What is Industry 4.0?

What is Industry 4.0?

Industry 4.0 is related to the fourth industrial revolution which is associated with the advancements of cyber-physical systems. It describes the rise of automated systems and data exchange technology within the manufacturing industries. Examples of the Industry 4.0 technologies becoming more prominent on factory floors include:

• The Internet of Things
• The Industrial Internet of Things (IIoT)
• Smart Manufacturing
• Connected Manufacturing
• Smart Factories
• Cloud Computing
• Cognitive Computing
• Artificial Intelligence
• Cyber-physical Systems

This automation creates a manufacturing system where all the devices and technology used in production are wirelessly connected and use sensors and monitors to visualize entire processes and provide an overview of a company’s manufacturing. These technologies are always advancing and, with the rollout of 5G, businesses can expect faster response times and real-time communication between systems.

The Evolution of Industry 4.0

To understand the impact of Industry 4.0, it’s important to understand the evolution of industry from 1.0 to 4.0:

Industry 1.0

Mechanical production facilities were introduced to the world in the late 18^th century, paving the way for steam-powered machines to help workers in manufacturing. The increased production efficiency these machines provided helped small businesses grow into large organizations with owners, managers, and employees. Industry 1.0 is also deemed as the beginning of industry culture.

Industry 2.0

Industry 2.0 began at the start of the 20^th century with the development of machines running on electrical energy. Electrical machines were more efficient to operate and maintain than their steam-powered counterparts, paving the way for a more cost-effective, productive factory floor. The first assembly line was built during this era, further streamlining the process of mass production.

Industry 3.0

Industry 3.0 was centralized around the advances in the electronics industry in the last few decades of the 20^th century. The invention of technologies including transistors and integrated circuits revolutionized manufacturing, as they automated machines on the factory floor that resulted in reduced effort, increased speed, greater accuracy, and freed up the human workforce for more advanced tasks. The integration of electronic devices and machine automation created a requirement of software systems, fueling the software development market. The software systems paved the way for management processes such as enterprise resource planning, inventory management, shipping logistics, product flow scheduling, and tracking throughout the factory. As expected, the automation of machines and introduction of advanced software systems have evolved over the years as advancements are made in the electronics and IT industries. This is driven by the pressure to reduce costs and speed up production and has led to many companies moving their manufacturing to low-cost countries. This dispersion led to the formation of the concept of Supply Chain Management.

Industry 4.0

Industry 4.0 was introduced in the 1990s as the internet and telecommunications transformed the way we connected and exchanged information. This technology merged the boundaries of the physical and virtual world, and cyber-physical systems (CPS) further blurred this boundary in manufacturing, introducing an influx of new technologies into the industry. CPS allows machines on factory floors to communicate more intelligently with each other, eliminating physical and geographical barriers.

Industry 4.0 technology uses CPS to share, analyze, and guide intelligent actions for different processes involved in manufacturing. Having all the different machines on a factory floor connected and sending real-time data to the cloud creates the concept of a 'Smart Factory'. These smart machines monitor, detect and predict faults, suggesting preventive measures and remedial action before downtime occurs.

CPS also allows manufacturing processes to be completely virtually visualized, monitored, and managed from remote locations. Industry 4.0 puts machines, people, processes, and infrastructure into a single, connected manufacturing process, which provides businesses with full disclosure over the entire workings of their manufacturing and production. Using this information makes overall management highly efficient.

How Does Industry 4.0 Work?

One of the best ways to understand Industry 4.0 is to think about how it is applied in manufacturing. Here are 3 use cases that will help you recognize the value Industry 4.0 can add to a manufacturing operation:

Supply Chain Management

Industry 4.0 technologies allow businesses to have greater insight, control, and data visibility over their supply chain. Smart manufacturing means companies can deliver products and services faster, cheaper, and with better quality. As more and more businesses use Industry 4.0 solutions for supply chain management, the market becomes more competitive, forcing companies to adopt a similar strategy or risk falling behind.

Predictive Maintenance

Industry 4.0 solutions and a connected factory floor can be used to predict potential downtime in machinery before it occurs. Without IoT systems, preventive maintenance must be done manually and happens based on routine or time. Industry 4.0 systems sense problems before they arise and can even provide insight on how to solve issues before they become a problem.

Asset Tracking and Optimization

Industry 4.0 makes it easier for businesses to track inventory, quality, and optimization opportunities related to logistics. Connected manufacturing and the IoT provide employees with visibility over company assets worldwide. Standard asset management tasks such as asset transfers, disposals, reclassifications, and adjustments can be streamlined and managed centrally and in real-time.

Benefits and Challenges of Industry 4.0

Before adopting Industry 4.0 into your business, it’s important to understand the benefits and challenges and make sure it’s a good fit for you.

What are the Benefits of Industry 4.0?

The benefits of digitalization include:

Revenue Gains

In European industry, digitized products and services create an additional €110 billion in revenue each year according to a PwC report. Nearly 50% of businesses with Industry 4.0 projects underway expect to see double-digit growth over the next five years. Using market data and machine learning, businesses gain a deeper understanding of customer wants and needs. This can be applied to product development and be used to increase interactions and conversions.

