4th industrial revolution’s impact on the back office

4th industrial revolution’s impact on the back office
The fourth industrial revolution will not just digitally transform manufacturing, but bring potential benefits to white-colar staff

The big digital manufacturing breakthroughs such as 3D printing, big data analytics and human-robot collaboration (HRC) focuses on the impact expected on the factory floor. But this industrial revolution may have its most profound effects on white-collar staff in the offices,  the Manufacturing Global reports.

Industry 4.0 integrates digital connectivity with manufacturing technology to build products faster, better and cheaper. By 2030, the research show that the global value-added potential of this wave of innovation will reach $1.4 trillion. By providing real-time information about customer demand, production capacity, operational performance and product quality, Industry 4.0 will enable decision making that dramatically improves process efficiency in everything from pricing to production planning. Consequently, while the factory floor will undoubtedly benefit enormously from Industry 4.0, the greatest gains could actually occur in non-production areas. And as Industry 4.0 digital innovations such as algorithm-based decision-making take hold in areas such as R&D, product launches, pricing, planning, dispatching and purchasing, companies will likely automate many jobs currently done by humans.

At the same time, however, new digitally supported opportunities will emerge for white-collar employees that possess the required skills and capabilities.

Many tedious and tough clerks’ duties will be taken over by office automation and artificial intelligence capabilities, for example:

  • Demand forecasting and intelligent pricing:  Today, such forecasts result from estimates made by sales and marketing executives, market expectations, and overall market competition. Imperfect and unresponsive to developments beyond the sales and marketing departments knowledge base, such forecasts typically lack rigor. Instead, some companies have begun to improve on this approach by adding big data techniques. Automatically drawing on data from a wide range of sources, centralized analytic algorithms predict future demand from different customer segments and geographies. Ultimately, real-time, algorithm-based demand forecasting will feed into many related processes, such as market research, sales planning, production planning and scheduling with very little human assistance.
  • Smart purchasing and outsourcing: Benefits will result from increased integration transparency with suppliers, access to a wider range of suppliers and greater flexibility in make-or-buy decisions. Manufacturers will standardize the exchange of fully digitized product and production-related data with suppliers. This will enable them to overcome a variety of current shortcomings such as inconsistent digitization, which can hamper the request-for-proposal process.
  • R&D efficiency and product launch: Gains will emerge from extensive simulation, data integration, big data pattern recognition and real-time feedback loops. Thus, R&D departments will require fewer costly, labor-intensive physical prototypes, replacing them with digital modeling and virtual testing environments.

In each of the above examples, Industry 4.0 will drive new levels of efficiency across a manufacturer’s white-collar functions, enabling companies to do much more, often with fewer back office employees. At the same time, however, these digital solutions will generate new business opportunities by, for example, enabling manufacturers to help their business-to-business (B2B) customers reduce costs, improve their own customer offerings and create both value and jobs.

Disruptive yes, but these changes can also create opportunities for the firms and white-collar workers that embrace them. Doing so will require flexibility and a willingness to gain digital savvy, compelling employees to learn different ways of working and to take on new responsibilities. While clerical and administrative white-collar positions are vulnerable to Industry 4.0 disruptions, with the right training and experience, people in those jobs can begin to transition to roles that rely on human problem-solving capabilities and creativity—human talents that algorithms can’t as yet match.

Industry 4.0 promises to reinvigorate manufacturing, but as with every other industrial revolution, it will also displace workers that lack the skills and training needed to operate in the new environment. There is a bright side, however: the forces behind Industry 4.0 will also open new opportunities for white-collar workers who can adapt to their new connected environment.

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