The Upcoming Revolution of Workforce Tech in Industry 4.0
By Aditya Majumdar, Pathway Ventures Fellow
America’s supply chain infrastructure is the backbone of our economy. In 2020, the COVID-19 pandemic shone a spotlight on this infrastructure, revealing just how brittle it can be in times of national crisis. As critical products such as cleaning supplies, PPE, and basic household goods either ran out of stock or faced massive shipping delays, it became clear that there were innovation opportunities throughout the supply chain to prevent similar breakdowns from reoccurring. As a result, companies operating within Industry 4.0 accelerated their product development to capture new opportunities and bring their technologies to the broader economy.
Given the rapid changes occurring in Industry 4.0, our team at Pathway Ventures has been studying the unique problems that manufacturing and supply chain technology companies face as a result of the increased reliance on data and digitization, particularly with a workforce that isn’t typically as tech-savvy.
In this article, we’ll outline the challenges and opportunities related to changing workplace dynamics within Industry 4.0:
- Automating and simplifying on-the-job training
- Ensuring industrial workers are matched to jobs that best match their skills
- Providing specialized apprenticeship programs to revive local hiring pipelines
What is Industry 4.0?
Industry 4.0 refers to the newest phase of the Industrial Revolution, broadly covering the themes of real-time and decentralized digitization, autonomy, and connectivity within manufacturing and supply chain management.
In contrast to previous phases, Industry 4.0 emphasizes cyber-physical connections. By taking a more holistic, interlinked approach to manufacturing, Industry 4.0 technologies allow business owners to better understand every aspect of their company’s physical operations. These business owners are able to access real-time analytics and insights that reveal gaps in their manufacturing processes, enabling them to add the right amount of automation that will boost their employees’ productivity, maximize their skills, and improve industrial processes.
🔥 Why is there so much buzz about Industry 4.0?
Technology to improve training and skilling programs within Industry 4.0 has become a prime innovation area due to structural changes within the sector.
- Workers are being displaced by automation. According to MIT economist Daron Acemoglu, between 1987 and 2016, automation displaced 16% of the industrial workforce, while only 10% of the workforce had access to newly created, replacement roles. Acemoglu found that while the introduction of earlier technologies and automation benefitted low-skill workers, in the 1990s and 2000s, the new types of roles available and the technologies being introduced primarily served high-skill workers instead. Not only have low-skill industrial workers been losing their existing jobs due to these automation trends, but they are often unable to find new roles that are good fits for their skills.
- Hiring workers in Industry 4.0 is more difficult due to a shrinking labor pool. The birth rate in the United States has been steadily dropping for years, so regardless of industry, relatively fewer newcomers are joining the workforce, and the average age of workers has increased — from 39.3 in 2000 to 42.8 in 2020. Gary Paul Green, a sociology professor at the University of Wisconsin, states that “technological change, especially computerization, has increased productivity and led to fewer workers in manufacturing. Globalization and the loss of routine jobs in the manufacturing sector to low-wage countries… have contributed to a smaller manufacturing [worker] base” in small communities that have only focused on industrial work in recent decades. Because it is now more challenging to find younger hires for manufacturing or supply chain related roles, companies are increasingly turning towards robots and automation to fill the roles they cannot find humans for. But while much of this automation is promising, the current reality is that these technologies are most effective when they complement a human worker instead of replacing them entirely.
- These trends present entrepreneurial opportunities targeting both industrial frontline workers, and business owners/managers. Employees are looking to keep their skillset updated so that they remain relevant in their current role, or at least set themselves up to land at another company without having to entirely exit the industry or community they have known for so long. Similarly, managers are looking to make their existing employees comfortable using new technologies and processes, while also looking to refresh a stagnating hiring pipeline.
Where are the high-potential opportunities for entrepreneurs to transform Industry 4.0?
