Industry 4.0: Adoption Challenges in Indian Manufacturing

Industry 4.0 – also known as the Industrial Internet – is the result of Internet-driven interconnectivity, digitisation, and massive advancements in automation, Big Data, and digital technologies like the IoT, AI, and ML. In this new age of the "smart factory," manufacturing companies have considerable opportunities to transform how they operate, manage, and invariably optimise their value chains.

In fact, research has discovered that over a 5-year period, Industry 4.0 can boost manufacturing efficiency by 18% and reduce costs by 21%. In addition, it can yield robust qualitative benefits around planning and control, manufacturing flexibility, organisational resilience, customer satisfaction, and faster time to market.

And yet, many manufacturing organisations, particularly in India, struggle to even get started with Industry 4.0 initiatives. These challenges prevent them from optimising their supply chains, reducing waste in factories, identifying new opportunities for value creation, and leveraging the power of data-driven business decision-making.

This article explores some of these key challenges and suggests solutions to address them.

Challenge 1: Identifying the Most Suitable Business Cases

Industry 4.0 is already having a positive effect on existing business models. It is also helping to generate new disruptive business models. However, to best leverage Industry 4.0, it's vital to select business cases that can deliver a greater ROI in the shortest possible time. But this is where many companies fall short.

One reason is that they cannot properly articulate their desired future state linked to their business strategy and goals. Another is that it's not always easy to outline a clear business case when expanding beyond the factory to reach across the end-to-end value chain. For these reasons, they cannot select the best possible use cases for pilots. By understanding these issues, they can formulate a positive business case (or cases) that will deliver the maximum ROI.

It's also essential to draw up a value stream map (VSM) to understand the current state of operations, define the problem to be solved in detail, and clarify what needs to be accomplished with new tools and technologies.

Challenge 2: Selecting the Right Smart Devices for the Right Needs

Connected devices and technologies are the key enablers of Industry 4.0, whether it's IoT components, gateways, and platforms, or cloud computing, Big Data, communication technologies, RPA, ERP, manufacturing execution systems (MES), etc.

As the number of such connected devices, sensors, and embedded systems increases, manufacturing firms cannot always identify which devices they actually need. This "problem of plenty" prevents them from accelerating their Industry 4.0 journey. Network and device misconfigurations are another problem that hinders their Industrial Internet goals.

One way to address this challenge is to develop a comprehensive hassle-free sourcing strategy with an experienced solution provider. This strategy should ensure quality products, services, and timely delivery. Collaborative platform models also enable better time-to-market, resource pooling, and cost reduction.

Another option is testing, selecting, and validating a given device or platform to determine which works best for your manufacturing operations. This translates to assessing factors such as:

  • Possibility of real-time data analytics for improved decision making
  • IoT component capability
  • Cost advantages
  • Ability to manage communications
Challenge 3: Data-driven Decision-Making and Data Security

The Industrial Internet is about hyper-connectivity and huge continuous flows of data. But not all manufacturing operations can analyse or use this data in an integrated or structured way to optimise production or support data-driven decision-making.

Further, according to one PwC survey, "unresolved questions concerning data security" is one of the top challenges for the successful implementation of Industry 4.0. To protect their data and IP assets, Indian manufacturing companies need robust control technologies and software architecture expertise. They must also create an up-to-date inventory of digital assets to pinpoint existing vulnerabilities and implement the right tools and safeguards to protect these assets from bad actors. Finally, they need strong internal data governance policies to support cross-organisational data sharing for new Industry 4.0 initiatives.

Challenge 4: Integration with Existing Technologies, Processes, and Workflows

The Industrial Internet is about both the horizontal integration of processes and data with external stakeholders like customers and third-party partners and the vertical integration of internal processes and data flows. Such enhanced integration helps create innovative business models, revolutionises product portfolios, and even lowers market entry barriers.

Nonetheless, coordination and integration with existing technologies, IT systems, workflows, and datasets remain a challenge. Older legacy systems may not be able to accommodate new technology, so it's vital not to invest in these tools without first getting a full lay of the land. Thus, to take full advantage of Industry 4.0, manufacturing firms must first assess their current IT and OT systems. Based on this assessment, they should invest in upgrades and ensure that their IT stack is scalable and obsolescence resistant. They should also create an ecosystem of external technology partners that can help them seamlessly transition to Industry 4.0.

Challenge 5: Cultural Pushback and Lack of Leadership

Many manufacturing companies struggle to get the most out of the technology due to internal resistance and pushback. Often, this is because the idea of "fail fast" is frowned upon, which stops innovative thinkers and "intrapreneurs" from sharing or experimenting with their ideas.

Another problem is that the adoption of new technology and techniques demands new skills, attitudes, and aptitudes that workers may be unwilling or unable to learn. Finally, weak leadership prevents companies from getting a high ROI from the Industrial Internet.

To address these challenges, leaders must embody the changes they want to see and promote, both through their behaviour and messaging. They should set an example by using Industry 4.0 tools and encourage and reward staff for doing the same. To further minimise resistance and pushback, it's also crucial to clearly explain the benefits of Industry 4.0 to the workforce and prepare them for upcoming changes with well-structured, high-quality training.


In a utopian world, all manufacturers would be able to reap the benefits of Industry 4.0 by investing in tools and technologies and then hitting the "On" switch. Unfortunately, the reality is not quite so simple, and many companies grapple with a range of challenges that keep them from achieving a high ROI from the Industrial Internet.

That's why it's unwise to assume that any Industry 4.0 initiative can be effortlessly kicked off with one solution, one device, or one business case. For a sustainable, efficient, and profitable move to this new paradigm, organisations must understand these challenges. They must also look at these issues holistically and from the perspective of their business strategy. Finally, they should create a comprehensive roadmap that incorporates planning, adoption, measurement, and scaling to reach their Industry 4.0 goals.