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Paolo Cerruti: In Industry 4.0 the value we provide is much higher than the cost


Paolo Cerruti – former vice president of Tesla's global supply chain, as well as vice president of operations planning for the company led by Elon Musk - says that the costs in the first adoption phase of Industry 4.0 "can be a dissuasive element ", and that companies have to "evaluate the chain as a whole and the total costs," and will "end up realizing that the value they are providing is much higher than the cost."

The current chief operating officer at Sweden's NorthVolt (Tesla's competitor) also believes that the major challenge facing organizations in Industry 4.0 lies in the cultural changes they have to make internally. The executive indicates which is "the" necessary competence to succeed in the Fourth Industrial Revolution.


What is the major Industry 4.0 challenges?

There are several challenged, but the main one has to do with cultural changes - it is very easy to keep doing what you always have done so far and not changing, so this is a major change in the industry. The second one is internal competencies: a new capability set has to be developed; as well as having people in operations that would not be expected in this area. And the cost can also be a dissuasive element in the beginning, but you have to evaluate the chain in its whole and evaluate the total costs, and you will end up realizing that the value you are providing is much higher than the cost.


What are the key competencies we need to succeed?

I think there is a very profound change in terms of skills: we can mention the IT integration skills sets in terms of connectivity, but if I had to choose one I would highlight data scientist. Because you can gather as much data as you want, but if you do not have the insight/knowledge and the ability to analyze that data, they're basically useless.


What is the impact of Industry 4.0 on the different sectors?



Regardless of industry, what is really wanted is to drive operational efficiency across the board. This means improving product and chain traceability; means reducing working capital in all aspects - if you have a greater vision/perspective of the entire supply chain. All of this translates into improvements and greater cost-effectiveness - which you can decide to give back to customers or keep in-house.


How does Industry 4.0 become part of our day-to-day business?

It is everywhere, without realizing that it is present. We have an example from our everyday life: when a product is collected, and if it is able to detect exactly which batch is corrupted, or which failure has affected a particular product - it is the result of an extremely complex and sophisticated supply chain that is to track all products from beginning to the end.

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