Can the energy cost crisis accelerate digital transformation?
Craig Beck of Cheshire & Warrington 4.0 (CW4.0) proposes that an acceleration in digital transformation could be the one upside of the energy cost crisis.
UK Plc has long grappled with the question of how to boost productivity. For our small and medium sized (SME) manufacturing base, part of the solution hinges on increasing the adoption of Industry 4.0 technologies – however, so far, it has proven to be a hard sell.
The benefits of digitalisation are clear. A 2019 report from Accenture found that digital technologies have the potential to add £455bln in value to UK manufacturing over the next decade. On top of this, we will only be able to encourage more original equipment manufacturers to invest and grow here if they can plug into a supply chain that is digitally enabled, and the rationale is compelling.
And yet, anyone involved in digital transformation will tell you that boosting adoption in our sector is challenging, particularly when it comes to smaller firms. According to the OECD, the gap in digital adoption between businesses with 10-49 employees and larger firms has grown over the last decade. Because digitalisation is an important driver of productivity, and in turn wage growth, these gaps have contributed to increased inequalities among people, places and firms.
This is not because our SME manufacturers are lacking in innovation or ambition, far from it. Rather, the technology sector has a habit of shrouding itself in a level of jargon and complexity that can be alienating.
This sense of confusion has been highlighted in research undertaken by the University of Liverpool, UK. Among the biggest barriers that were cited as preventing SMEs from going digital, was a lack of understanding about what is appropriate technology (25%) and fears about the financial implications of making the wrong investment (21%).
Sadly, this means for smaller firms, lacking in capital expenditure or resources, the argument for investing in digital technology is not cutting through.
With this in mind, energy-price inflation is a major opportunity to illustrate just how effective digital transformation can be in having a positive impact on the bottom line for our SME manufacturers.
It is an immediate and tangible challenge that almost all manufacturers are facing. If experts and technology providers seize this opportunity, digital transformation can be boosted to help lower operational costs, while driving forward sophistication and innovation in our supply chain.
One clear pathway is through energy optimisation – reviewing present schedules, equipment and processes to ensure they optimise energy usage and can combat rising energy costs.
CW4.0 is helping manufacturing companies in Cheshire and Warrington, UK, identify and solve problems, and improve products and processes, using digital tools and technologies.
It is a digital innovation project, funded by the European Regional Development Fund, that aims to assist SME manufacturers by diagnosing their specific challenges and opportunities, and then working up a digital solution in partnership with them.
For example, Devonshire Bakery, a 100-year-old family-run manufacturer in Cheshire, was introduced to a delivery partner – the research engineering team at Liverpool John Moores University, UK. Operating multiple energy-intensive units every day, the business was particularly vulnerable to rising energy costs. Output tracking devices were installed on each piece of equipment, providing the business with live data to monitor its energy usage in real-time, making it easy to identify wastage.
The team has since been able to identify energy-efficient equipment and make an informed decision on where to invest. This data has also allowed the team to make informed decisions on how to adjust day-to-day processes, including reducing stock in freezers and altering the times that machinery is turned on and off. This data is shared throughout the whole team, meaning everyone can buy into this evidence-based approach.
The immediate need to address energy costs provided a compelling reason to engage with CW4.0, and Devonshire Bakery is now planning a broader range of digital adoption projects as a result. For instance, by installing a system to monitor stock control, the business has saved storage costs, staff time, wastage, and reduced the reliance on international suppliers that can be susceptible to long lag times.
Taking SME manufacturers on this kind of iterative journey of digital adoption is key. For example, knitted mesh specialists Knitwire understood the need to digitally transform to remain competitive, but the prospect of devising a five-or-ten-year digital roadmap seemed costly and daunting.
Working with a specialist team of research engineers through CW4.0, Knitwire’s management team was advised on gradual, cost-effective, digital changes that would have a direct impact on its business.
Engaging with SMEs on their own terms and with a focus on their immediate challenges – rather than bombarding them with the art of the possible – is the only way we will convince more businesses to start their digital journey. And once they start, they will continue. The first 10 SME businesses to work with CW4.0 have gone on to invest a combined £91,390 in adopting new technologies, with applications as diverse as rapid prototyping and testing of new products, to adopting immersive technologies to improve the customer experience.
