Episode #57: From Industry 4.0 to 5.0: Human-Centric Transformation, Reliability, and Leadership with A.W. Schultz
U.S. Manufacturing Today host Matt Horine interviews A.W. Schultz, Founder of A.W. Schultz Training and Industrial Transformation, about the shift from Industry 4.0 to Industry 5.0 and what it means for manufacturers. Schultz describes Industry 5.0 as a rebalancing built on resiliency, sustainability, and a human-centric approach, arguing many digital investments underperform because people aren’t involved and change management is weak. He outlines common reliability challenges such as poor integration and gaps between strategy and execution, and explains adaptive work management as a culture-aware, non–cookie-cutter approach that emphasizes relevant metrics and organizational health. Schultz discusses maintenance strategies (reactive, preventive, predictive) using asset criticality and supply constraints, and stresses that transformation success depends on leadership, humility, and continuous feedback. He advises leaders to lead with courage, data, and heart and shares where to find his Factory of the Future Podcast.
Links
- A.W. Schultz on LinkedIn
- A.W. Schultz Training and Industrial Transformation
- Factory of the Future Podcast
- Matt Horine on LinkedIn
- Veryable Is Revitalizing U.S. Manufacturing
- Navigating Trump 2.0
- Sign Up on the Veryable Platform
Timestamps
- 00:00 Welcome and Guest Intro
- 01:51 AW Schultz Origin Story
- 03:20 Frontline Lessons and Common Gaps
- 06:15 Industry 4.0 Reality Check
- 09:46 What Industry 5.0 Means
- 13:46 Labor and Automation Tension
- 15:45 Adaptive Work Management
- 18:20 Why Transformations Fail
- 21:07 Reliability and Human Centricity
- 25:58 Maintenance Strategies Explained
- 29:24 Leadership Makes It Work
- 31:45 Free Advice and Where to Find AW
- 33:15 Wrap Up and Subscribe
Episode Transcript
Matt Horine: [00:00:00] Welcome to US Manufacturing Today, the podcast powered by Veryable, where we talk with the leaders, innovators, and change makers, shaping the future of American industry, along with providing regular updates on the state of manufacturing, the changing landscape policies and more.
Today, we're talking about the future of manufacturing, not just how factories operate today, but where they're headed as Industry 4.0 gives way to Industry 5.0, and what that evolution means for the people on the plant floor and the leaders guiding them through change. Our guest today is AW Schultz, founder and principal consultant of AW Schultz Training and Industrial Transformation, an Amazon bestselling author, international speaker, and one of the most recognized thought leaders in maintenance, reliability, and industrial transformation.
Aaron has spent more than 25 years working in manufacturing across some of the world's largest companies, including Fortune 500 organizations in food and beverage, chemicals, oil and gas, med devices, pharmaceuticals, and more. He holds two bachelor's degrees in agricultural systems and manufacturing and engineering, an MBA, and is currently pursuing a doctorate in [00:01:00] organizational change.
Aaron is perhaps best known for his work on adaptive work management, a human-centered framework for navigating industrial change, and for being one of the leading voices in the United States on Ind- Industry 5.0, the next era of manufacturing built on sustainability, resilience, and putting people back at the center of the factory of the future.
He is also the host of a podcast called Factory of the Future Podcast. Today, we're going to talk about what the shift from Industry 4.0 to 5.0 really means for manufacturers, why asset management and reliability are more critical than ever, and how leaders can build organizations capable of thriving in an era of rapid transformation.
AW, welcome to the show.
A. W. Schulz: Hey, Matt. Thanks for having me. It's great being on another podcast once in a while where I get to talk about what, what, what's going on with me. Happy to be here.
Matt Horine: Yeah, we're very excited to have you. It's great to have other hosts on from time to time, and sometimes get on the other side of the microphone for me as well.
So a lot of exciting topics today to cover, but first, wanna dive into your background. Let's start with your journey. You've spent over 25 years in manufacturing [00:02:00] across a wide range of industries and roles. What drew you to this field, and what has kept you passionate about it?
