Man and Machine in Industry 4.0

Man and Machine in Industry 4.0

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Man and Machine in Industry 4.0

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  • Preparing for the Changes

    The shifting employment landscape has significant implications for industrial companies, education systems, and governments. Business leaders and policy makers can consider the following recommendations as they seek to foster high employment levels while also promoting productivity and competitiveness.

    How Should Companies Respond?

    Companies will need to retrain their employees, adopt new work and organization models, recruit for Industry 4.0, and engage in strategic workforce planning.

    Retrain Current Employees. Companies in countries such as Germany, where the industrial workforce is fundamentally strong, should be prepared to frequently retrain their workforce to keep pace with the introduction of technological advancements. “We estimate that approximately 65 percent of employees in Germany are capable of upgrading their skills to the new requirements of Industry 4.0,” notes Constanze Kurz, an adviser on Industry 4.0 at IG Metall. Although many companies already have programs in place to requalify their employees, these efforts will need to be expanded and refined. Effective training programs for specific job-related skills should include both on-the-job instruction (through the use of augmented reality, for example, or by observing how experienced workers perform a task) and classroom instruction. It will be essential to offer online competency-based learning programs, given the scope and scale of the necessary retraining and employees’ need for flexible scheduling. Training in a broader set of skills will often be required, because many employees will be working on a greater variety of tasks. Fostering a positive perspective on change among employees will be essential for enabling them to adapt to new processes and challenges.

    Adopt New Work and Organization Models. Industry 4.0 creates new types of interactions between people and machines—interactions that will have significant implications for the nature of work and organization structures. To accommodate the increased variability in production schedules, companies should consider new work models that include flexible schedules similar to those already applied in office settings. As Stefan Gerlach, a researcher at the Fraunhofer Institute for Industrial Engineering IAO, explains: “Mobile-assistance systems and smarter machines pave the way for a much-needed flexibility in work schedules. Production shifts can have different starting times for each worker. In the future, machine operators might even work for different companies on different days of the week, thus enabling them to maintain full-time employment.”

    Companies will also need to rethink decision-making authority. For example, a robot coordinator should not need to wait for instructions from a supervisor before allowing a robot to initiate emergency repairs on production machinery. In many instances, companies will benefit from introducing flatter organization structures in order to manage the more dispersed use and control of data. Industry 4.0 will also require closer integration of a company’s IT department and the operational departments, so that software developers fully understand how their solutions are being used in production and operators understand how their production lines are affected by these solutions. For example, developers will need to obtain shop floor operators’ approval to reconfigure the software of a flexible production line. Interactions between developers and operators must thus be designed in a way that ensures seamless handling of complex IT tasks. Companies must also ensure that humans remain responsible for innovation and coordinate overall processes, rather than trying to automate these critical capabilities.

    Recruit for Industry 4.0. To succeed with Industry 4.0, companies should consider new approaches to recruiting that focus on capabilities, rather than qualifications determined by degrees and roles. Because employees will be working on a greater variety of tasks unrelated to their core education, recruiters will often have to look beyond formal degrees to identify workers with the relevant skills for specific roles. “We need radically different thinking and platforms to focus on capabilities instead of qualifications—an approach similar to the dating app Tinder for the new job marketplace,” observes Alexander Spermann, director of German labor policy at the Institute for the Study of Labor. That is, manufacturers should emphasize the relevant characteristics and capabilities in their job specifications, because formal degrees and training matter less. For example, instead of seeking a mechanic who is certified to perform a specific repair, manufacturers should look for a mechanic who is open to change and has expertise in repairing machines during production hours, specific experience working with a given machine brand, and experience using certain types of IT interfaces.

    To prepare for the shifting job requirements of Industry 4.0, companies should work with governmental job agencies to develop a set of specific capabilities for each role and design ways to assess individuals’ capabilities against these requirements. Because the talent pool for Industry 4.0 jobs is not limited to recent graduates, it is crucial that companies identify existing employees or experienced individuals from outside the company who possess the right capabilities for specific jobs. Employees in the recruiting department will need to update their skills to work effectively in this new environment.

    Engage in Strategic Workforce Planning. In addition to transforming the frontline industrial workforce, Industry 4.0 accelerates the need for new types of leadership skills and intensifies the competition for talent in many countries. (See “Prepare for E-Leadership and the Competition for Talent.”) To master the variety of challenges ahead, companies need to direct significant attention to “strategic workforce planning.” This effort starts with systematically gathering baseline information relating to all employees and categorizing the various types of employees into job families. Quantitative modeling can be used on the supply side to gather insights into employee attrition and retirements and on the demand side to simulate staffing requirements given the company’s forecast rates of Industry 4.0 adoption, productivity improvement, and revenue growth. The output from the supply and demand models can then be combined to produce a comprehensive gap analysis that gives insights into the necessary measures, such as people development, transfers, insourcing or outsourcing, and adoption of new recruiting goals, that companies should undertake. This planning process should be repeated annually.

