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Capturing Industry 4.0 trends to accelerate recovery in a post-pandemic Thailand

   Posted on 03.06.2021 by SEA-VET Admin, Bangkok Post, McKinsey & Company | Bangkok Post
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Expert Insight | Alpesh Patel and Parimol Karchanachari | McKinsey & Company

Bangkok Post (28 May, 2021) - Advances in technology and changes in society are rapidly transforming how businesses operate on every level. COVID-19 is accelerating these trends in operationally intensive companies. Developing new strategies and processes to grow the workforce is a key issue for business leaders.

Confronted with the largest health and economic crisis in recent history, industrial digitization is facing its biggest test to date. COVID-19 has forced companies across sectors to take extraordinary measures to protect their people and maintain operations. Those that had scaled their Industry 4.0 deployment prior to COVID-19 are finding themselves better positioned to respond to the crisis. Others are re-evaluating the direction of their operational strategies, changing both the business issues they want to address and the technologies they can use to do so.

Whether companies are ahead of the digital curve or lagging behind, all are impacted by the automation revolution that COVID-19 is accelerating. In our survey of more than 400 companies worldwide, 56 percent of respondents told us that Industry 4.0 technologies have been critical to their crisis response.

That percentage is even higher for executives in Southeast Asia where 62 percent said Industry 4.0 has been keeping their company’s operations running and helping them meet business objectives during the pandemic. In fact, 58 percent of respondents from Southeast Asia cite agility and customer-centricity as their company’s highest strategic priority when it comes to Industry 4.0 adoption.


TOP CHALLENGES IN IMPLEMENTING INDUSTRY 4.0 SOLUTIONS IN THE CURRENT ENVIRONMENT

However, adoption comes with challenges. Globally, executives cited lack of funding because of COVID-19 as their biggest challenge in implementing Industry 4.0 solutions. In Southeast Asia however, nearly 40 percent of companies said their number one challenge is a lack of relevant people, skills and knowledge.

Many companies were already struggling to find tech talent even before the pandemic — 43 percent of executives report existing skills gaps in their organisations. Now they face new limits on labour mobility and access to workplaces. With the next wave of digital disruption at our doorstep, what steps can organisations take to prepare the workforce and capture new value?


THE ROAD AHEAD IS BUIILT ON SKILLS

Most companies are pushing on with their transformation plans despite the pandemic, and with Industry 4.0 still top-of-mind. Yet our research shows that progress has become more difficult. Companies that have paused Industry 4.0 projects since the onset of the pandemic cite a range of challenges, including access difficulties due to lockdowns and the introduction of remote working, cash constraints, and teams being diverted to other urgent issues.

Given the unique circumstances of the pandemic, agility and flexibility in operations have emerged as top strategic priorities above raising productivity and minimising cost, which used to be primary objectives in the past decade. Similarly, technologies that enable remote working and collaboration topped the list of priority Industry 4.0 use cases, with more than half of respondents working on projects in that area.

With the acceleration of Industry 4.0, many jobs in Thailand may change, many quite profoundly, and the majority of Thai employees today will likely need to develop new skills. Companies need to consider shifting the skill profiles of their entire organisations. While all employees may need to upskill themselves in broad topics, such as the business value and applications of digital and analytics, some may need much deeper and targeted reskilling for new roles. This is particularly true for certain sectors in Thailand, such as manufacturing, which are more susceptible to automation.

To get the right people and processes in place to support their Industry 4.0 ambitions, companies will need to develop and deploy the infrastructure and capabilities to reskill at scale. The post-COVID-19 economic environment might make it easier to hire people with some of the key skills companies will need in the coming years, such as data scientists and IoT engineers.

Players with significant long-term talent requirements will also need to step up their in-house capability building efforts, especially for key roles that require a combination of deep domain expertise and digital skills, such as analytics translators or product owners. The Thai government is addressing the talent needs of the private sector by continuing to support programs to enhance digital skills and infrastructure, as well as joining public-private partnerships around talent and digital ecosystems, with the long-term aim of driving its Thailand 4.0 digital economy vision.

There are no quick and easy fixes to talent and organisation challenges. Meanwhile, the imperative for rapid development and deployment of new solutions will require Thai companies to accelerate the adoption of agile ways of working, using small cross-functional teams and rapid, iterative processes. The critical link lies in companies’ ability to upskill talent at the same scale and pace as technology to realise the full benefits of Industry 4.0 transformation.


A LAUNCHPAD FOR ACTION - PROGRAMMES AND TOOLS FOR ADOPTION AT SCALE

If all sectors come together and collaborate, there could be significant progress in successful adoption. A case in point is the Industry 4.0 Human Capital Initiative (IHCI) in Singapore, a government funded programme that supports companies in implementing and deploying Industry 4.0 solutions to improve productivity. As the name suggests, this includes a key focus on human capital, working closely with human resources leaders to identify jobs and tasks that are impacted by technology adoption, conduct skills gap assessments, and design training programs.

67 companies across 12 industry sectors are or have already taken part in the initiative, and the results have been significant, with some achieving up to 200 percent productivity improvements. These companies come from a wide range of manufacturing sectors – from electronics to consumer goods – and were in varying stages of maturity in their Industry 4.0 implementation, which further demonstrates the value that such programmes can have for companies across all stages of adoption.

The coronavirus crisis is changing the rules of the digital game. The pandemic has reinforced the value of Industry 4.0, but it has also exposed the limitations of today’s implementations and set a higher bar for success.

As businesses across the world face a painful transition to the post-COVID-19 next normal, some companies may be tempted to slow, or even pause, their digital transformations. That would be a mistake. Industry 4.0 leaders are already reaping the benefits of their pre-pandemic investments. Instead, we believe companies should accelerate their digital efforts, targeting the most strategically important opportunities, aiming to achieve real scale and keeping the workforce at the centre of transformation.


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03.06.2021
SEA-VET Admin
, Bangkok Post, McKinsey & Company | Bangkok Post

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