A. W. Schulz: I, I'm gonna say it started in high school, and it started with, "I don't know what I wanna do."
And I was working at a pasta manufacturing plant when I was, I wanna say, 16 years old. Horrible job for a 16-year-old boy, that their whole job was counting to s- counting to 10 and putting lasagnas into a box. I kept on doing it, and then eventually I moved into other positions and- I would say I still wasn't all that good of an employee 'cause my mind drifted.
I got the pleasure of sometimes working with my friends, which teenage boys, probably not the best thing. Came to a point where I did decide to go to school. Manufacturing, there's stability there, and it's always going to be there, so that kinda led me to the, to, into that realm on that. So, spent a lot of time in, in the food and beverage, went into the oil and gas, pharmaceutical, and then up to this point, I've done several different [00:03:00] ventures, but always had fun, and I, I tell people that touring a factory to me is more fun than going to Disney World.
Matt Horine: For people who are into manufacturing, that's absolutely the case. We were at a factory just last week looking at some of these advanced engineered processes, and it's like somebody tap me on the shoulder if I stop too long and watch the, the process play out. Definitely get that, that feeling all the time.
Now, you worked hands-on inside some of the world's largest manufacturing organizations. How did those frontline experiences shape the way you now coach and consult in moving from a corporate role to founding your own firm?
A. W. Schulz: I've had the privilege of working with what I would say is some of the, the best in the business, the experts into it, and having their tutelage was mind-blowing for myself.
And it taught me some of the real-world gaps between strategy and execution. Like I say, I, like you mentioned, I coach and consult on it, and I'm biased to the fact that I've been in both roles, both as an operator, a mechanic, and a supervisor, and then in a corporate role, and now I'm in consulting. [00:04:00] So it's, it's fun.
I relate to it, and I often walk into these sites and I see this vicious cycle that just continues to move on or around.
Matt Horine: Yeah, it's definitely one that's a common theme throughout manufacturing and, like you said, you've been in a number of different industries, and it seems to be very common across all of them.
What's the com- most common part of that thread across those different verticals, foods, chemicals, oil and gas, when it comes to performance and reliability challenges?
A. W. Schulz: They've got a poor integration. There's also, they've got weak change management. There's project management. I often tell the story that I'll come in and offer continuous improvement processes and installations, and the leaders will, "Well, how do we know when it's working?"
Because it's a delayed process. And for me, I tell them, "You know when it's working 'cause the employees, they start talking different." And talking different means where one point there was finger-pointing going back and forth about maintenance didn't support this, operations, quality should've attacked this.[00:05:00]
But when they start talking about the process that's in place, that does mean they're making that, that, that transition into a, a, a more mature manufacturing workplace, a smart manufacturing. And for me, that, that's, that, that's, that's when my shoulders urge back, and I'm very proud that they're starting to make that transition because I can't take them all the way through it, but there's the point where you just gotta let go, and that, that's usually the point where- Especially in the leadership, they need to know that you may not need me anymore 'cause you're going down that right realm.
And working with a lot of these people, they're very smart. They're very smart. It's just opening up that box that opens them up to start looking at things versus a process standpoint that can, you know, foster growth.
Matt Horine: Right. I think you hit something on the head there for me. When I think about teams or manufacturing environments, there's a lot of talking about bad outcomes versus talking about the actual process.
And when you hear teams shift that, that dialogue from talking about the state of the way things are [00:06:00] to, like, how they're going to fix it and working through a process and being responsible, it's delegated, it's to the right person, there's that kind of critical point where the person on the shop floor knows they're playing their part, and it all starts to flow a little better when it's that more critically defined.
So really great insight. I wanna shift now and talk a little bit more about Industry 4.0, which you've spoken on a lot. We hear a lot about it, smart factories, IoT, automation, data-driven operation. Where do manufacturers actually stand today in that Industry 4.0 journey?
