From March issue NZ Manufacturer magazine.     www.nzmanufacturer.co.nz

NZ Manufacturer March 25 by Media Hawkes Bay Limited – Issuu

 

Adam Sharman, CEO LMAC Group APAC

The Smart Industry Readiness Index (SIRI) has emerged as a critical tool for manufacturing organisations seeking to navigate their digital transformation journeys.

At LMAC Group we have supported over 200 business across New Zealand and the UK to define, start and optimise their Industry 4.0 journeys through our digital transformation approach using the Smart Industry Readiness Index.

Reflecting on this experience, in this article we will discuss the key themes and insights into the current state of Industry 4.0 adoption and their implications for manufacturing business across the industry

As New Zealand manufacturers seek to optimise and accelerate their productivity through Industry 4.0, they face several distinctive challenges:

1. Scale and Investment Capacity: With most New Zealand manufacturers being SMEs, many face challenges in securing sufficient capital for comprehensive digital transformation initiatives.
2. Talent Acquisition: The limited local talent pool for specialised digital skills creates a significant barrier, with many organisations struggling to attract and retain experts in areas like industrial IoT, data science, and automation engineering.
3. Connectivity Infrastructure: Regional manufacturers sometimes contend with limited high-speed internet access, constraining their ability to implement cloud-based solutions or real-time monitoring systems.
4. Integration with Legacy Systems: Many established New Zealand manufacturers operate with older equipment and systems that present integration challenges for newer digital technologies.

New Zealand manufacturers exhibit a characteristically pragmatic approach to technology implementation. Rather than pursuing cutting-edge technologies for their own sake, Kiwi businesses tend to prioritise practical solutions with clear returns on investment. This approach serves many companies well but can sometimes limit exploration of more transformative technologies that might deliver longer-term competitive advantages.

Most Commonly Identified Priority Dimensions for New Zealand Manufacturers

SIRI assessments across New Zealand have consistently highlighted several dimensions that manufacturers identify as top priorities for improvement. These priority areas reflect both the specific challenges facing New Zealand’s manufacturing sector and the greatest opportunities for competitive advantage.

Vertical Integration

The connection between operational technology (OT) and information technology (IT) systems presents a significant opportunity for New Zealand manufacturers. Priority areas within vertical integration include:

• Creating seamless data flows between shop floor equipment and enterprise systems through IoT connectivity for real-time data collection and analysis
• Implementing manufacturing execution systems (MES) to bridge the gap between ERP and operational systems
• Developing digital twins of production processes to enable better simulation and optimisation

This dimension is especially important for export-focused manufacturers who need to demonstrate complete traceability and compliance with international standards.

Shop Floor Automation

Many New Zealand manufacturers identify shop floor automation as a critical priority, particularly given the country’s persistent labour shortages and relatively high labour costs. Assessments reveal that while basic automation exists in many facilities, there are significant opportunities to:

• Implement more advanced robotics solutions, especially collaborative robots that can work alongside human operators
• Automate material handling and internal logistics to reduce manual movement of goods
• Deploy machine vision systems for quality inspection, reducing reliance on manual inspection processes
• Integrate automated guided vehicles (AGVs) for more efficient movement of materials within facilities

This dimension becomes particularly important for manufacturers in sectors like food processing and assembly operations, where labour-intensive processes remain common.

Data Analytics and Intelligence

Data collection, centralisation, integration and analytics capabilities consistently emerge as a high-priority area from SIRI assessments. New Zealand manufacturers recognise significant untapped potential in their operational data, with specific focus areas including:

• Implementing predictive maintenance systems to reduce unplanned downtime
• Creating real-time performance dashboards to enable faster decision-making
• Building quality prediction models to identify potential defects before they occur

The gap between data collection and data utilisation is particularly pronounced in New Zealand, with many companies possessing extensive operational data but limited capabilities to derive actionable insights from it.

Enterprise Connectivity

With New Zealand’s geographic isolation and distributed supply chains, enterprise connectivity consistently ranks as a high-priority dimension. Key focus areas include:

• Implementing cloud-based platforms to enable remote monitoring and management
• Developing better connectivity between manufacturing sites and distribution networks
• Creating digital collaboration tools to connect with international customers and suppliers
• Building robust cybersecurity frameworks to protect increasingly connected systems

For manufacturers with multiple sites across New Zealand or international operations, this dimension becomes particularly critical for maintaining operational visibility and coordination.

