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How Canadian manufacturers are leveraging technology to future-proof their business


Industry 4.0 is transforming manufacturing in Canada, as digital tools and technology become more accessible and cost-effective.

The 2023 Manufacturing CFO Outlook Survey by BDO USA found that 36% of manufacturers polled—of which 14% are Canadian manufacturers—will pursue Industry 4.0 investments to mitigate risk and uncover value. Further, approximately one third of respondents included digital transformation as part of their top three resilience strategies. 

Although Industry 4.0 applications were already underway in many manufacturing and distribution companies around the world even before the COVID-19 pandemic, the past three years have made it clear that supply chains are vulnerable and highly complex, making automation technologies even more valuable. As we navigate towards Industry 5.0, the integration of human-machine collaboration will further optimize supply chain management and manufacturing processes. 

As manufacturers navigate the post-pandemic landscape, digital solutions offer the opportunity to rethink traditional manufacturing enterprise models to reduce costs and increase resilience. While dedicating full organizational support behind advanced technologies might initially appear daunting, particularly those in smaller manufacturing enterprises, acknowledging the challenges and seeking tailored solutions can pave the way for gradual and impactful transformation.

What is Industry 4.0 and how is it different from Industry 5.0?

Industry 4.0 is a journey towards a fully connected business ecosystem that is continuously improving and evolving. 

From its beginnings as a massive automation and digitization program, Industry 4.0 grew out of numerous technological advances in four main categories: software, sensors, processors, and information and communications technology (ICT). ICT involves the digitization of data (information technology) and the advancement of networks, Wi-Fi, wireless and Bluetooth capabilities (communications technology).

Industry 5.0 represents the next stage of digital evolution that builds on the foundations laid by Industry 4.0. This set of technological changes takes the concept of connectivity and automation a step further by reintroducing the importance of human creativity into the manufacturing process. 

The path towards Industry 4.0 and Industry 5.0 can mean different things to different organizations and stakeholders, depending on their goals, available resources, and technological readiness. Universally, however, manufacturers across the globe are realizing new opportunities for cost reductions, improved product quality, new revenue streams, and service differentiators that make them more competitive.

The challenges for Canadian manufacturers

While some Fortune 500 manufacturers began the Industry 4.0 journey a number of years ago, companies in the middle market—and in Canada in particular—have struggled to fully realize a path to digital transformation. 

Despite gaining traction, many owners and executives in the manufacturing sector, especially small and medium-sized businesses, see Industry 4.0 as an insurmountable undertaking.

Cost concerns are one of the primary challenges Canadian manufacturers face when considering Industry 4.0 adoption. On top of the costs associated with acquiring, implementing, and integrating advanced technologies, there are ongoing expenses related to maintenance, updates, and training. Businesses must carefully balance these costs against the potential long-term benefits and return on investment (ROI).

Did you know a range of government incentives are available to help manufacturers adopt digital technologies?

Our team can help you identify the right technology to implement and apply for the benefits that fit your business and goals, from grants and subsidies to zero-interest loans. Reach out to explore the options available to you.

Start your journey

Developing the right strategy is another major hurdle. The crux of a successful digital transformation lies in an integrated path forward, which may be difficult to execute when knowledge gaps exist. Given these complexities, manufacturers may consider partnering with a digital transformation consultant who can bring the necessary expertise to build a robust, well-informed transition to Industry 4.0.

Industry 4.0 in action:

Our client relied heavily on slow legacy systems and manual processes that were time-consuming, labour-intensive, and prone to human error. By helping them leverage our award-winning HeroPath data pipeline, we provided them with a secure, scalable, and cloud-based data analytics solution that led to more efficient and effective processes. With access to near real-time reporting tools and an interactive visualization dashboard, our client saved thousands of work hours with timely and proactive data analysis.

Companies also need to engage appropriate resources to drive the plan forward and deploy new initiatives. The migration to Industry 4.0 is often a gradual process, which can be particularly time-intensive for small and medium-sized businesses because modifying existing processes, integrating advanced solutions, and upskilling the existing workforce all demand time. Despite the initial investment, the long-term gains in efficiency and competitiveness far outweigh the upfront costs. Industry 4.0 is, to some extent, already adopted by larger manufacturers and, with the right guidance, is generally considered to be achievable for small and medium manufacturers. In time, as manufacturers of all sizes lay the foundation from their Industry 4.0 transformations, transitioning into Industry 5.0 can become more viable.