A. W. Schulz: For those that I circle around, they're well within the, the 4.0.
And you think about the 4.0, like you just said, the Internet of Things, putting that big data up in the cloud, pulling it down, running algorithms on it, the sensors, the robotics, all that cool stuff that when you do a, a Google search that pops up with these robots doing these things, it- that's your Industry 4.0, and that's the technology of today.
What the gap is, and I'm doing a lot of research on this, and particularly what's going into [00:07:00] 4.0 and what's evolving into 5.0, is 32% of industrial operations investments don't meet the expectations that the, that they were expected to deliver on. And for me, it, this is something that gets my little squirrel start running around the, in the, in, in the little wheel, is asking the question why.
And many, in many of these cases, it's, it's the innovation of not involving the people in the process of it. So e- just quick history on it. Industrial 1 was about the automation of steam and power. Two was the, o- was with the factory floor and electricity and driving forces, railroads and stuff like that.
Three is actually the introduction of circuitry and computer sensors. Four is the mammoth of what we talked about, the Internet of Things and everything that goes into that. And then five, five took a big step. So it was in 2021, European Commission was asking the question: How do we need to take what [00:08:00] we're doing with all this technology and derive it to sustainable goods?
And this was driven by the Paris Accord agreement on the, the expectations of being net zero by 2050. Now, I don't hear a lot of talk about that anymore, at least in the last year, but there's still a lot of traction around organizations that are trying to drive that. Now, Industry 5.0 takes what everything Industry 4.0 had- Resiliency and driving that technology, but it also puts two things on the fact that I just mentioned that 32% of an in- industry struggle on meeting the expectations of what they thought they were gonna get out of this technology.
One big aspect of it is the people side, the human-centric approach. And especially when you talk about Gen Z, there's a new way of managing. And in addition to it, Industry 5.0 is a drive on sustainability. So how do we do more with less, and what can we do to help both the environment but become more [00:09:00] efficient at what we're doing?
Matt Horine: It's something that you don't realize is going on right in front of you because I think as you defined it there, the gap between installing technology and actually transforming operations, that 32% that you cited seems to be the experience of a lot of people when they talked about automation and they talked about IoT.
I- we've had guests on that talk about IoT in the sense it's like you're making, like, an automatic fish feeder, right? Like, how many, how, what granular level can we get down to here where it's, "Hey, this has reached the end of its potential value creation," especially if the people aren't bought in. And that focus on digitization, automation, connectivity, there was a lot of buzz around it, and I think it's transformed a lot of things and like you said, you can go Google it and you'll see these great automation setups on YouTube or anywhere else, but now integrating that piece of it.
Since you, you led into what is now being called Industry 5.0, you are one of the leading voices on, in the US on this. It's for manufacturers who haven't heard the term. I heard it, I've heard it maybe once or twice before this call, [00:10:00] so in full disclosure, this is fairly new to me as well. How do you explain what the core of that Industry 5.0 is and how it differs from what came before?
And I know you mentioned sustainability. That, that has translated more into people's minds go directly to, like, environmental type scenarios. But what it also means is reliability and resilience, which you noted. So curious to hear if somebody hasn't heard that term, how do you explain it, uh, even in, in more depth?
A. W. Schulz: Yeah. So it's on three principles. It's resiliency, sustainability, and a human-centric approach. And for me, I was, so I, I was working on my, my, my next book, and I was going into adaptive work management and driving sustainable change within organizations. And then I came across it, and like I mentioned earlier, Interbeer Commission is, they're coined with creating that term, and it's really just saying that this is the next step in our evolution of what we're walking into, and it's nothing bad.
It's just, it's what's, what we're expecting for change. [00:11:00] And for me, I circle around the idea that the human-centric approach about how organizations treat their people and how do you get their buy-in to drive some of the results onto that? Now, I said that 32% of industrials struggled to bring organizations up to it, but I would ar- I would argue that most of those organizations don't involve The people aspect come to it.
Asking the questions about why we're taking this change. What are your feedbacks onto it? So when you look at continuous improvement in early management, one of the, one of the core things that, that you usually wanna do, especially in project management aspect of it, is involve those that are going to be part of it.
