Canadian manufacturers lag in the adoption of Industry 4.0 technologies

Manufacturers around the world are adopting Industry 4.0 technologies and integrating digital technologies that optimize their processes. But Canadian companies have not been quick to adopt advanced technologies, according to the 2020 Advanced Manufacturing survey of mostly small and medium-sized manufacturers.

Industry 4.0 focuses on automation, interconnectivity, machine learning and the analysis of real-time data that involves the Internet of Things (IoT), the cloud, advanced computing and artificial intelligence.

The survey for BDO Canada LLP by PLANT Magazine/Annex Business Media looked at how 251 owners and senior executives view these technologies and probed their level of adoption. Many see the value of advanced technologies but are wary of costs and return on investment as they continue to apply more traditional manufacturing methods.

They’re also concerned that people with the skills necessary to make the most of digital technologies and networks are in too short supply. Challenges include data being complicated and requiring special knowledge, increased cybersecurity risks, and the massive investment needed to replace machinery.

New technology leads to competitiveness

Most executives (87 per cent) recognize emerging technologies allow companies to compete globally.

“They realize that Canadian manufacturers are competing with companies around the world. This survey echoes our experience. And almost 80 per cent see the Industrial Internet of Things as a business growth opportunity,” says Mike Gillespie, partner, manufacturing leader, BDO Canada LLP. “Sixty-four per cent of respondents say manufacturers with smaller operations have more to gain from Industry 4.0. This is welcome news. The first step to change is acknowledging the need to change.”

Low adoption rate

But just 24 per cent of executives are currently applying the Industrial Internet of Things (IIoT), 36 per cent are planning or evaluating, but 24 per cent aren’t familiar with the technology’s capabilities and 15 per cent stated IIoT is not applicable to their operations.

They see the top IIoT applications as: improving efficiency and productivity (33 per cent); providing more visibility into production processes (23 per cent); improving maintenance functions (22 per cent); tracking materials and shop floor assets (20 per cent); and pulling together business data from shop floor to top floor (20 per cent).

Challenges to adoption

Challenges encountered while implementing technology strategies include resistance to change (51 per cent), lack of skilled talent (48 per cent), funding (46 per cent) and integrating with legacy technology (36 per cent).

Most companies are using traditional means to compile information. Seventy per cent are using spreadsheets such as Excel for production and material planning, and 46 per cent use accounting packages while 43 per cent generate manual paperwork.

Integrating ERP for the supply chain was cited by 35 per cent of respondents and MRP by 26 per cent. Only 14 per cent are employing sensors to capture big data.

Research firm RK Insights in Toronto conducted the survey through July and August for PLANT Magazine, in partnership with sponsor BDO Canada LLP, an accounting, tax and advisory firm. The margin of error is +/- 5 per cent, 18 times out of 20.

Most of the companies are small: 52 per cent have fewer than 50 employees and 47 per cent of respondents hold controlling or minority ownership, or have partners. Average annual revenue of all respondents is $65.7 million, but 52 per cent take in less than $10 million.

Download the survey results and executive roundtable report from https://www.plant.ca/2020-advanced-manufacturing-report/.