Impacts of 4.0 technologies on companies’ organisation

A fortnight ago, we introduced the concept of Industry 4.0 and Logistics 4.0. Today we would like to talk about the impact caused by the shifting from a traditional production paradigm to a 4.0 paradigm on the companies.

A couple of years ago, Albachiara and I, together with our colleagues from the University of Bergamo, Chiara Cimini, Matteo Kalchschmidt and Roberto Pinto, studied at length the impact that the introduction of the technologies typical of the Industry 4.0 paradigm has on companies as part of a project in collaboration with the “Club dei 15” of “Confindustria Lombardia”, the regional companies’ category association.

In particular, our study focused on the impacts of 4.0 technologies on company organisation. Therefore, the first step of the research was to identify a conceptual framework that encompasses the main features of these two elements: technology and organisation. This research’s conceptual framework was grounded on the theoretical models already presented in the scientific literature and shown in Figure 1.

Technology characteristics

First of all, we have identified the principal features that characterise I4.0 technologies reviewing all the previous conceptual and theoretical frameworks presented in the literature. Based on these previous studies, we have decided to include in our framework three characteristics related to technology: 

• Automation encompasses all potentialities offered by advanced manufacturing systems that can perform production processes with high productivity, thanks to intelligence embedded in machines and equipment.
• Information exchange refers to the connectivity of products, processes, and people provided by Internet of Things technologies, improving communication and enabling real-time data exchange between humans and information systems. Realising such an information exchange entails interoperability and standardisation among devices and procedures, which are the main challenges for implementing I4.0.
• The decision support system includes the analytics and optimisation potentials provided by data analysis and visualisation. Decision-making can become more responsive. Consequently, corrective actions on the shop floor can be implemented more efficiently and effectively, with the support of data analysis tools that can convert data from different sources into information.

Organisational characteristics

We have also identified the principal components that characterise the organisational aspects reviewing all the previous conceptual and theoretical frameworks presented in the scientific literature. Based on these contributions, we have redefined the organisation concept into three sub-dimensions: competence, job and structure.

• Competence: this category includes aspects related to the skills employees need to be productive in their I4.0 organisations. Although the term “competence” is frequently used, there is no commonly accepted definition. Multiple interpretations have been presented in the literature. We have considered competence as a “cluster of related knowledge, skills and attitudes that affects a major part of one’s job (a role or responsibility), that correlates with performance on the job, that can be measured against well-accepted standards, and that can be improved via training and development” as suggested by Parry (1996). In the context of I4.0, four categories of competences can be recognised, as described by Hecklau et al. (2016):
  • Technical competences refer to state-of-the-art knowledge, increasingly related to IT, automation programming and data analysis.
  • Methodological competences include skills and abilities to handle situations and problems, such as conflict solving, creativity and decision-making.
  • Personal competences include values, motivations and individual attitudes. Among them, it is possible to find flexibility, motivation to learn and the ability to work under pressure.
  • Interpersonal competences represent social skills and abilities to communicate and cooperate with others, such as networking skills, leadership skills, and teamwork.

• Job:  this aspect is connected to the roles played by humans and their individual positions. Introducing I4.0 and the organisational change it entails is expected to create new jobs. However, it is still unclear whether the prevalent scenario will be skill polarisation, standardised and formalised jobs, or skill upgrading. Workers will be autonomous decision-makers performing various tasks. We consider different job’s aspects such as:
  • Job specialisation includes the horizontal (i.e. the number of different tasks performed) and the vertical (i.e. control over the completed tasks and autonomy) dimensions.
  • Job formalisation concerns work process standardisation and workers’ behaviour regulation.
  • Training refers to how the skills and knowledge required to perform a specific job are taught to employees. Training plays an essential role in sustaining the I4.0 paradigm and related innovations. Many industries in most developed countries are experiencing talent shortages.

• Structure:  sub-dimension concerns the organisational structure and includes two primary constructs, allowing it to be described without strict reference to a specific or ideal structure (e.g. functional, divisional, matrix, hybrid).
  • The number of hierarchical levels or vertical span is defined as the number of job positions in the chain of command, from the chief executive to the employees working on output.
  • The span of control is a measure of the limits of hierarchical authority exercised by a single manager. It influences the closeness of contact between superior and subordinates (and directly affects the unit size – that is, the number of positions grouped in a single organisational unit. These two variables allow for defining the configuration (i.e. the organisation’s shape and roles structure) and evaluating the organisational structure’s flatness. Fewer hierarchical levels and a wider span of control are symptoms of a flat organisation, which has been advocated as an appropriate structure to complement introducing I4.0 technologies.

Next week we will show you the main results of this research introducing new concepts that will me more in-depth addressed in future articles and by future guests here on Young SCholars!