And one of the struggles that 4.0 has, you think about this scenario, like the average person works in their position about three years, and then after that they move on. So even if you do early managing, project management of installation of new technologies, the best you can, that person's involved, [00:12:00] and what happens?
They leave. And then what's usually the common scenario that they have to do? They have them shadow the next best qualified person, if it's not that person that's already there. And then all of a sudden, all that tribal knowledge that, while it's documented, but nobody sits there and reads the manuals, then you've got this new person that's running the maqui- machines or this technologies, and there's gaps.
And the idea of 5.0 is let's put as much effort into the technology as we do with the people side of it. That's, I think, what's the turning point on where 4.0 struggles. And for me, I remember I was doing 4.0 before it was even a term. It, it became a term in 2011 in Germany. And I remember I was in... It was 2008, and I'm working on this automation line trying to figure out what's the driving factor, what's changing everything, and first of all, the entire staff has turned over three times.
The equipment is dirty, and in this particular case, [00:13:00] they were neglecting some of the critical maintenance that was going on in this case. So that's the driving force that's, for me, I'm giving you an example what 5.0 is, but where I've seen 4 and 5 and where I, I see the next evolution of companies that are gonna be successful with it.
Matt Horine: That does bring in a big question from my side because you think about it in that linear time step, right? You just walked us through 1.0 through, through 4. It's not necessarily, from what I'm gathering, a rejection of technology, but more of a rebalancing, if that's an accurate way to see it. And the, does it replace 4.0 or does it stack on top of, of it neatly with just this rebalancing that you've described?
A. W. Schulz: Yes, exactly we did. And I like how you say rebalancing because that's really what it is. You have to put the investment in the people just as much as you're putting into the new technology.
Matt Horine: Yeah, no, that's a really, that's really spot on. That's what we see a lot of at Veryable, where we talk with manufacturers every day is kinda like labor being the key constraint, and we tend to try to knock down a lot of those, those phrases where they say, "Oh, there's a, there's a labor shortage."
It's, there's a labor access issue because [00:14:00] it's not really centric to, like, how has the environment changed? How have people gone to work differently over the past decade? But do people want options and choice and being able to choose where they're going to work? So that's, we see a lot of that and that kind of rebalancing is you'll walk into a plant that's, quote-unquote, "fully automated," but the need for labor is still pretty extensive And they're having trouble filling that last gap because they're trying to do it in a very traditional way, old school way, where they, they staff a plant, or they, they build to an exact head count.
It's just a, it's a different environment altogether.
A. W. Schulz: Yeah, Matt, we, we got into the discussion earlier before about the staffing issues, and it's, a lot of it's more of a technical issue, 'cause you're walking into a technical position that, that requires a depth of knowledge into it. But it's, I think McKenzie is saying by 2030 we're gonna have 3.8 million job openings in the manufacturing sector, which is staggering.
Which, which also forces us into the idea of this is why we pick automation, but then we're spinning our wheels [00:15:00] that we think that this automation's gonna drive the performance, and then we don't, we still lack on the people side of it. Best case is we, we inject a lot of automation in it. Worst case is we do it overseas and we have to bring it over, and then that's money lost for the US.
Matt Horine: No, that's definitely, even the theme of our show is talking about the state of US manufacturing, the reshoring buzzword, reindustrialization word, what does it actually mean in practice? Which means that none of the traditional stakeholders or some of the pillars go away. There's a need for labor, there's a need for technology, there's a need for all these things to keep up with what is frankly turning into the 21st century arms race as people realizing that their industrial base is more critical to them than anything they could do diplomatically or militarily, because if without it, you're left pretty exposed.
So you did hit a key word there when you talked about adaptive. You've developed a framework called adaptive work management. Can you walk us through what that is and the problem it's designed to solve?
A. W. Schulz: I coined this phrase because when I go into a lot of different [00:16:00] facilities, I often find myself having to be adaptive to the cultures that they have.
