Determining the Critical Failure Factors for Industry 4.0: An Exploratory Sequential Mixed Method Study | IEEE Journals & Magazine | IEEE Xplore

Determining the Critical Failure Factors for Industry 4.0: An Exploratory Sequential Mixed Method Study


Abstract:

Critical failure factors (CFFs) are the key factors where “things must go wrong” for the I4.0 implementation to be a failure or that do not meet the intended objectives. ...Show More

Abstract:

Critical failure factors (CFFs) are the key factors where “things must go wrong” for the I4.0 implementation to be a failure or that do not meet the intended objectives. CFFs provide a set of indicators or identifiable conditions so that problems can be identified and addressed before they fail. This article uses an exploratory sequential mixed method design to investigate the CFFs for I4.0. In the first explorative qualitative phase, 26 senior managers participated through a purposive sampling frame. The article finds ten CFFs: lack of I4.0 strategy, absence of well-designed smart product/service systems, lack of digital supply chains, leadership is not supportive for I4.0, poor human resource management for I4.0, absence of I4.0 technology transformation management plan, I4.0 is not implemented totally, lack of top management support for I4.0, poor change management strategies in place, and inadequate consideration of sustainability in I4.0 initiative. In the second quantitative phase, 156 senior managers participated in an online survey. Exploratory factor analysis (EFA), confirmatory factor analysis, and ranking of CFFs were carried out. The findings on CFFs will help the practitioners and organizations to identify, monitor, and control these factors while implementing I4.0. Moreover, a good understanding of the failure factors will help organizations to avoid the failure in the implementation of I4.0.
Published in: IEEE Transactions on Engineering Management ( Volume: 71)
Page(s): 1862 - 1876
Date of Publication: 20 April 2022

ISSN Information:


I. Introduction

The fourth industrial revolution has resulted in organizations using digital technologies to create a digitally connected integrated business ecosystems to meet the goals and objectives of the organization [1]. Among other advantages, Industry 4.0 (I4.0) can result in enhanced organizational performance in operational, economic, environmental, and social dimensions [2]. In a study on the Global Light House Network group of manufacturers, it is found that I4.0 makes sustainability initiatives of the organization easier. It not only complements the green technology with digital tools but also improves productivity by increasing the efficiency of manufacturing systems [3]. In a strategic sense, early and late adopters of I4.0 diverged in terms of organizational performance. The late adopters will have an advantage in terms of improved business models, whereas early adopters will see a marginal increase in profits and increased stock price [4]. I4.0 is thus a digital transformation of the organization, its value chains, and products through different forms of integration [5], [6]. Despite of all the hype of I4.0 in the academia and industry, the literature also suggests that the success rate of digital transformation has been dismally poor [7], [8]. To cite an instance, Sears and Zynga invested millions in creating analytics, but these initiatives never were paid back [8]. In a survey by McKinsey, it was found that six out of ten companies who implemented I4.0 have had limited progress or no progress at all [9]. The success rate of implementation of smart manufacturing has not been very encouraging [10]. The World Economic Forum Global Light House Network and McKinsey & Company, Inc., have identified some factories that are applying advanced manufacturing technologies, such as artificial intelligence (AI), Internet of Things (IoT), big data analytics, etc., and it was found that only 70% are still stuck in the “Pilot purgatory” phase itself without generating any value to customers or enhanced customer experiences [11]. A high failure rate is a cause of concern because I4.0 implementation involves massive resources and large-scale transformation of business systems. Contingency theory suggests the ability of the organization to be effective is dependent on the manner it adjusts to the environment. There is a need for congruency between the structure of the organization and the environment. The technologies directly determine the organizational attributes such as formalization of rules and procedures, span of control, and centralization of authority. Further study depicts the context-structure-performance relationship. Thus, implementation of I4.0 technologies warrants changes in the organization attributes, structures, policies, and business models to be successful. Organizations that do not adapt or adjust will fail in I4.0 implementation with disastrous consequences. A failure of such a magnitude will render the organizations in deep financial, operational and strategic distress. Thus, it is perennial to study those factors affecting the failure of I4.0 implementation. It is stressed here that critical failure factors (CFFs) are different from critical success of factors (CSFs) of I4.0. CFFs of I4.0 are those factors in an organization where things must go wrong to achieve a high level of failure rate of I4.0 implementation [16], [17]. CSFs are “namely the conditions that need to be met to assure success of the system” [14], [15]. CSFs of I4.0 are those factors that if present will help to assure success of I4.0 implementation [16], [17]. Thus, it is stressed here that CFFs are not just the absence of those CSFs, rather it captures factors that can make I4.0 a failure [13]. CFFs are those factors that provide a set of indicators or identifiable conditions so that problems can be identified and addressed before it fails [18]. These are used to prepare alternative or contingency plans for high-risk projects [19], [20]. CFFs describe management areas and conditions that must go wrong for the project or initiative to achieve high level of failure [21]. In other words, it depicts dark side of implementation, reveals issues that may not be thought off or intentionally or unintentionally censured in narration of successful experiences [22]. The CSFs and CFFs are both equally important and recent studies have studied both in the same study. To cite an instance, recent papers have studied both success and failure factors of project success [23] or Green building projects [24]. Such studies indicate the importance of understanding of both factors. There have been many studies on the CSFs of I4.0 [16], [25]–[27]; however, there are no studies yet on CFFs on I4.0. In order to have a complete understanding of I4.0 implementation, the organizations should have knowledge as regards to where things go wrong for I4.0 would be a failure. Therefore, this study investigates the following three research questions.

RQ1: What are the CFFs of I4.0 implementation?

RQ2: How do these CFFs vary according to the nature of the business (manufacturing versus service companies)?

RQ3: How do these CFFs vary according to the size of the business (large versus small and medium-sized enterprises)?

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