The Blending of the Industrial and Electronic Worlds

The Fourth Industrial Revolution is Here

By Allison Sabia

Allison Sabia

The last two years have brought several seasons of change to industrial automation distribution. COVID-19 pandemic shutdowns, supply chain challenges and the Great Resignation have significantly impacted what industrial automation will look like and how distributors should react today to meet those future needs.

It’s a fact. Automation in the manufacturing industry—the fourth industrial revolution, or “Industry 4.0”—will be driven by the interconnection of technology and the data it provides, and distributors must make substantial investments and adjustments to remain relevant and viable.

Forecasting new models of doing business, budgeting capital investments in technology and recognizing paradigm shifts in industrial production will be the difference makers.

The value-add model

Distributors cannot simply rely on moving parts.

Those days are over. It’s not just about storing products anymore; it’s about being a value-add resource for both manufacturers and customers. Right now, manufacturers still have several distributors from which to choose, and they don’t only need a warehouse.

Customers can purchase products online, also from several distributors.

So, what added value is the distributor bringing to the manufacturer? To the customer? What is the differentiator?

For manufacturers, what are the marketing and advertising offerings? Manufacturers are looking for partners that have a plan for highlighting their products.

For customers, what technical expertise is there? Customers can purchase products anywhere, but where they need help is in the technical usage, integration and troubleshooting of industrial automation products.

Digital strategy

Industrial automation is going digital, and e-commerce provides the widest reach for attracting new customers. Manufacturers are investing in research and development, not in a customer acquisition and customer experience digital strategy.

The bottom line for manufacturers is about sales and how many customers are purchasing their products through the distributor. In addition to a value-add proposition for manufacturers, a digital strategy for how efforts will garner sales and increase the number of customers purchasing products is a must-have.

Distributors will need to be more focused on the digital distribution of product knowledge, technical expertise and customer support as well as what digital channels customers want to use. Many current and future customers are not accustomed to flipping through an owner’s manual or technical documentation and spec sheets to locate their answers. They will “Google” it or “YouTube” it.

Methods for a digital strategy must consider the types of avenues and channels with which manufacturers and customers prefer to exchange and learn information.

A digital strategy will only be as good as its digital e-commerce, digital merchandising and product information distribution platform.

Consolidation

The capital investments and expenditures required to put a value-add model and a digital strategy in place will simply not be available to every distributor. What’s more, to maintain a robust and thriving relationship with manufacturers, significant investments in product information management systems (PIMs), enterprise resource planning systems (ERPs), e-commerce platforms, digital merchandising and human capital in the form of a marketing team of copywriters, content creators, front-end and back-end web developers, SEO specialists and marketing managers is necessary to lead these efforts.

Until manufacturers reshore and get automated, supply chain issues will continue to drag, and distributors will need to consider ways of expanding lines while also shortening supply chain issues.

Mergers and acquisitions will further alter the industrial automation distributor landscape. Five years from now, the number of industrial distributors will be half of what they are today.

Human capital shortages

In the wake of the Great Resignation, human capital is now at an all-time low. The effects of this shortage will be felt in several key areas for industrial automation distribution.

First, and most importantly, manufacturers are ramping up re-shoring efforts to overcome the obstacles brought on by supply chain challenges. What this means, though, is that new onshore factories built in North America are going to be automated. The forecast of labor shortages and the need to increase production efficiency will drive new facilities to the industrial automation sector for direction, products and support.

Second, the need for automation products is going to increase, and now is the time for distributors to position themselves in the marketplace as a resource. This will be when a value-add model, digital strategy and consolidation efforts can pay off for distributors.

Lastly, from manufacturing to maintenance, repair and operations, the number of maintenance staff, operators and facilitators will be impacted, thus leaving many maintenance operations left to rely on automation. However, during this transition, many will lean heavily on distributors for assistance with product knowledge, troubleshooting, installation and technical support.

Diversity of thought

For distributors that consolidate, this will be a little easier, but for some, hiring will be challenging and tough. It is no reason to settle.

If anything, it is an opportunity to take a bold look at hiring practices.

Hiring the right people over hiring the best people—that is, the best person on paper may not be the best person for the organization.

The need for a diversity of thought in the automation economy will be huge.

While it is true that every company must decide on its own preferred qualities in employees, favoring diversity of thought as a quality in new candidates can help organizations gain new perspectives, approaches and points of view for problem-solving, innovation and processes. Tackling these types of issues with new ways of thinking fosters growth and retention.

To realize the benefits of diversity of thought, distributors should implement ways of assessing a candidate’s approach to industrial automation distribution.

Distributors should incorporate assessments and include a set of pre-hire questions for prospective candidates to address. What is most important is to seek out and utilize tools that are available to evaluate a candidate’s quality of diversity of thought before and during the interview.

Automation and the rise of data

The future of automation is data, and lots of it. Advancements in artificial intelligence (AI), data analytics, machine learning (ML) and predictive intelligence are leading the charge in the “smart factories” and re-shoring efforts of the immediate future. These advancements are also making significant inroads in maintenance, repair and operations, thus allowing maintenance to become more automated.

As the industrial automation industry continues to integrate Industry 4.0 technologies, 2023 will see a surge toward digital transformation. Manufacturers and maintenance operations will concentrate their efforts by investing in highly interconnected IT infrastructures and architectures to meet the challenges that data-driven automation requires.

The foundation necessary to meet data-driven operational efficiency requires a flexible, scalable and highly interconnected IT infrastructure. This level of connectivity enables manufacturers to control, operate and monitor their entire system of machines, applications and processes. This is where the Industrial Internet of Things (IIoT) makes it possible to connect, monitor and receive the data necessary for automation.

Using connected sensors and machinery, a complete data picture of the manufacturing process can be realized. IIoT not only allows operators and engineers to observe system health and performance but also to collect vast amounts of data to be analyzed for a host of preventative, predictive and performative purposes.

One of the most exciting trends will be in the fight against unplanned downtime. Over time, AI and ML software can detect subtle signs in equipment and processes to optimize maintenance schedules, find problems and anticipate breakdowns before they result in expensive downtime or damage.

Distributors will need to align their value-add and digital strategies with these developments.

The automation revolution is here

The adage in real estate is “location, location, location.” For industrial manufacturing, it is “automation, automation, automation.” Automation in manufacturing, distribution, warehouses, and yes – fast food, will become the norm. New automotive manufacturing markets like electric vehicles and the push for renewable and sustainable energy will fuel a rush for industrial automation parts and products for the safe transport of high-voltage energy and reliable connections for consumers to tap into for activities such as recharging and disposing of batteries.

And the list goes on…

Out of the ashes of the pandemic, supply bottlenecks and the Great Resignation, comes the Automation Revolution.

About the author

Allison Sabia has been in the electronics distribution industry for over 25 years. She is currently the president and CEO, and Board member, of Galco Industrial Electronics. Previously, Allison spent 23 years at Arrow Electronics where she served in senior-level roles in sales, marketing, operations and e-commerce. Allison received her BBA and MBA from Hofstra University. In 2016, Allison was named to the “Women Worth Watching” list by the Profiles in Diversity Journal. In 2019, Allison was also named to the Top 50 Women in eCommerce list. She is passionate about breaking down barriers for other women to succeed. She mentors several people with the goal of guiding the next level of leadership forward. She is actively involved in volunteer work and lives in the Denver area with her husband and two children.