When I first started this adaptive work management, this was a couple of years ago, and it led into Industry 5.0, driving that human-centric approach. But in adaptive work management, it's coming in and looking at this is the scenario they have. Now, we're not gonna... It's not a cookie cutter approach. Every facility's got their own little stories that, that go with, along with it.
But how can you be a, I'm gonna use the word adaptive, on driving some of the change on it? And it's a very fundamental s- project management approach. One of the things I was doing when I was working on this book, which, which was never published, but I was researching on it, I was interviewing people from all over the world, and it, different industries, and the approach was very similar.
But just it comes down to that building an understanding of what the individuals are looking for and what they wanna drive for as far as performance. A lot of organizations, they've got metrics and KPIs, and [00:17:00] I frankly am, I'm just, I'm embarrassed that we still look at some of these KPIs. We should be tracking something more, more relevant.
And if you're an executive and you're looking at PM completion rates, just- Throw out the door, 'cause th- they're fixed. And there's many different things out there that are relevant metrics, but import- they're on your performance review, so that's, that's something that i- it doesn't drive change. If you're looking at important metrics is, to me, it's your org health surveys, or your turnover, or filling vacant positions, and it's the actual output that you're getting out of it.
Too often we look at some of these inputs. You've got your leading indicators and your lagging indicators, and I'd argue some of your lagging indicators may maybe be something more simple. It's gotta be simple. It's gotta be something that you're, you're sharing with your employees on a daily basis, and talking about your wins and challenging the losses, and how we're gonna...
what we need to do to fix them. That's really what adaptive work management is, is just [00:18:00] understanding the culture they have and being flexible on what you're walking into the scenario.
Matt Horine: Yeah, th- that's a really critical point, because a lot of change management practices are cookie cutter. They don't take into consideration the type of organization.
And I don't mean that what vertical are they manufacturing in? I mean that in, like, their history and all those things that you touched on there that are very specific to each organization. That's great, and you've seen these types of transformations succeed and fail. What separates the percent of failures from success that the majority, I'm assuming the majority, don't get the change management that they're seeing, but what's the critical factor for the change succeeding?
A. W. Schulz: It's always leadership. I like it yes, and I answer really quick, because that's what it always is. And for, for my organization, I've used to do consulting, and they'd bring me in, and they would have what they perceived the problem to be, and I'd have to politically correct on some of the things that they need to do.
And one, one of the, one of the th- things I'm changing is, so I'm doing these mastermind workshops on Industry 4.0, and the [00:19:00] whole premise is, let's talk about what we need to do as far as the people. And I'm not going 5.0, because it's, it, I think it goes over their head. So I, I go 4.0. But the idea is, every organization I go into, I always see the same problem.
And addressing these problems early, understanding change management, understanding you have got g- governance as far as the regulatories you have into it. Those are the things that define good from great. Understanding the maturity level. And it's okay if you're not, if the maturity level isn't at the ideal state.
But understanding where you're at gives you a good aspect of, to understand where you need to go next. And too often, organizations come into and s- "I wanna be world-class." There is a lot of changes to become world-class, and it's a cultural thing. It's not just buying it. That's, that's part of all where I, I've, I've done a, a lift and shift in from where I was doing more consulting to where I'm doing more training, and I'm [00:20:00] seeing that as organizations I think can feed their organizations better through understanding that you need to have a good understanding.
Be honest with yourself where you're at. Because not all organizations can afford to make that big investments. And I've been in world-class organizations and, or factories, and often I, I've seen them go out of business because... And they had a world-class manufacturing facility, but the product they produced d- was irrelevant anymore.
They're not. They're gone.
Matt Horine: No, that's exactly right. It's, they, you think about some of the big names in manufacturing, I don't have the stat in front of me, but the names 100 years ago are not the names today. There's a few of them sprinkled in, but they weren't there for the long ha- haul because either the product w- became irrelevant or-
A. W. Schulz: General Electric- Yep
is one of them. And really, I, I remember doing a presentation on it, and I, it was General Electric and I can't think of any others.