How can manufacturers drive productivity and growth with technology? Discover practical examples and strategies.

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Six ways Industry 4.0 can help middle-market manufacturers

According to studies from Canadian Manufacturers and Exporters (CME) and PLANT magazine, the Canadian manufacturing industry is facing a number of issues, including talent shortages, supply chain disruptions, productivity, the cost of business and development, and adapting new technologies. Industry 4.0 initiatives can solve many of these problems, including these six key benefits:

With increasing pressure to produce quality products for lower costs, manufacturing companies must find ways to do more for less. New technologies such as robotics, data analytics, and embedded sensors can eliminate time-wasting procedures and improve efficiencies.

As the manufacturing sector comes to terms with a lack of skilled labour, hiring difficulties, and an aging workforce, advanced technologies can be critical in keeping operations thriving. By automating routine tasks, enhancing workforce skills, improving efficiencies, and even being a force to attract young talent, Industry 4.0 enables manufacturers to achieve higher levels of productivity and competitiveness, even in the face of a diminished labour pool.

Industry 4.0 in action: Labour shortages forced our client to further streamline backroom operations, despite having recently invested in automated packaging. We advised they move to cloud-based accounting and supported them through the entire transition. We also helped them integrate the cloud platform with their existing workflows and suppliers. This new cloud-based system gives them better insights into their financial data and ensures staffing issues don’t impact operations or client services.

The cost of doing business in Canada is high, due to wages, energy costs, the chip shortage, rising inflation, regulatory compliance, and other factors. Canadian manufacturers who have difficulty competing on price need to differentiate themselves through innovative products and services.

Industry 4.0 opens up new pathways to doing business, such as enabling the development of smart logistics solutions, leveraging predictive analytics to anticipate supply chain disruptions, and receiving real-time visibility into supply chain management. These advancements all help manufacturers diversify their supply chains and build greater resilience.

Over the next five to 10 years, a large percentage of Canadian companies will come under new ownership, either through business succession or sale. Initiatives such as scheduling algorithms, simulation tools, and predictive maintenance can increase innovation and product quality, which in turn raises the intrinsic value of the company. As today’s business owners begin to look to the future, implementing the right digital tools now can help preserve their legacy.

Traditional manufacturing has struggled with issues related to a lack of centralized management, operational silos, and fragmented data. As cloud computing, edge computing, and plant and corporate systems become more sophisticated, digital factory strategies are more accessible and affordable. Managers and plant operators are able to collaborate across multiple locations, consolidate and interpret data, and share information directly from their workstations.

Industry 4.0 in action: One of our clients struggled with siloed decision-making, outdated reporting, and a heavy reliance on manual processes, which made analyzing scenarios expensive. We helped them identify relevant systems to invest in and created an integrated three-year roadmap, which drove efficiency and data-driven decision-making within their operations. With the help of our scalable roadmap, they anticipate a tenfold return on their investment.

Organizations in all industries are under increasing pressure to measure, address, and report on their ESG impacts. As automated processes gain momentum throughout factories and supply chains, they can, if used effectively, facilitate the benchmarking and reporting of corporate sustainability practices.

Building an Industry 4.0 roadmap

To stay competitive both domestically and on the global stage, Canadian manufacturers need to be proactive about their Industry 4.0 transformation and implementing digital initiatives. While both the journey and the end state look different for every organization, the roadmap to Industry 4.0 consists of six stages.