As our team has continued to study the trends around Industry 4.0 and spoken to countless entrepreneurs building in the space, a few key opportunity areas have risen to the top:
1. Automating and simplifying on-the-job training
“Industrial firms have created a culture that makes it difficult for front-line workers to communicate training needs or ask for procedural changes which they believe would increase efficiency.” — Peter Costa, CEO of Baltu Technologies
There are a couple of major structural reasons for this misalignment:
- Smaller and medium-sized Industry 4.0 firms rarely have a department dedicated to skills training so workers may not be able to highlight skills gaps or provide feedback
- Compared to white-collar settings, managers in industrial organizations are more likely to have risen through the ranks without having received formal training in management or operations
Baltu Technologies empowers employees to troubleshoot and fix bottlenecks themselves with a just-in-time training platform. The Baltu platform enables skilled workers to document their expertise so workers with less training can easily reference and learn from others.
Technologies that democratize expertise without requiring formal training courses or lengthy onboarding sessions will decrease downtime, reduce safety incidents, and allow workers with less experience to do their jobs more confidently. Given the structural barriers to setting up relevant, ongoing training programs, technologies that allow industrial workers to quickly document and share their expertise will become increasingly critical.
2. Ensuring industrial workers find jobs that best match their skills
According to Deloitte’s Brendan Lehan, the industrial sector broadly emphasizes trust and a “family-centric environment” when making operational changes or promoting from within. Especially among smaller companies, this often resembles placing a square peg in a round hole; that is, existing employees are preferred over external hires due to their industry background, customer relationships, and loyalty, even if their skills may not be well suited for higher roles within the organization.
Additionally, Jessica Lee, CEO of Increment, says that low margins within Industry 4.0 make it difficult for business owners to provide rigorous support for onboarding and training. To overcome the cultural and cost challenges, it will be important for companies to place employees in positions that utilize their skills effectively.
Mapping pathways for career progression — Platforms such as FutureFit AI and Coursera’s Skills Playbooks provide employees visibility into open positions at their company, along with the learning tools and skills assessments they need to prepare for those roles. In a competitive hiring market, leveraging technology to retain employees by helping them find more suitable positions internally will be significantly more cost-effective than trying to rely on purely external hiring. And in an industry that strongly prefers internal promotions for cultural reasons, there remains a major opportunity to use skills-centric data to match existing employees to open roles where they can both succeed and grow.
3. Providing specialized apprenticeship programs to revive local hiring pipelines.
As young workers flock to cities, they leave behind a talent gap in industrial communities. With industrial workers aging and a limited talent pool, Industry 4.0 companies struggle to find talented new hires.
The issue is exacerbated by prospective hires not having access to or feeling uncomfortable with various newer technologies that are available for use in industrial settings. “Entrepreneurs new to the industrial sector should not assume that end-users will have the same baseline technology literacy you may find in other industries,” says Increment’s Jessica Lee. “Most shop floor workers often can’t use a smartphone or tablet at work and don’t have a work email account, making it difficult for them to enter real-time data easily, follow AI-driven guidance on new analytical dashboards, and otherwise work alongside interconnected technical products, although this varies from manufacturer to manufacturer.”
Where do we go from here?
To help bridge this digital divide, companies will increasingly need to focus on external training or apprenticeship programs:
- The best training programs will often partner with large manufacturing firms, local colleges, or the government to certify that graduates are well equipped to succeed in modern, tech-enabled industrial workplaces; Toyota’s FAME partnership and GM’s ASEP are prime examples of the amplifying effect of apprenticeship programs when they are backed by known brands.
- Programs such as Right Skills Now provide hands-on training to teach leadership, technical operations, and data analysis, while ensuring that students from any background feel confident in their ability to contribute and adapt. The latter is critical, as we know tech will continue to transform industrial workplaces, and employees will need to upskill themselves more than they ever have before.
The industrial sector has arguably never been more ripe for innovation than it is right now as the pandemic has uniquely stressed the sectors’ business models, hiring practices, training programs, and career pathways. Given the disruptions felt throughout the economy as a result of these stresses, it is critical that the brightest minds across business and politics equip Industry 4.0 employees with the technology and training to fortify the sector against future disruptions, while learning how to better place those workers in roles that maximize their professional success and happiness.
