Customer Centricity, Resilience and Sustainability: On the Threshold of Industry 5.0?

In order to assess the potential of digital transformation for companies in the mechanical and plant engineering industry and thus also for important players in the printing industry, the supporting association of drupa VDMA, the largest network organisation and an important voice for the mechanical engineering industry in Germany and Europe, conducted a joint study with the management consulting firm McKinsey. The result is the publication „Customer centricity as an opportunity for digital breakthrough“ (German only), which shows how far the digitalisation of the product and service portfolio in mechanical engineering has progressed. 

Focus on the Customer

One of the most important findings of the study is that so far only 0.7 per cent of sales in Europe are generated with digital platforms and value-added services – so there is still enormous growth potential here. In order to build such digital platforms, many companies rely on cooperations. This also meets the desire of customers for solutions that are not dependent on a single manufacturer. For them, openness and compatibility are priorities in their decision-making. Furthermore, customers pay particular attention to the performance and safety of the equipment. High-quality machines with integrated digital services form the basis for success. 

Also in their online magazine „Digital Transformation – Digitisation changes the world“ (German only), the VDMA emphasises that there is no standard strategy for how machine and plant manufacturers should approach the digitisation process, but that compatibility and common principles are an urgent recommendation. Ultimately, the focus of all activities should be on how to generate as much added value as possible for customers. This is how companies differentiate themselves from their competitors and create an effective customer loyalty instrument that pays off in the long term. 

From Industry 4.0 to Industry 5.0

According to the European Commission, the development towards customer-centricity of digital processes and solutions described above is an elementary component of Industry 5.0. Other key characteristics are resilience and sustainability. Especially the latter is a core factor and still a unique selling proposition that companies should occupy as long as not all have joined the race by force.

So it is no wonder that the interplay between digitalisation and sustainability is also a topic in the VDMA magazine referenced here. In his article „Why digital transformation and sustainability are mutually dependent“ (German only), Matthias Brockmann, Managing Director of the Cluster of Excellence Internet of Production (IoP) at Rheinisch-Westfälische Technische Hochschule Aachen (RWTH), examines the question of how much Industry 4.0 has actually found its way into practice so far and whether the mechanical and plant engineering sector is even ready for the next revolution.

He starts by naming the major challenges that go hand in hand with the digital transformation in companies. These include, for example, selecting the right data sources, determining the measurement frequency and, last but not least, ensuring their subsequent accessibility or reusability. The latter is achieved when collected data volumes can be provided quickly and in line with the respective demands. In this context, Brockmann speaks of digital shadows and compares them to a search engine that delivers relevant information on queries in real time. In order to drive this progress efficiently, he also advocates for setting up sector-specific standards that are actually already in the development stage.

Combining Two Megatrends: Go for Sustainability in Digitisation

This leads him to the following conclusion:

„the revolution is here, but at this point we cannot predict what it will result in. […] Whether one particular platform or many different ones will dominate cannot be clearly answered even ten years after the revolution was proclaimed. But this is precisely its great opportunity: digitalisation makes it possible to have a better and faster overview of the interaction between supply chains, production processes and the use of energy and resources. This can be used to maximise profits, but also to boost sustainability.”

After all, despite the associated energy consumption and emission increase, digitalisation has the potential to save resources because it makes data on raw materials, the choice of supply chain or related energy and resource consumption available. Thus, data-driven efficiency gains can also have an impact in these areas. And this is exactly in line with today’s spirit: Such efforts improve the company’s image and reputation, increase its attractiveness as an employer and have a positive influence on customers‘ purchasing decisions, as they are willing to pay a higher price in favour of sustainable products. Therefore, the data collected in the context of digitalisation measures should not only be used to optimise manufacturing processes in terms of productivity, but also to establish sustainability and improve the resource management of companies. In this way, digitalisation can contribute to making production more resilient and more sustainable, allowing companies to maintain innovative capacity and strengthen their market position in the long term.

All in all, after consulting the cited sources, it can be said that after the first digital steps were taken within the framework of Industry 4.0, which focused on the networking of systems and plants, the next logical stage is now the connection with customers and their expectations, which, in addition to flexibility, also include the urgent desire for more sustainability.

Are you working on digital transformation in your company and where do you stand on the way to Industry 5.0? Are there any learnings and insights that you would like to share with us?