  • Conduct a holistic assessment of your company's resources, information systems, organizational structure, and culture to determine where you stand on the Industry 4.0 maturity model.
  • Examine your organization's readiness across its main functions: development, production, logistics, services, and marketing/sales.
  • Identify any gaps, such as cybersecurity and IT systems, the availability of a data analytics program, or a workplace culture that supports flexibility and adaptation. Some areas of your business may be higher or lower on the maturity model index than others.
Evaluate your current state
Digital maturity level Business processes How to improve
Level 1
  • Organizational and operational silos
  • Islands of technology and data
  • Manual and non-standard processes
Explore IoT opportunities and focus on data governance and information sharing across the critical, high value processes.
Level 2
Breaking down silos
  • Collaboration by exception
  • Connected data & devices
  • Share data upstream or downstream
  • Pockets of process-level analytics
Connect disparate data sources and operational systems to enable cross-functional collaboration and visibility.
Level 3
Integrated enterprise
  • Collaborative planning
  • Standardized ERP suite
  • Consolidated business intelligence/data warehouse
  • Vendor information sharing
Integrate data with operations to automate processes, optimize performance and improve decision-making agility
Level 4
Integrated value chain
  • Integrated performance management
  • Formation of digital thread
  • Process automation
  • Predictive analytics
Focus on third-party systems integration and end-to-end visibility, with heavy consideration given to controls and cybersecurity for information sharing.
Level 5
Adaptable ecosystem
  • Data monetization
  • Inter-company planning & collaboration
  • End-to-end process management
  • Prescriptive analytics/robotics
Consider new revenue streams and increase collaboration and value co-creation with customers, suppliers, and vendors.

Achieving Levels 4 and 5 on the digital maturity model represents an advanced stage of digital transformation, and many manufacturers are still in the early stages of this journey. For small and medium-sized manufacturers especially, reaching Level 3 of the model is a more practical and achievable target for the near future.

  • Your company’s unique Industry 4.0 vision should include the organization’s present state and desired outcomes. Set priorities based on strong, tangible returns.
  • Formalize benchmarks and key performance indicators (KPIs). According to the CME, approximately 90% of manufacturing companies do not engage in benchmarking their operations against industry leaders. Measuring your progress against the current state of your competition or the industry as a whole will provide valuable insights and improvement opportunities.

  • Be proactive about creating a funding blueprint. Companies that are the most successful adopt a forward-looking approach and present a strong business case.
  • Government are available to Canadian companies based on a project’s technology readiness level.

  • Engage internal and external stakeholders who will work collaboratively to drive initiatives forward. Assign clearly defined roles.
  • Internal stakeholders should include a cross-section of employees from multiple levels and functions: executives and senior leadership, HR, production, logistics, finance, sales, etc.
  • External stakeholders may include suppliers and customers who will be impacted by your projects, and third-party experts who can assist with planning and implementation.

  • Focus on solving a concrete business problem or operational bottleneck. Digitalization often begins by taking small steps and building to a larger goal over time.
  • Follow the three “i’s” of Industry 4.0: make your project incremental, iterative, and integrated. Leave room for flexibility and adaptation, and work to minimize organizational barriers.

  • Map your initiatives to existing processes and relationships (both internal and external), incorporating the effect on various departments, possible roadblocks, and test plans into your project.
  • Design a strong change management strategy. Engage your employees in the process, communicate clear expectations, and provide resources for training and development.

Next steps for your Industry 4.0 journey

While the prospect of a full digital transformation or even significant integration of digital solutions may seem distant for some manufacturers, it's important to remember that progress is defined by incremental steps. Even small yet strategic shifts towards automation, data analytics, and other digital tools can have a great impact on efficiency, productivity, and overall operational performance. 

To successfully create and implement an Industry 4.0 roadmap, manufacturers need to develop strong partnerships and establish forward-thinking strategies. BDO’s team of manufacturing industry experts and service professionals can help you define and meet your unique vision and goals, with end-to-end solutions that include:

  • Technology advisory services
  • Advanced analytics
  • Procurement
  • Risk advisory
  • Government incentives
  • Transformation and change
  • Strategy and operations
  • Cybersecurity 
  • Business process enhancement

Contact us to learn how BDO can help your organization build a comprehensive Industry 4.0 strategy, or to learn more about our manufacturing services.

Are you ready to leverage digital solutions to enhance your manufacturing business, but don’t know where to start?

Our team can help you identify the best technologies to meet your goals and relevant government incentive programs to fund your transformation.

Contact our team

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