    Prepare for E-Leadership and the Competition for Talent

    Manufacturers must ensure that their organization’s leadership capabilities keep pace with Industry 4.0’s rapid advancements. To apply state-of-the-art information and communications technology to oversee teams across borders and to use this technology to innovate, managers will need “e-leadership” skills. Building these skills requires action on four fronts:

    • Awareness. Recognizing and understanding digital opportunities and threats, such as the evolving digital ecosystem and the digital consumer
    • Capabilities. Building specific capabilities to commercialize digital ideas, such as capabilities to derive insights from data or lead digital teams
    • Culture. Cultivating the mind-set of a digital culture to advance the desired organizational behavior, such as embracing experimentation and failure
    • Enablers. Putting in place organizational enablers, such as a new IT department, to deliver sustainable results

    Industry 4.0 also further accelerates the competition for talent, as the shortfall of qualified young employees and an aging workforce will limit the pool of appropriately skilled workers in many countries. For example, BCG’s research forecasts a shortfall of 5.8 million to 7.7 million employees throughout Germany’s workforce (not only in manufacturing) through 2030.

    A local BCG publication is available in German on this topic. See Die halbierte Generation: Die Entwicklung des Arbeitsmarktes und die Folgen für das Wirtschaftswachstum in Deutschland, BCG report, May 2015.
    What Should Education Systems Do?

    Education systems should seek to provide broader skill sets and job-specific capabilities, close the IT skills gap, and offer new formats for continuing education.

    Provide Broader Skill Sets. Industry 4.0 will create many new cross-functional roles for which workers will need both IT and production knowledge. Many current educational programs at all levels provide highly siloed training and offer limited interaction among fields. To foster cross-functional knowledge and communication, universities should increase the number of interdisciplinary study programs that integrate IT and engineering, building on current programs in business informatics and business engineering. Traditional study programs, such as mathematics and physics, should include additional IT-related and basic engineering coursework and require internships in manufacturing to promote a common understanding of the requirements, terminology, and culture. Universities should focus on building specific capabilities for the new roles and adapting their curricula to meet companies’ expectations for Industry 4.0 skills. Universities also need to foster soft skills that enable workers to be open to ongoing capability development, interdisciplinary collaboration, and innovation.

    The academic community should explore opportunities to begin developing interdisciplinary skills for students who are still in high school. Such courses could combine instruction in building and programming connected systems, for example. Germany’s apprenticeship and cooperative-education models, in which theoretical and practical learning are combined, can be further applied domestically and adopted by other countries. These hybrid models are internationally recognized as superior approaches to professional training and are ideally suited for building capabilities related to Industry 4.0.

    Close the IT Skills Gap. Education systems must address the significant shortfall in IT skills required for Industry 4.0. For example, considering German manufacturers’ staffing requirements relating to Industry 4.0, we estimate a potential shortfall by 2025 of approximately 120,000 university graduates with degrees in IT and com- puter engineering. These skills require in-depth university training and often cannot be acquired by current members of the workforce on the job or through requalification.

    Universities, along with companies, industry associations, and governments, should encourage students to pursue degrees in IT or computer engineering and seek to attract foreign computer-engineering students. Academic leaders should work with government job agencies to help students understand that IT skills will be needed for all types of future employment, not only for Industry 4.0 jobs, and dispel the misconception that these skills are relevant only to specialists. Consistent with the objective of broadening skill sets, universities should further integrate elements of computer-engineering instruction into other disciplines, especially engineering and business. These elements would include mandatory instruction in IT infrastructure design, user experience programming, principles of electronic measurement and control, and programming for data science.

    Offer New Formats for Continuing Education. Academic leaders should prepare the education system to support the ongoing requalification of the industrial workforce, recognizing the need for training to take place in more settings than only the traditional off-site locations. This support could include providing online-learning platforms and access to free courses at “open” universities, which have no entry requirements, as well as using mobile apps to offer training and access to know-how. Universities could also offer a free, high-quality “massive open online course” in programming to all citizens. Academic leaders should work with business leaders to discuss their companies’ specific training needs. This collaboration could lead to new education models for business, such as instructional programs aimed at building capabilities rather than conferring degrees.

    How Can Governments Support Job Creation?

    To maximize the number of jobs created by Industry 4.0 and help companies retain as many employees as possible, governments must help improve coordination among stakeholders in business and academia. In many cases, these efforts will need to focus on promoting the successful implementation of Industry 4.0, which is a prerequisite to generating manufacturing growth and creating new employment opportunities.

    In Germany, the Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Education and Research have created a coordinating body that brings together stakeholders to discuss the long-term strategy for Industry 4.0. However, some experts have expressed a desire to see the federal government take on a stronger coordinating and financing role and build on best practices developed by certain states. A stronger central-coordinating body would assume a leadership role in defining a national strategy for Industry 4.0 and thereby help the German industrial sector realize the full potential of these advances. Through this body, the government would, for example, provide funding for crucial upgrade projects and develop job descriptions on the basis of capabilities. Such support would be crucial to many small and midsize German companies, known as the Mittelstand. These companies are currently unable to undertake the necessary research or make the investments and high-level decisions related to Industry 4.0 that could boost their long-term performance and thereby promote job creation.

    For more information on the initiative, see "Plattform Industrie 4.0,"