Matt Horine: Yeah, something triggered as soon as you said it. There was a stat on the companies that were, whether it was what they were listed at on the stock exchange or, I can't remember where I saw that, and I'll go back and find that maybe.
But a lot of it did have to do with some types of change management because they [00:21:00] weren't adaptive and they weren't flexible to new operating environments. They were just used to being the incumbent and working the way that they always had. I think one of the things that when we talk- first talked that kind of separated your methodology and what stood out to me was the concept of asset management and reliability in the smart factory.
You, you spent a lot of your career in, within asset management and maintenance and those things. They're the core of your work. Why does getting this right matter more than ever in this new age of smart factories and where it's going with the more human-centric approach?
A. W. Schulz: I, I, I think it's always mattered.
The, the one thing I'm fascinated with the new generation is because they don't, or they do have options to do something else. And one of the things I'm vocal for is STEM, is just introducing people to manufacturing. It's a good, solid, lifelong career if you're open to it. And you can, it, there's manufacturing is everywhere.
And getting in the door isn't often that hard, especially when there's 3.8 million jobs gonna be open by 2030. [00:22:00] And the, the new generations is, i- it requires a new type of leadership that's more, like I s- that's why I'm passionate about 5.0 because it's, it, it talks about human-centric, human centricity.
So where, there, where we once would, we had muscle, and then we had machines, and now we're going back to the people side about it. The human and the machine portion of it plays a critical factor into it. So if you're a leader on it and you're not addressing some of these human needs, there's, there's cause for concerns.
You know what is funny is I, so in my podcast, I got a g- a guy coming on in a couple weeks, and he's got some background in manufacturing. But his, one of the things was he spent 10 years in prison for bank robbery, and I just like, I've never talked to a bank robber before. And he, he was telling me, "Well, but we al- I also worked in a prison manufacturing plant.
We, we made furniture." And I go, "Well, what's the difference between a manufacturing plant..." Because, and he does consulting in manufacturing also today, software. And he, he goes, "You know what the difference is between working in a [00:23:00] manufacturing in a prison versus others with the normal concept? Nothing. They feel and look the same."
And I was just like Yes, exactly. It feels like a prison in there. So if you're addressing the human-centric pr- approach to it, things change. I had another guest on, he works in automotive, and, and h- honestly, the same, I don't have a... I don't really have any background in automotive. I wanna tour an automotive plant really bad.
And he was talking about, "We made changes to these machines over the years, and, like, all of a sudden we didn't have to wear earplugs." And I'm like, "Whoa, you don't have to wear earplugs? I thought that was just safety default." And no, because y- we, we understood the employees' needs so much that the machines were so quiet that we didn't need earplugs anymore.
I'm like, "Oh, my goodness. That's, that is a change that, that's new to me."
Matt Horine: Yeah, that's funny that you said that about the earplugs, 'cause that's a really dialed-in example of, I think, what exactly what you're talking about, is I could walk into any manufacturing plant today, and they've probably [00:24:00] got, like, the earplug, eye pro, helmet.
Safety is cultural, right? And if it's so quiet that you don't need earplugs, what are we doing? Everybody's putting earplugs in. And so that's just as a really minute detail. You did... I thought you were going another direction there for a second when he s- you said that guest was doing consulting. I was worried you were gonna say going to prison consulting or something like that.
But that's a really interesting point because there are, is a lot of manufacturing. I know there's, like, the old do they make license plates kind of things. I've been to the state prison here in Texas on a tour for something completely unrelated, and they were manufacturing. They were making things, all kinds of stuff, and we toured through that, and it's like, it looks like a manufacturing line.
And this was before my career. I was actually in college. It's pretty incredible because it's a pretty simple process. It's laid out in a certain way, and when you get down to the root of all of it, it's like you are making something. And so that level of productivity is critical to people feeling valued and feeling like they're contributing and building something, and that extends into manufacturing.
And I like also, you, you framed this really nicely right at [00:25:00] the outset of the question, was the newer generation does have choices today. And you're the, I think, the first guest that I've had on that said they haven't framed it in a way, it's like, we've gotta get more people into manufacturing. It's like, because there's nothing else to do.
