Podcast: Is Industry 4.0 leading to real manufacturing transformation or just technological overload?

Francisco Almada Lobo is the CEO and co-founder of Critical Manufacturing. He is recognized as a top strategic thought leader and evangelist in digital transformation, specifically Industry 4.0, manufacturing operations, and the factories of the future. Francisco also holds various positions within the smart manufacturing and venture capital industries, including as a member of the 200M Funds Investment Committee, an executive committee member of SEMI Smart Manufacturing Technology, a member of the Forbes Technology Council, and an adviser to many Industry 4.0 startups. Francisco recently spoke with Scott Achelpohl, managing editor at Smart Industry, about the challenges and opportunities of digital transformation in manufacturing, with a focus on AI and MES systems.

Below is an excerpt from the podcast:

SI: At Smart Industry, we cover Industry 4.0 a lot—saying that is an understatement. Digital transformation is one of our hallmark topics. I’ll mention that our (R)Evolutionizing Manufacturing video series with industry enthusiast Jeff Winter—who also happens to be an employee of Critical Manufacturing—is our primary platform for this. So, we’re happy to have Francisco’s voice today.

For our audience, the many companies we serve, digital transformation can sometimes feel like a culture shock, and the process can be quite involved and expensive. These companies want it done correctly so resources and personnel aren’t wasted. So, we want to advise them on how to get it right. I’m hoping Francisco will help us answer the questions: Are manufacturers achieving real transformation, or are they simply layering more technology on top of existing inefficiencies? It's an important question we posed.

So Francisco, let me ask you a few questions to get our chat started. We spoke in our run-up to this program about how a lot of companies take a gradual, staged, or step-by-step approach to digital transformation. What’s your advice on this? What should be the starting point? What are some middle steps, and what are the end goals? Where can companies get off track during this process?

FAL: Great question! So, let me start by saying something that is often overlooked: companies should begin by reviewing and streamlining their processes. One of the most expensive mistakes companies can make is to start by simply digitizing their current processes—what we call “paper on glass.” We’ve had customers who started an MES or AMES project and began by streamlining their processes. Interestingly, they immediately gained a significant portion of the project’s ROI even before the system was fully operational. So this is very important.

Then, the second aspect, which is more closely related to your question, is that there’s nothing wrong with the step-by-step approach to digitalization—quite the contrary, as long as there is a global vision of what you want to achieve, and the basic infrastructure is in place. The issue is that today, digitalization infrastructure isn’t just about computers or networks; it includes back-office systems that support step-by-step implementation.

To use an analogy, it’s like building a house. You first need strong foundations, solid framing, and essential infrastructure like plumbing and electricity. Only once these elements are securely in place can you confidently add smart home technology, advanced automation, and sophisticated gadgets. If you don’t, and you start with just the gadgets for a specific use case or pilot, you’ll end up in "pilot purgatory"—where solutions don’t scale, can’t evolve, or can’t adapt to ever-changing requirements. This is definitely not the way to go.

SI: Francisco, how does Critical Manufacturing recommend companies go about digital transformation, and how do its products specifically tie into this process?