After years of hearing that digital transformation will be the magical ingredient for companies of all shapes and sizes, the consensus is that we are finally on the cusp of integrating emerging technologies into business optimization strategies such as quality management. However, the adoption of next-generation tech is only one part of a quality transformation puzzle that is indelibly linked to the requirements of Industry 4.0.
According to Boston Consulting Group’s Quality 4.0 Takes More Than Technology report, around two-thirds of companies believe that next-generation technologies such as predictive analytics, digital twins, simulation testing and embedded sensors will have an impact on quality within the next five years.
Under the umbrella of Quality 4.0, these technologies will become both the backbone of the fourth industrial revolution, the “factory of the future,” and a path to quality leadership. In addition, the required integration will be one part of a business strategy that will include soft skills and establishing a culture of quality within a digitally-savvy workforce.
Companies that master the challenges associated with the adoption of Quality 4.0 will be able to see tangible benefits in all areas of the value chain, the report said. In addition, the opportunities to not only reduce the number of product recalls but also increase customer satisfaction and operational efficiency will give adopters a competitive advantage.
“Quality 4.0 is among the many developments that are giving rise to the ‘factory of the future,’ in which digitally enhanced plant structures and processes increase productivity and flexibility in the factory and throughout the supply chain,” BCG said. “Digital technologies can help improve quality in various ways. For example, companies can monitor processes and collect data in real time and apply analytics to predict quality issues and maintenance needs. Digital tools also enable people to do their jobs faster, better, and at reduced cost.”
The future of quality
Over the next few weeks, the ETQ Blog will be taking a deeper dive into some of the Quality 4.0 topics highlighted in the BCG report, but the onus is on companies to understand that many of the solutions are already here in some form.
The BCG report – written in collaboration with U.S.-based quality community ASQ and the German Association for Quality (DGQ) – was based on a global survey of executives and quality managers from 221 companies. Quality 4.0 has been a hot topic in the QMS sector for some time, and this report identified both the current state of adoption and a number of potential challenges to the integration of the principles and approaches detailed in Quality 4.0.
The concept of Quality 4.0 has been around since 2017 and was originally coined by LNS Research. The term is a nod to the digital impact of Industry 4.0, an oft-cited concept that includes technologies such as machine learning and artificial intelligence, mobile, augmented and virtual reality, the cloud, connected devices (the Internet of Things), big data and data lakes, social media and blockchain.
The caveat is that while these methods are at the center of Quality 4.0, quality transformation occurs when tech is coupled with a culture of quality, leadership and a responsive workforce.
Survey respondents, for example, said that Quality 4.0 would impact manufacturing, research and development (R&D), service and after-sales, logistics and sales, and procurement. As you might expect, manufacturing and R&D were predicted to benefit most from the integration of Quality 4.0 technologies, with elements such as predictive quality, machine vision quality control and digital standard operating procedures (SOPs) all considered to be important use cases.
In terms of R&D, the report said that simulation testing and AI would improve the product design process dramatically.
AI may still be a nascent technology, for instance, but it can be used to support failure mode and effects analysis (FMEA). Enabling a preventative quality model means potential failure points are identified earlier and at a lower cost. In addition, companies would be able to take advantage of usage pattern data that IoT-connected sensors capture to not only enhance the design of future products but also find out what doesn’t work at all.
Procurement was one area was cited as having significant Quality 4.0 adoption right now.
Over 50 percent of respondents said that their companies were using digital dashboards to track supplier performance, with the generated data giving an insight into where quality risks already exist in the supply chain. This information would allow companies to both add transparency to the supply chain and enhance future procurement negotiations, two elements that could boost the bottom line.
Quality 4.0 is off to a slow start
As we noted above, nearly two-thirds of survey respondents stated that Quality 4.0 would have an impact on a number of business optimization processes within five years. In addition, people said that the quality function itself would need digital technologies to comply with quality governance, performance management and training.
The problem is that hardly any companies have made any progress on their Quality 4.0 journey.
Only 16 percent of respondents said that their organization had started to integrate digital technologies – identified by BCG as frontrunners as opposed to followers. Only 20 percent had begun planning for integration, while around 63 percent of people said that no decision or plan had been made as yet. And the number of companies that has successfully adopted the requirements of a Quality 4.0 implementation? Zero.
Companies in Europe were more likely to be frontrunners compared to their U.S. counterparts – 21 percent and 6 percent, respectively – and respondents cited the widespread acceptance of a total quality management culture as a reason why. Germany was seen as a leader in Quality 4.0 implementation, primarily due to the high-tech manufacturing strategies – “Industrie 4.0” – encouraged by the German government from 2011 onwards.
Quality 4.0’s slow start is the result of the fact that only 25 percent of respondents said that their company either had a digital transformation strategy in place or possessed working knowledge about the tech requirements of Industry 4.0. In addition, a large proportion of organizations don’t have a culture of quality to fall back on, with a mere 14 percent of people saying that employees have an understanding of their role in maintaining quality.
Major roadblocks to adoption rates are the usual suspects, the report said, citing a lack of talent, time, outdated systems and no defined strategy as reasons for the low adoption rates of digital quality solutions. And while quality initiatives are being discussed at executive level, only 27 percent of people said that their company had articulated its quality-related goals and objectives to the workforce.
Catalysts for change
So, if adoption and implementation rates are already low, what business factors are going to persuade decision makers to integrate Quality 4.0 into their working practices? And, importantly, if there are more followers than frontrunners, what will be the catalyst for change?
The report said that people wanted improvements in three distinct quality-related areas – performance, responsiveness and productivity. All three of these metrics could be measured by overall manufacturing quality (first-pass yield, scrap rate, rework), the impact of poor quality on customers (rejects, complaints, warranty claims) and, somewhat significantly, the cost of poor quality itself.
Technology aside, the report also noted the shortage of digital skills and the failure to implement a culture of quality from the top down. Unsurprisingly, frontrunners were more concerned about data-related roadblocks, which included the fragmentation of data and the integrity of the data being generated.
In addition, companies that are “winning” are investing in people and empowering the quality management professionals to become evangelists. These leaders will be proficient in soft-skills such as communication, change management and teamwork, with collaboration between the C-Suite, IT and internal quality auditors a vital part of strategic or long-term planning.
Quality will be the winner
The digitization of quality is not going to happen overnight.
In fact, the integration of Quality 4.0 will require companies to take a structured approach to both the technological needs and the human element. With that in mind, BCG’s findings make it very clear that companies need to ensure that their adoption of digital quality solutions addresses a full range of strategic, cultural and technological issues.
Ultimately, digital transformation accompanied by advanced quality practices will give companies a competitive advantage by creating operational efficiencies and improving products and services. But creating a culture of quality will be the more elusive goal, requiring sustained investment across the classic trinity of people, process and technology.
ETQ helps organizations realize the business opportunities that quality creates. Our industry-leading Reliance 2019 SaaS solution features built-in best practices and best-in-class flexibility, with the software enabled to optimize the critical processes that drive excellence through quality.
To learn more about how ETQ can help you become a quality leader, contact us today. Alternatively, reach out for a demo, and find out how to move through your quality journey.