis' that systems can recently self-develop and also manage, systems can now sense when problems are arising or say, particular machinery needs to be fixed, which can potentially empower managers to solve potential issues before it's too late and too big. A McKinsey report focusing on Industry 4.0 applications shows that an African gold mine identified a problem with the oxygen levels during leaching, this increased their yield by 3.7% which is saving $20 million annually.

What Industry 4.0 has

in store for SMEs.

Industry 4.0 has also reached emerging countries and across several industries that have already shaped the new political strategies and trade relations. For example, China making full use of Industry 4.0 to continue dominating its place as the world's manufacturing home and logistics influencer; interestingly, for its 'Made in China 2025 strategy, the state has pinpointed ten industries within which leading Chinese global companies are set to dominate, these companies are into high-end automation, robotics, artificial intelligence, and robotics (FAZ 2019). India also has its own "Make in India" initiatives to boost several industrial sectors and key players, e.g., the automobile industry where components of Industry 4.0, as well as the Internet of Things, could significantly boost the nature of operations and domestic manufacturing at the global standard.

In the OECD area, SMEs are the predominant business type that account for about 99% of all firms while providing for about 70% of jobs and generating from 50 -60% of value-added. Similarly, in emerging economies, SMEs contribute up to 45% of total employment and 33% of GDP. SMEs make up more than 96% of Asian businesses and provided two out of every three private-sector jobs on the continent. However, not all these countries have the right state and local level support strategies to retain the benefits of the fourth industrial revolution.

Artificial Intelligence-managed manufacturing concepts for SMEs

However, most SMEs lack either a concrete model or support system to incorporate introducing a massive dose of technologies all at one point, from the Internet of Things (IoT) to Big Data analytics and these shape the logistics and procurement strategies. While these technologies can almost immediately start making processes and systems more proactive and efficient, the support system that needs to be built first needs to identify what kind of smart and intelligent systems an SME can absorb given its innovation absorption capacity. Each case would vary.

Majority of the time if we look at SMEs in the media or food & beverage industry using industry 4.0, it's largely about creating adapted design solutions for production or procurement systems. While SMEs may not always have the resource capacities, both human and financial, to systematically investigate the challenges and potential of introducing Industry 4.0, many SMEs work on developing smart manufacturing concepts, and automated logistics systems that are either AI-managed or/and cloud-based. One thing that can be done fairly quickly, however, is to establish a culture of continuous improvement.

With intelligent and cloud-based systems, firms can do better resource planning. This would ensure better resource management, using the right volume of materials in stock and ensuring there are no overorders based on projected capacity as estimated. This would address the potential cash flow issue. When orders are satisfied with the flexibility to cope at capacity levels, confidence is also built between B2B and B2C. Another example, setting up electronic-customer relationship management (e-CRM) system with an ERP that helps suppliers read sales trends, project order volume, and liaise with clients – all at the same time. Finally in this context, for SMEs to remain competitive, the ability to tailor products according to customer needs and customise quickly while also making available high version numbers at low batch sizes is now a prerequisite. This is where automated manufacturing processes come in, a setting where individual and customer-specific products are fabricated according to mass customisation requirements. This is another way that industry 4.0 could support SMEs.

More examples… Smart

systems can lead to improved business processes

Integrating Industry 4.0 with SMEs operations also helps with compliance requirements, for example, while food manufacturers are required to prove provenance, aerospace demands evidence of tolerances and QA levels, these are aspects that consumers today care about. Customers expect traceability and to be able to say/ share that they associate only with firms that are ethical and believe in sustainability - these are buzzwords today. A digital system helps SMEs track and trace materials whilst fulfilling compliance requests automatically. It's much more organised, methodically arranged, and can also be shared easily when required.

An SME that is in the IT and software development business wants to scale the operations up. The small team size, uncertain market demand, and resource constraints are typically the barriers that come in the way of expansion. This is where cloud computing [another component of Industry 4.0] can come in. Cloud computing, putting it simply refers to the delivery of on-demand computing services over the internet on a pay-as-you-go basis. When we compare and contrast on-premise and cloud-based computing, it helps to make a more informed decision about which of the two could be more efficient. On-premise requires payment of lump sums for scalability only to get lesser options, i.e., once the business scales up it becomes difficult to scale down - this could lead to losses in infrastructure and maintenance costs. Cloud computing, on the contrary, provides an option where the business can pay based on how much of the services are used with faster provisions for scaling up or down.

For SMEs in the logistics industry, both the business and customers prefer transparency and openness in the logistics process - between the order information and the last stages of a product lifecycle. Typical cloud-based logistics software packages can provide agile, real-time communications across supply chain components (e.g., ships can talk to warehouses via interconnected systems) that contribute to higher and measurable efficiency gains along with collaborative efficacy. In addition, the level of security is also higher than on-premise options, e.g., cloud systems allow privilege-based access only, where customers can access information that they require while securely hiding company-sensitive data.

Additionally, there are immediate cost and efficiency gains with cloud computing. Using cloud technology does not require any hardware, IT, centralized global connectivity, and large upfront lump sum costs. By moving the logistics and supply chain management to the cloud, businesses can reduce the upfront capital investment while any previous integration and configuration costs get added to operating costs. With all the services online, businesses can automate repeatable tasks using configurable rules, routing guides, policy management, and custom workflows that exist in the cloud. Cloud solutions leverage managed automation and data analysis, leading to more intelligent systems of resupply processes. Cloud technology empowers your management team to make more intelligent decisions without senior managers experiencing decision fatigue regularly.

Cut to credits, projections show that the global cloud computing market will grow by $ 461 billion by the last quarter of 2025. That will be a 17.5% Compound Annual Growth Rate (CAGR). Today, large companies are not the only ones with access to cloud computing during industry 4.0. Small businesses have also teethed into cloud computing to leverage the technologies to allow efficient logistics businesses to boost optimum productivity gains though a significant majority [e.g., agri firms and natural resource-based firms], without the right mentoring and support, find it challenging to put the Industry 4.0 paradigms into practice. A digital transformation strategy offers opportunities for SMEs' growth and maintaining competitiveness that has a wider impact on trade relations and creates new internationalisation opportunities.