Challenges to Industry 4.0 Implementation: Identification and Modelling for Smart and Sustainable Production

ABSTRACT This study identifies and models the key challenges that hinder Industry 4.0 (I4.0) adoption, supporting organisations in prioritising mitigation efforts while advancing sustainable production goals. A review of the literature led to the selection of 13 major challenges and 57 related sub‐challenges. Using Interpretive Structural Modelling (ISM), an eight‐level hierarchical structure was developed to map the interrelationships among these challenges. MICMAC analysis indicates that most challenges are linkage variables, characterised by strong interdependence and high system sensitivity. The Interpretive Ranking Process (IRP) was employed to rank the challenges based on their dominance across performance dimensions. Results from both ISM and IRP reveal that insufficient advanced technologies and supporting processes constitute the most critical barrier to I4.0 implementation. The combined ISM–IRP framework offers a practical, decision‐oriented tool that enables managers to identify priority areas, allocate resources effectively, and design more coherent strategies for I4.0 adoption in alignment with organisational needs.