Barriers to digitalisation in the SME manufacturing industry: a guideline to a solution

Abstract

The Fourth Industrial Revolution, also known as Industry 4.0 has emerged and it is forcing companies to re-examine the way they do business. Numerous companies barely finished catching up with the third revolution that dealt with digitising their company. The Dutch government recognised the problems in taking the next step towards digitalisation especially within the SME manufacturing industry. As digitalisation is an intricate process, the mechanisms and characteristics that enable digitalisation needed to be researched. A comprehensive model to identify barriers and offer potential solutions to lagging digitalisation in the SME manufacturing industry is currently missing in the literature. This gap in the literature led this research to the following research question: “What strategies can SMEs in the manufacturing industry use to overcome barriers to digitalisation, creating a digital enterprise and thus increasing their competitiveness?”. To visualise how all conceptual elements coexist together, a conceptual model was created after an extensive literature study. This model was tested by conducting qualitative interviews with a wide range of companies in the Dutch SME manufacturing industry. The respondents shared the same pronounced views on what barriers were most troublesome. At a micro level, compatibility challenges prevent linking the factory floor with ERP software. The barrier at meso level is the fact that the digitalisation level of companies within a supply chain can differ immensely, so the degree of possible collaboration is limited. The macro level barrier concerns the lack of standardisation in the industry. This last barrier is the solution in itself. When all companies in a supply chain can use the same database structure or are able to link it easily with their own software, sharing data will become effortless. Using standardisation for machinery software will also prevent the resource investment of custom software development. Policy makers, education institutes and company executives and managers must keep this conceptual model as their guideline as they aim towards optimising digitalisation. Using this conceptual model can identify weak points within a company’s digitalisation efforts. Companies can actively cope with these weak points and thus become a more digital enterprise. Future research can test the impact of using the conceptual model and its subsequent effect on digitalisation across the supply chain within SMEs in the manufacturing industry. Applying the model in other industries or company sizes might also offer different results and solutions that could help advance the discussion and creation of theory.