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Uneven Adoption of Industry 4.0 Could Threaten Sustainable Development

Uneven Adoption of Industry 4.0 Could Threaten Sustainable Development

Promote inclusive and sustainable industrialization is the ninth Sustainable Development Goal of the United Nations. Market access and the location of businesses within sustainable value chains are predicted to be impacted by digitalization. Those nations or industries who adopt digital technologies more slowly run the danger of falling behind in this change. The uneven adoption of digital technologies and its implications are discussed in a recent study.

"The use of digital technologies can improve environmental management along the supply chain by facilitating a constant flow of information and increasing transparency. This can expose sustainability issues, such as outsourcing to nations with lower social and environmental standards, and provide insights into opportunities to enhance the sustainability of global value chains, according to main author Silke Niehoff (IASS). In several developing nations, there is currently a shortage of investment in digital technologies and skills.

The study contrasts the progress of digitalization in Germany's industrialized sector with that of China's and Brazil's emerging markets. Employees from businesses of various sizes and in various industries participated in the survey. The findings shed light on how digital changes develop in nations with vastly varied starting places.

Smaller businesses are falling behind

The researchers were able to demonstrate that, contrary to what experts had assumed, country-level variations in the digitalization of value chains are not as pronounced. However, distinct variations in each country's level of digitalization across industries and among businesses of various sizes appeared. Less than 10% of the firms polled worldwide indicated plans to fully digitalise collaborative procedures. The majority of businesses operate in this way already: 46% of Brazilian, 61 % of Chinese, and 63% of German firms do so.

Large businesses use the potential provided by digitalization more than small and medium-sized businesses do in all three nations (SMEs). "It's crucial to keep in mind that SMEs are the foundation of nations' economies and shouldn't be overlooked. According to co-author Grischa Beier, "global governance is required to pinpoint areas of uneven development at the national level and, where necessary, to reinforce national support policies for SMEs (IASS).

By completely integrating production data into organizations' environmental management systems, production processes could become more sustainably run. For businesses and regulators, this might make it easier to comply with environmental regulations and certification procedures, which sometimes call for assessments covering the whole value chain.

Only 9% of German, 3% of Brazilian, and 6% of Chinese businesses have fully incorporated production data into their environmental management systems, nevertheless.

The automotive sector as a leader in digitalization

Compared to 72 percent of Chinese and 62 percent of Brazilian businesses, 84 percent of respondents from the automotive sector in Germany indicated at least a partial digitalization of collaborative processes. More than in the other industries surveyed, respondents from the automobile industry claimed that digitalization had reduced the number of partners while improving the quality of collaboration. The authors claim that the automobile industry is a promising area for further study and that other businesses could benefit greatly from an analysis of the lessons learned in this industry.

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