Participants from 47 mechanical and plant engineering companies were interviewed as part of the study. Andreas Gladis, Head of Inform's Production division, and Professor Dr. Volker Stich, Managing Director of FIR, answer SCOPE's questions about the success factors and stumbling blocks on the path to the digital factory and call on politicians to set clear objectives.

SCOPE: In your opinion, which industries are currently pioneers in digitalization?

Andreas Gladis: The topic of digitalization is of course important for all branches of industry. However, sectors such as the automotive industry or mechanical and plant engineering have always been and continue to be very strongly confronted with the topics of automation and Industry 4.0 due to their generally high level of mechanization in production and the many repetitive and easily automated work steps. They have therefore been dealing with this matter for a long time and are correspondingly well positioned in this respect. Nevertheless, there are still major differences between individual companies within these sectors. Some of them are digital pioneers and role models, while others still have a long way to go. For example: our customer Wittenstein, a manufacturer of planetary gearboxes, gearing technology, electromechanical drive systems and AC servo systems, recognized the potential of digitalization early on and set up its own Industry 4.0 department. In this "innovation factory", the company is driving forward its digital transformation. The aim of the development is the smart factory: in it, people as decision-makers should be at the center of production and supported by networked physical and virtual production elements and corresponding control systems.

SCOPE: What can other companies, especially smaller ones, learn from these pioneers?

"We often see that company size does not necessarily play a decisive role when it comes to digitalization." Andreas Gladis, Head of the Production division at Inform

Gladis: We often see that company size does not necessarily play a decisive role when it comes to digitalization. On the one hand, some large corporations have already come a long way towards Industry 4.0 due to their greater resources. On the other hand, however, there are many "hidden champions of digitalization", particularly in the SME sector, who are clearly playing a pioneering role. This is because they are often able to implement digitalization strategies more quickly due to their size and flat hierarchies. However, this rule cannot always be applied one-to-one to every type of company: digitalization often requires restructuring, for which smaller companies in particular do not always have the necessary financial, structural and organizational resources and capacities. On the other hand, the need for digital restructuring or reorganization in smaller companies is often not perceived as overly strong, urgent or even "painful" because processes are simply more manageable and generally more transparent there. However, the pressure to keep pace with competitors and to be able to react more quickly to changes with the help of digitalization measures is also growing here.

SCOPE: What role do you ascribe to politics when it comes to digitalization in Germany?

Professor Dr Volker Stich: Germany is lagging far behind countries such as China, the USA and Israel when it comes to digitalization. One of the reasons for this is that we are moving far too slowly. One indication of this, for example, is the extent to which approvals for research projects and the release of urgently needed project funding have been delayed and postponed in recent months alone due to the protracted process of forming a government. Politicians need to drastically shorten decision-making processes and set clear objectives in terms of 'where do we want to go? This must happen as quickly as possible and in the shortest possible time, because otherwise Germany will be left behind in the "digitalization game".

SCOPE: Will digitalization only really take hold in companies once a complete generational change has taken place?

Stich: Digitalization has long since found its way into companies - think of automation with robots or the use of sensor technology, for example. We are already very advanced in this area in Germany and employees of all ages are already working with these new technologies on a daily basis. What's more, not only younger but also older generations use computers, smartphones and tablets both professionally and privately as a matter of course and understand how to use them. What the next generation increasingly needs to bring with them is a more fundamental understanding of the necessary speed and adaptability of a company: while the older generations are still characterized by processes remaining stable against the background of a certain flexibility, our children have to deal with the topic of agility. This means that they are faced with the major challenge of developing completely new business models, possibly under completely new circumstances and possibly even in a completely new market - and doing so relatively quickly.

SCOPE: A lack of equipment with the right technology and a lack of skilled workers to deal with digital networking are two major hurdles on the road to Industry 4.0. How can this lack of knowledge and equipment be remedied?

Andreas Gladis: We believe that the introduction of digital processes and the transition to digitalization make sense for all companies and will be a decisive competitive factor in the future. A lack of skilled workers is certainly a hurdle here - but the problem of a shortage of skilled workers has existed for a long time, regardless of the digital transformation. Of course, this brings with it higher demands on the skilled workers sought and thus exacerbates the issue. However, if employees are involved in the digitalization process from the outset and introduced to new ways of working, there will be no major gaps in knowledge from the outset and core skills can be developed in a targeted manner. This requires appropriate training and education. On the other hand, I don't see a lack of equipment as an obstacle. The technologies and equipment are readily available - so it is probably more a question of willingness to invest and therefore "only" a financial hurdle.

SCOPE: Over a third of respondents (39 percent) see the organizational structure as an obstacle to the implementation of major Industry 4.0 projects. How could this be remedied?

"Germany is lagging far behind countries such as China, the USA and Israel when it comes to digitalization." Professor Dr. Volker Stich, Managing Director FIR

Professor Dr Volker Stich: The digital networking of a company has a profound impact on the entire organization, not only in terms of technological equipment, but also in particular on the entire work organization, the processes, the required qualifications of the employees, etc. This is why this digital networking only works if the entire process is supported by top management. This is why digital networking only works if the entire process is supported by top management. Managers must answer four questions for their company: Where do I currently stand? Where do I want to go? What does this mean for me - in other words, do I need to invest, train employees, change my organization, acquire new IT solutions? And the most important and at the same time most difficult question: How exactly do I do this? There is no one-size-fits-all solution here; instead, management must decide what makes sense for their own company and fits the organization. A digital roadmap then needs to be drawn up in which all existing and new digitalization projects are collected, dovetailed and put in a sensible order. The integration of all projects is crucial - if this is not done on a cross-company basis, digital networking cannot and will not be successful. Once again, top management must take the lead here.

