Dr Hanh Pham, Assistant Professor, Leeds University Business School

Researchers from Leeds University Business School have developed a toolkit that promises to radically simplify decision-making around digital technology adoption.

Industrial digital technologies (IDTs) are transforming the manufacturing landscape. The integration of IDTs into manufacturing promises to yield a production ecosystem that is drastically more flexible, efficient, and responsive. The adoption of IDTs has already had a big impact on UK manufacturers and will impact the global economy as a whole, offering promising opportunities to improve the position of UK manufacturers within global value chains.

But with these opportunities come potential challenges, and therefore it is essential to find out how UK manufacturers can best manage these opportunities and challenges to make the most out of Industry 4.0.

In response to this pressing need, the research team, led by Dr Hanh Pham, Assistant Professor at Leeds University Business School, examined the drivers, barriers, and performance outcomes of the adoption of IDTs in UK manufacturing firms and developed interventions that facilitate IDT adoption to enhance their performance in international markets. The team collected primary data from a focus group, interviews, and a survey of over 300 UK export manufacturing SMEs.

The research found that SMEs see the potential benefits of IDTs, but that perceived risks of investing in IDTs come from the fear of losing investment from a wrong choice of IDTs and being locked in into inflexible software that involves a regular payment and the lack of control over data and security.

The results also showed a disconnect between SMEs and IDT suppliers, with the former finding the information provided by the latter to be unreliable. The SMEs called for better access to impartial advice from honest third parties rather than relying on technology suppliers.

SMEs interviewed during the research also criticized the type and scale of government support in IDT adoption, arguing that the business support landscape is insufficient, fragmented and confusing.

Interviewees also reported preferring IDTs that are easier to adopt and set up with proven use cases and those that offer opportunities to collaborate, for example, with buyers.

While access to knowledge about IDTs was reported as difficult partly due to a lack of collaboration to share guidance or best practices, SMEs are not very keen to use a community of practice with potential competitors.

When adopting IDTs, SMEs reported hoping to improve responsiveness, in addition to quality, efficiency, flexibility and transparency. The key drivers that promote the adoption of IDTs among SMEs include pressure from business partners, laws/regulations and governmental funding.

Dr Hanh Pham commented: “Results from the survey show significant positive impacts of some IDTs for adopters on several indicators of operational performance, export performance and financial performance. This speaks to the important benefits to be reaped by UK manufacturers that successfully implement IDT adoption.

“We know that adopting IDTs can be challenging for UK SME manufacturers, however, so we wanted to develop a toolkit that would help make the process of deciding what industrial digital technologies are right for your business more straightforward and less risky.”

Based on the research findings, the project team developed an IDT adoption toolkit and an IDT decision-making model. The toolkit provides guidance on potential improvement opportunities from implementing IDTs, ranks business functions by potential impact from IDT adoption, and offers prioritization of IDTs for a firm’s stated focus area.

The toolkit also allows UK SME manufacturers to benchmark their level of IDT adoption against the industry standard, to identify which specific IDTs will have the greatest impact on improving their business performance across a number of indicators and can direct users to the digital solutions most relevant to their needs, thereby simplifying the process of IDT adoption.

The research team comprises Dr Hanh Pham (project lead), Professor Chee Yew Wong, Dr Richard Hodgett, and Dr David Mckee (CTO, Digital Twin Consortium). The project was funded by InterAct (UKRI).

SMEs can access the toolkit and decision-making model by contacting Dr Hanh Pham (H.Pham@leeds.ac.uk).