Workforce Learning & Development

Perhaps the most consistently identified priority across all SIRI assessments in New Zealand is workforce development. Specific focus areas include:

• Creating structured training programs for digital skills development
• Implementing augmented reality tools for knowledge transfer and remote assistance
• Developing clear career pathways for employees transitioning to more technical roles
• Building partnerships with educational institutions to create talent pipelines

This dimension represents both the greatest challenge and opportunity for New Zealand manufacturers, as successful digital transformation ultimately depends on having skilled personnel who can implement and operate new technologies.

Process Flexibility

Given New Zealand’s relatively small market size, manufacturers often need to produce a wider variety of products in smaller volumes than their international counterparts. This makes process flexibility a critical priority, with focus on:

• Implementing modular production systems that can be rapidly reconfigured
• Developing digital work instructions that adapt to different product variants
• Creating flexible automation solutions that can handle product variation
• Building scheduling systems that optimise changeovers and setup times

This dimension is especially important for contract manufacturers and those serving multiple export markets with varying product requirements.

Understanding these priority dimensions helps create more targeted improvement strategies for New Zealand manufacturers and allows for better allocation of limited transformation resources. The SIRI framework provides not just assessment capabilities but also a roadmap for addressing these key areas in a structured, prioritised manner.

Digital Maturity Varies Widely Across Industries

One of the most striking findings from SIRI assessments to date is the significant variation in digital maturity across different manufacturing sectors. While industries like semiconductors, pharmaceuticals, and automotive manufacturing typically score higher, traditional sectors such as textiles, food processing, and raw materials often lag behind. This disparity reflects different competitive pressures, regulatory environments, and historical investment patterns in digitalisation.

Companies consistently score higher on technology adoption than on process redesign or organisational transformation. While many organisations have invested in advanced technologies like IoT sensors, data analytics platforms, and automation systems, they often struggle to adapt their processes and organisational structures to fully leverage these technological capabilities. This disconnect creates a significant barrier to realising the full potential of Industry 4.0 investments.

Interestingly, company size doesn’t always correlate with digital maturity. While large enterprises often have greater resources to invest in digital transformation, some smaller and medium-sized enterprises demonstrate remarkable agility in implementing Industry 4.0 solutions. These high-performing SMEs typically succeed by focusing on specific, high-impact

The Human Dimension Remains Critical

Perhaps the most significant finding from SIRI assessments is the crucial role of leadership commitment and workforce engagement in successful digital transformation.

Organisations with strong leadership support for Industry 4.0 initiatives and comprehensive strategies for workforce development consistently outperform their peers, regardless of industry or region.

Return on Investment Challenges

Many organisations struggle to demonstrate clear returns on their Industry 4.0 investments. This challenge often stems from inadequate planning, insufficient metrics for measuring success, or failure to align digital initiatives with broader business objectives.

Successful organisations address this by establishing clear KPIs for their transformation efforts and focusing on initiatives with measurable business impact.

Workforce Transformation Challenges

New Zealand manufacturers consistently identify workforce development as a critical challenge. The transition from traditional manufacturing skills to digital competencies requires significant investment in training and cultural change.

More successful organisations are developing multi-pronged approaches that combine upskilling existing workers, recruiting new talent, and partnering with educational institutions.

Future Outlook for New Zealand Manufacturing

SIRI assessments suggest that New Zealand manufacturers are at an inflection point in their Industry 4.0 journey. While most remain in early to middle stages of digital maturity, the path forward is becoming clearer.

Leading organisations are demonstrating how targeted digital investments can overcome geographical isolation, address labour shortages, and create distinctive competitive advantages in global markets.

Looking Forward: The Path to Maturity

SIRI assessments indicate that most manufacturing organisations are still in the early to middle stages of their Industry 4.0 journey. However, leaders are emerging across all sectors who demonstrate how comprehensive digital transformation can drive significant competitive advantage. These organisations typically succeed by:

1. Taking a holistic approach that addresses technology, processes, and organisational culture simultaneously
2. Focusing on use cases with clear business value
3. Building robust data infrastructure that can support advanced analytics and AI applications
4. Developing comprehensive workforce development strategies

As more New Zealand manufacturers undergo SIRI assessments and develop structured transformation roadmaps, we can expect accelerated digital adoption across the sector, with potentially transformative effects on the country’s manufacturing productivity and international competitiveness.