SCOPE: You mentioned it: Managers play a crucial role in successful digitalization. What new challenges do they have to overcome in particular?

Stich: Firstly, management needs to rethink the way it manages employees. The long-established "top-down" model has had its day and will give way to a more collaborative approach in future. It is not enough to take off the tie, because this is a completely new way of managing: Instead of keeping large units stable in the long term, management will increasingly have to steer small, flexible units - at eye level with the employees. Another crucial point will be that managers will have to adopt a completely new, modern understanding of strategy. Traditional strategy was characterized by guidelines such as 'make sure everything goes according to plan', 'look for synergies' or 'consistently approach a specific goal'. In the future, however, managers must use their strategy to ensure that they can detect changes at an early stage and react to them quickly. It is important to think in an agile way with regard to your own processes and responsibilities. This is the only way to always have possible response scenarios ready for changing requirements, to create appropriate options and to keep them open. This also includes looking for skills inside and outside the company that can be quickly reconfigured to meet new requirements. With regard to new systems, new models and so on, it will also be very important to test them quickly for their suitability and benefits and to learn from them. Our German engineering mentality, which likes to test for a long time and then launch a 100 percent functioning solution on the market late, will no longer be expedient in this context in the future. I am sure that these points will separate the wheat from the chaff: Those who are able to live the modern understanding of strategy will win.

SCOPE: According to the majority of respondents, they are still at the beginning of their journey towards the smart factory, 55% do not yet have a digitalization strategy. What advice would you give these companies?

Andreas Gladis: There is no generally applicable digitalization strategy. Every company has to decide individually where digital processes make sense and add value. However, digitalization should take place across all departments and be holistic. This is the only way to achieve a real competitive advantage. After all, digital processes offer many opportunities. For example, they can help to save costs and increase productivity. A company must recognize this for itself and take the first step. This does not require a complete overhaul: Small initial steps or projects that build on each other are enough to start with. In general, a three- to five-year plan makes no sense anyway, as the market, requirements and, not least, technical possibilities change far too quickly. The key here is to be agile - not only in terms of digitalization, but also in your own digital development. We also take this approach with our software, which can be one of these first steps. It helps manufacturing companies to better plan their production using algorithm-supported software. We always adapt our solutions to the individual needs of companies and make agile adjustments where necessary.

Another factor that companies should consider in the course of digitalization is their employees: digitalization can only succeed if everyone in the company pulls together. To this end, it is important to allay employees' fears that they may no longer be needed as a result of the innovations. To counteract such scenarios, the employer should convey to them that they can also gain advantages for themselves through new digital solutions, such as new areas of work and more responsibility.

SCOPE: How can the German mechanical and plant engineering industry manage to transfer and expand its existing strengths into the "digital age"?

Gladis: German mechanical and plant engineering is the "backbone of the German economy" and a highly innovative industry that stands for precision and high quality when it comes to its own products. The industry should try to apply this precision and innovative strength to itself. The companies would therefore have to transfer their "spirit" and the drive to constantly improve and produce better to their own processes - and they are already taking the first steps towards digitalization mentioned above. Digital processes can help to build on the industry's existing strengths and make production faster and more cost-efficient in order to secure a competitive advantage in international business. The aim should therefore be not only to be a technological leader, but also to be process-reliable.

SCOPE: How do you think the increasing digitalization and networking of the entire production process will affect employees in the future?

Professor Dr. Volker Stich: Digitalization will not destroy the majority of jobs, as many fear. But it will change them significantly. Robots are taking over more and more heavy physical and repetitive tasks. At the same time, employees will have more decision-making work to do, supported by decision support systems. In addition, the demands on employees will change in general: in future, they will be required to learn at least one or two programming languages - just as it was important for us to speak at least one foreign language. This applies to absolutely everyone, regardless of their school or academic qualifications, and a rethink needs to take place here too: It is not only those with academic degrees who can and will be involved in IT and programming. In the future, this will affect every employee.

Background:

Together with the FIR e.V (Institute for Industrial Management) at RWTH Aachen University, Inform conducted a survey on the development and significance of digitalization in German mechanical and plant engineering to find out to what extent digitalization has already arrived in German mechanical and plant engineering. Participants from 47 different mechanical and plant engineering companies were interviewed. Comparative values from a similar survey conducted in 2015 serve as a reference. The comparison of the results makes it clear that there is a clear upward trend in the strategic importance of the topic of Industry 4.0 in mechanical and plant engineering. Not only has attention for the topic increased in general, but concrete measures for implementation in the area of digital networking have also been stepped up. Many of the companies surveyed stated that they had already initiated initial organizational measures. However, despite the topicality of the issue and the growing competitive pressure in the industry, many companies still seem hesitant to implement comprehensive Industry 4.0 strategies. cs