People have implied that other things are going a different way, and now this is an alternate route. It is a route among many, and it's one, becoming one that is, like, much more attractive to people in Gen Z. Like, we talk a lot about Gen Z and what they like to do, and he... But the, the, these factories of the future are the automation, the technology, everything that goes into it.
It's a choice, and I think I really liked how you framed that up front, was they're lining that up against other things if people are choosing manufacturing. So maybe that was the first time someone said it to me where it really stood out. It was like, no, that's, people are choosing this. This isn't some t- like, pipeline to fill.
It's critical, obviously, but it's o- it's something that is, is great and really cool and people are taking it in consideration across a broad spectrum of potential careers. So I, I wanted to note that because it was a really good observation. I don't think anybody's framed it [00:26:00] that way A little bit more about the reliability maintenance, just because we ha- have you on, this is an area of subject expertise for you.
There's a difference between reactive maintenance, preventative maintenance, and predictive maintenance. Where are most manufacturers at today and where do they need to be?
A. W. Schulz: So yeah, everybody wants to be in predictive maintenance, or there's an even another term, uh, I can't think of it. But you need to understand, there, it's expensive.
So predictive maintenance was developed by NASA and Boeing back in the 1960s because those 747s that they were making, they didn't want them falling out of the fly- or out of the sky. So they wanted to be predictive on it versus being reactive on it. And up to that point, we typically fell within that planned maintenance, reactive maintenance, so on.
But one of the things I teach on is understanding where to go. Now, in oil and gas, I spend a lot of time, we- they, it's predictive. It's time-based, it's wear-based, it's analyzed, it's not. Other [00:27:00] industries, you don't necessarily have to be predictive maintenance. I can tell you my house, most of the stuff in my house is run to failure.
Except, and you're a texting guy, except for my air conditioning. It really comes down to is, what I usually go through is an asset management process onto it. And it was funny 'cause I was in Africa a couple years ago doing planning and scheduling workshop at an energy plant in Ghana. And I o- you know, I'm talking about some things you can let wear out, because the cost of having it on your inventory or in your storeroom has a cost to it.
And then I remember like, "Hey, AW, we can't," because it's not like the US. Like in Houston or I'm in Dallas, is we can get stuff in hours. It takes them a year to get a product in or a component in. And it's, okay, so when you do a criticality analysis of your assets, you may, you might have more predictive maintenance on it versus reactive.
'Cause I think in, in especially in the, the [00:28:00] regions we're at, you know, I always argue that it's kind of like the 80/20 rule there. 20% of your assets should be considered critical and have a scenario to what, what's gonna happen if it goes down. And then the other 80%, whether it's planned or reactive, certainly if, what, understanding what your cost of downtime is, and especially, you know, how long it takes to get a component in or there's some, some skill set or there's, or discovery learning that has to go into it.
But I'm passionate about that comment. The easy answer is everybody should be predictive, but I think there's, you gotta, at an executive level, take the concept of, okay, I want this to be reactive, and I want it to be reactive because I don't wanna pay the cost of it. And if you think about your house as an example, there are certain things in our house that they can fail.
Say my stove breaks, guess what? We're having something in the microwave tonight or something or, or we're getting Uber Eats. But that's kinda my thoughts on that.
Matt Horine: Yeah, no, that's a really good example because I've ha- had an HVAC guy describe it to me before And say, outside of your car, this is like the [00:29:00] engine of the house.
In A- in Texas, certainly. And it's probably the most expensive system that goes into any home build, and people don't think about it like their car. You go get an oil change, you go do those things, so you are a little bit predictive. Being reactive is a horrible state, especially if it's happening between May to November at this point.
I, I feel like that's how long the heat goes on, at least that's what my electric bill says. That's a really good point. The e- I think one of the areas to tap into a little bit more, reliability is the foundation for everything. You can't be sustainable, productive, or competitive if your assets are constantly failing.
