Global manufacturing is undergoing its fourth major reinvention cycle. Industry 4.0 has ushered in a wholesale transformation of manufacturing, driven by smart factories and new technologies to manage supply chains, systematize decision-making, and reengineer physical processes in real time. Or so the story goes.
For Dom Mirabile—a consultant for a leading consulting firm—Industry 4.0 offers a convenient shorthand for the digitization trend among producers, but it also invites oversimplification.
“A lot of the narrative around the Fourth Industrial Revolution suggests that if people adopt these exponential technologies, we’re going to have huge jumps in productivity and integrated supply chains,” Mirabile says. “It’s all predicated on getting manufacturers to adopt new technology.”
But for Mirabile, Industry 4.0 represents an aspirational narrative. “These are capital-intensive businesses,” he says. “They’re generally not the quickest to change. They’re focused on costs and production targets, and it can be really hard for them to innovate. So the Industry 4.0 narrative of ‘invest big or be left behind’ isn’t always going to resonate.”
The Hero’s Journey
At 26 and just starting his career, Mirabile was wary of that single paradigm. “Manufacturing is a huge system,” he says. “You have big OEMs, small suppliers, public-private partnerships, policy makers, and solution providers. It’s a big ecosystem, and I wanted to see as much of it as I could for myself.”
And he has. Mirabile took a sabbatical, loaded a few essentials into a backpack, and took off on a four-month odyssey. He circled the globe, visiting 21 countries, 35-plus cities, and more than 50 manufacturers from Pittsburgh to Shenzhen to Hamburg. He traveled by road and rail, including a seven-day trip from Vladivostok, Russia, to Moscow on the Trans-Siberian Railway.
“I toured tiny electronics manufacturing in China,” Mirabile says. “I saw shipbuilding in Korea—probably some of the largest-scale manufacturing on the planet—and everything in between, including apparel in Vietnam, jet planes in the US, industrial components in Thailand, and cars in Germany.” The list goes on.
This added up to a kind of professional “hero’s journey,” an archetype for adventure popularized by Joseph Campbell and inspiration for Mirabile. “I had a few years in the workforce and had seen a lot of different types of manufacturing in the US,” Mirabile says. “I was having trouble reconciling the hype of the Fourth Industrial Revolution and felt I needed to get grounded in some of the operational realities.”
Understanding Cultural Realities
Mirabile was steeped in American manufacturing, with its focus on operating efficiency, process control, and corporate organizational structures. “When you go to other places, you realize they’re not always designed with the same principles,” he says.
He has seen significant operational differences in low-wage or newly industrialized countries but hesitates to attribute the divergence solely to labor costs.
“Many of their organizations have different guiding principles, so they tend to operate—and innovate—differently,” Mirabile says. “If you go to Southeast Asia, many of the workers live on-site in state-sponsored or employee-owned dorms. The factory is not solely their workplace; it’s often their community and home. It’s an institution that provides for them. You can think about how that changes work and the bonds that bind everyone there.”
The creativity of small manufacturers with limited resources was notable—in tooling, for example. “One producer bought all their equipment used and basically hacked it to be exactly what they needed,” he says. These were not professional engineers. “They just tinkered and figured it out to make it work for them,” Mirabile says. This was just one example of the creativity and resourcefulness of manufacturers all over the globe.
In Southeast Asia, most manufacturers are focused on moving up the value chain from low-value production. Many manufacturers no longer seem content to supply to the multinational brands and are building their own brands and selling directly. “Global brands outsourcing a lot of their manufacturing to Southeast Asia have given away that manufacturing capability and know-how,” Mirabile says. “Now their suppliers are using it to grow brands themselves.”
Europe, Mirabile found, seems to have much in common with the US, with its similarly high cost of labor. One critical difference is in European labor policies. “For a long time, they’ve been trying to work out the right human-machine split for work and how to integrate automation while protecting jobs,” Mirabile says.
Finally, “human-centered factories” seem to differentiate Japan, where mass layoffs are rare and automation tends to be focused on augmenting employee productivity rather than replacing human workers.
Mirabile’s sojourn gave him the opportunity to critically rethink some of the industry’s conventional wisdom. He offers reframes of several such concepts:
1. Innovation Mechanisms. The process of innovation in manufacturing appears to be changing—Mirabile notes the rise of “co-creation platforms” built to outsource design and manufacturing expertise. “Others are partnering with or incubating startups to set up test beds for cutting-edge technology,” he says. “They are defining new tactics for how to drive innovation onto the production floor.”
2. Talent Models. The talent conversation in manufacturing should go beyond training and reskilling. Some visionary manufacturers are evolving to provide open talent models and genuine career pathways. One manufacturer in Thailand assembles handbags with a distributed, highly skilled workforce—working from homes on-demand. “This allowed the manufacturer to throttle their workforce based on demand and lift up some remote communities with access to work,” Mirabile says.
3. Digital Platforms. “With so much hype around digitization, I searched for those rethinking the underlying systems in manufacturing,” Mirabile says. China is investing heavily in creating high-tech, integrated value chains: building smart factories and integrating the raw-materials provider with the fabricator, designer, and customer. “The tech giants are taking the lead on this, not the big Chinese OEMs,” he says. “They’re trying to get everyone on their ‘industrial cloud platforms’ [to create] one seamlessly integrated value chain.”
4. Investment Playbooks. Leading manufacturers are getting creative about how they access and deploy capital. Mirabile says some have co-invested with suppliers or customers, set up microfactories to test new production technologies, or let design act as a forcing function for new production technologies by rolling manufacturing innovation into their R&D budgets.
5. Smart Factories. Dynamic systems continuously optimizing digital and physical processes are the 4.0 ideal, but that vision is well ahead of what Mirabile encountered. Managers should first focus on flexibility as a necessary condition before layering in intelligent systems. “I saw factories ripping out air ducts and unbolting equipment to achieve ultimate flexibility,” he says. “They’re starting with being able to change the length of production lines with demand, then moving on to closed-loop automation.”
Overall, Mirabile was most impressed with companies taking a holistic approach to transforming themselves—not merely through the latest tech. “It’s in vogue to say, ‘We used to be a consumer-products or industrial or health-care company, but now we’re a technology company,’” he says. “Many are trying to reenvision themselves through that technologist lens. But the companies doing that really well are the values-driven companies. They tend to let their idealism for serving customers or sustainability or product design drive their innovation process. This includes not only adopting new technology but also rethinking all these other things, as well: talent, investment playbooks, organizing principles, and so on.”
The trip proved that the promise of Industry 4.0 is so much more than the nuts and bolts of new technology.