Addressing a fractured industry – what are the three things vital to survive in Industry 4.0 Dr. Harry Teifel www.progressusdigital.com November 2018

4IR has multiple implications 4IR implications Leveraging the power and creativity of customers Combined effect of disruptive Technologies Networked and multi-party value creation and innovation Ever-changing combination of competencies Data as driver of competitiveness

4IR means greater competition and shake-out + Level of Competi- tiveness in industries Time The 4IR game doesn’t allow anyone to abstain from playing. External Technology-enabled drivers dictate change and the need for constant organizational improvement. Competition drives new competitive benchmarks for all that players that operate in the market; this becomes the new standard. Ultimately there is a shake-out battle between successful 4IR-adoptees - and those who are unable to compete. With this cycle repeating itself. Progressus supports clients in translating and dealing with 4IR-world realities. New Technologies are available and allow for performance improvement Adopters increase their competitiveness and disruption is initiated Competition in the market moves to a higher level as benchmark Traditional players can’t keep up, a shake-out occurs and the cycle repeats itself

4IR changes the Rule-book Old Rule-book 4IR Rule-book Economies-of-scale Differentiation through data and cost Owned Resources / Assets, Erect Entry Barriers, Lasting competitive Advantage Access, loaned / shared Assets with Scale Effect Innovation and value creation dominated by one party Multi-party and networked Value Creation Higher predictability and work-to-plan activities Agility to respond to uncertainty and change

Industries including Manufacturing 4IR unfolds in waves of disruption 4IR Disruption Waves 1st wave Disruption Consumer Coal-face 2nd wave Disruption 3rd wave Disruption Back-end 4IR industries Middle-end 4IR Industries including Manufacturing Frond-end 4IR Companies

4IR readiness as massive challenge Limit Massive investments required by SA companies for 4IR 4IR Business readiness v Gap Ideal iv Manufacturing 4IR evolution levels iii ii Current i Time Challenges Dealing with 4IR change Agility Data exchange Sharing of resources and capital

Critical Success Factors (CSFs): 4IR Critical Success Factors Critical Success Factors (CSFs): Networks Data Mind-set

Hybrid Digital Supply- and Value Chain 4IR CSF 1A: Fundamental Shift to Value Networks In the past Hybrid Digital Supply- and Value Chain Interim Digital Value Network The Future Traditional Supply Chain

4IR CSF 1B: Value Networks with multi-tier architecture Sector Value Networks 1 Application Sustainability + Commercial Solutions Sector Commercial Clusters / Coops 2 Cloud / Middleware and Data Bundling 3 Thing / Data and applied Technology “Things”, Data or Technologies

Any-to-any inter-compatibility 4IR CSF 1C: Any-to-any Value creation PLM Best Practices Automation / Robotics Mixed Reality, Analytics and AI New-age Production (3D, Composites etc.) IIoT and real-time Command & Control Design Proto-type Industri-alize VC / SC Config Build & Ship Any-to-any Manufacturing Value creation Any-to-any inter-compatibility Digital Twinning Full data exchange Digitally enabled Business Flexibility

Differentiation through data 4IR CSF 2: Differentiation and value from data Differentiation through data Multi-Thing Real-time Data Digital Twin including Mixed Reality Digitize, read & visualise Explore, simulate and learn future-view Analyse, control and learn past-view Write, automate, and (self-)optimize Command & control process automation Analytics and Pattern Detection Machine Learning / AI Various Technologies: 3D Printing, Automation, Blockchain and other

4IR CSF 3A: Retirement of 2IR/3IR Thinking

4IR CSF 3B: Re-framing from negative to positive spiral Competition getting worse Less profits More fire-fighting More control for more risk More Shareholder value Less time for customers Poor future Business case Limitation of investments Previous restrictions (e.g. size, investments etc.) outdated New opportunities : Market Technologies Offering Partners Boundless possibilities exist Every country Every Sector Every Company Self-fulfilling prophecy of despair and decline Vision of a better future state within 4IR paradigm

Conclusion: Need for SA Manufacturing Platform Solution 4IR Value Network / Platform Roadmap Demand as critical enabler for sustainability Sector / Industry specialisation and value-add 4IR Solution Architecture & Focus areas Responsibilities and Platform Working model Business Model and Funding / Investments