But you're tying this back to the people-centric side. You have a strong point of view on leadership, which we were talking about earlier. What i- why is leadership the critical variable in whether the manufacturing organization transforms successfully? You hear a lot of people talking about if the team has bought in and they're leveled up.
Is it some of those expectations that they have that go in that you have to knock down first that you were describing earlier? What's the most, the critical point of that?
A. W. Schulz: Oh, I, I think a bottleneck is [00:30:00] the leadership, and the ego of leaving the ego at the door that, for myself, I- when I came out of college and I started as a supervisor, I thought I knew everything.
You can tell by w- my early introductions, I've learned more over the years. And that it, i- if you're not listening to the people and having that conversation, there's that barrier, that silo that your perception and the reality of it are two different things. That's my one takeaway, is if, find a format that works that's opening up discussion, not just saying, checking the box, saying you're having your quarterly meeting with the staff and, or the plant meeting and saying that, "This is what we're gonna be doing," but being open to continuous feedback and creating that funnel so you can, you can react to it before it becomes a problem.
And it sounds simple, but it's just one of those steps that you have to take. And so often I, I [00:31:00] see the opposite, especially it, it's, it, it's sad. It's sad, really, because often you think... A n- a new person gets hired, and I'm gonna use this as an example. They say it takes between 6 and 18 months before they actually start being productive.
I can't remember which one it is, but it's a long process, where I've been in facilities where the, the plant manager has been out in six months, and they've had no chance to try to develop and change a culture, and they're moving on to something different.
Matt Horine: That does happen. I think summed up, there are a lot of people that become way too invested in what is supposed to be a hypothesis, right, about this is what we think.
And instead of that, it becomes the party line, and then you're faced with the reality of some of that political situation that you described earlier. So really great point. This is the part of the show where I ask folks who come on for what I call free advice. So this is, if you were talking to A plant manager or an ops leader watching their industry change rapidly, where do they start when it comes to preparing for this, what we believe [00:32:00] is the next wave of Industry 5.0?
A. W. Schulz: It's leading with courage, data, and heart. That's as simple as it is. One way you can become the most dangerous person in the room is, one, you begin to trust your people, be data-driven, and think beyond the schedule. So think about the future. And for me, i- if that's one takeaway that others could let simmer, that would be my, my, my give back to them.
And if you understand that, you've already made the first step.
Matt Horine: So w- if our listeners are listening today, they wanna find out about, more about Industry 5.0, more about the work that you're doing, I know you're pursuing a doctorate in organizational change, where can they go to learn more about you, maybe listen to your podcast?
A. W. Schulz: Yeah, so we're gonna be having a podcast. Our... It's factorofthefuturepodcast.com. If you wanna reach out to me, if you do a Google search, A.W. Schultz, I, I pop up quite a bit, and I'd be more excited to connect with you, everyone else on LinkedIn, and answer any questions you have. But yeah, yeah, and Matt, it was a pleasure being on [00:33:00] your show.
This was a lot of fun. This was great.
Matt Horine: Yeah, it was great show, great having you on, and thanks for clearing up. I'd heard Industry 5.0 maybe once or twice before, so this was the topic that was really of interest to me and brought a lot of insight. So thanks for coming on today.
A. W. Schulz: Thank you.
Matt Horine: Manufacturing performance ultimately comes down to one thing, how effectively organizations harness both their technology and their people to create consistent, reliable, and sustainable output.
Industry 4.0 gave manufacturers the digital tools to transform, and 5.0 is the call to use those tools in a way that's more human, more resilient, and more sustainable, and to build leadership culture required to make it last. To stay ahead of the curve and to help plan your strategy, please check out our [00:26:00] website at www.veryableops.com and under the resources section titled Trump 2.0, where you can see the framework around upcoming policies and how it will impact you and your business. If you're on socials, give us a follow on LinkedIn, X, formerly Twitter, and Instagram. And if you're enjoying the podcast, please feel free to follow the show on Apple Podcasts, Spotify, or YouTube, and leave us a rating and don't forget to subscribe. Thank you again for joining us and learning more about how you can make your way.