Increased Efficiency and Productivity

McKinsey predicts that switching to automated production can boost productivity in technical industries by 45-55%. Automated machinery can free up the human workforce from low-skilled parts of the production process, allowing them to focus on more technical solutions. Using machine learning and manufacturing execution systems provides management with the information they need to identify inefficiencies and improve internal processes. All this contributes to a more efficient, productive factory floor. MIT estimates that collaboration with robots can reduce workers’ idle time by 85%.

Reduced Downtime

We have discussed the different Industry 4.0 technologies that use predictive maintenance to reduce downtime. Machine learning spots repetitive patterns that lead to procedure failures, identifying them early and even scheduling inspections before the downtime becomes expensive. These algorithms are constantly improving, increasing the effectiveness of predictive maintenance using Industry 4.0 solutions. Deloitte estimates that predictive maintenance can:

• Reduce maintenance planning time by 20-50%
• Diminish total maintenance costs by 5-10%
• Increase equipment uptime and availability by 10-20%

Improved Supply/Demand Matching

Instead of operating in an individual silo, Industry 4.0 solutions such as cloud-based inventory management enable better interactions with suppliers. Seamless exchanges ensure you have:

• High service-parts fill rates
• High levels of product uptime
• Improved customer service

Pairing cloud-based inventory management with big data analytics solutions can improve demand forecasts by at least 85%. Using Industry 4.0 technology allows you to adjust your supply with market demand in the quickest possible time. You can also perform real-time supply chain optimization, identifying possible bottlenecks preventing your growth.

What are the Challenges of Industry 4.0?

At the current stage of Industry 4.0 development, there are certain challenges that businesses should be aware of before they begin implementing solutions. 6 out of 10 manufacturers said implementation barriers meant they only achieved limited progress with their Industry 4.0 initiatives. The top-cited challenges were:

• Lack of unified leadership that makes integration and cross-unite coordination difficult
• Difficulty selecting third-party vendors for hosting and operationalizing company data
• Lack of courage to launch the digitalization plan
• Lack of in-house talent to support the integration of advanced technologies and solutions
• Difficulties integrating data from various sources to enable connectivity
• Lack of knowledge about Industry 4.0, vendors, and IT outsourcing partners

It’s important that businesses consider they have everything in place to successfully integrate Industry 4.0 technology. The first step to becoming an Industry 4.0 company is to estimate the ROI that digital solutions will generate for your business.

Is Industry 4.0 Right For Your Business?

We have put together a list of considerations to help you understand if Industry 4.0 technology can advance your business. Once you have identified a need, it will help when it comes to investing in integration.

• Industry 4.0 solutions can benefit your organization if:
• You’re in a competitive, tech-savvy industry
• You’re having difficulty recruiting for vacant job roles within your organization
• You want better visibility over your supply chain
• You want to identify and address issues within manufacturing earlier
• You want to boost efficiency and productivity throughout the business
• You want your employees to have access to informed, up-to-date reports on production and processes
• You want richer and more timely analytics
• You want to improve customer satisfaction, interaction, and experience
• You want to increase and maintain consistent product quality
• You want a more integrated enterprise resource planning system
• You want a consistent and flexible view of production and operations
• You want real-time insights to help you make faster, informed decisions

If a number of the above apply to you then it’s safe to start evaluating Industry 4.0 technology and allocating resources for deployment.

How Do You Implement Industry 4.0?

Finally, now we understand Industry 4.0, its role in manufacturing, and whether it’s right for your business, we are going to discuss how you can successfully implement this technology throughout your organization.

1. Understand Your Starting Position

This means reviewing your present state of maturity and reviewing areas of improvement for your team. Laying the foundations for successful adoption will make the implementation process smoother.

2. Prioritize Industry 3.0

In order to implement Industry 4.0, Industry 3.0 principles must be in place. Most companies aren’t ready to implement Industry 4.0 because they are yet to implement Industry 3.0. Here are some areas to focus on:

• Management Buy-In: Your entire team must be on board with the planned changes and adaptations. A secure management buy-in should be one of your first steps.
• Connect OT and IT: Information technology (IT) and operational technology (OT) departments must work together for Industry 4.0 to work. For example, an integrated production scheduling system should be in place before the Industry 3.0 vision can be successful.

3. Define a Strategy

Having a plan is a necessity before adopting Industry 4.0. Define your level of target maturity, lay out a detailed implementation plan, and assess the potential roadblocks in order to achieve your objectives.

4. Start Small

This applies to both Industry 3.0 and Industry 4.0. Avoid rushing into Industry 4.0 or you could face one of the many challenges highlighted above, such as a lack of unified leadership or in-house talent. Pick one challenge at a time and show your organization how you resolved it using Industry 4.0 solutions. This will gain support within the business, and once the first objective is achieved you can move onto the second pain point.

5. Create a Friendly Ecosystem

If your organization isn’t ready for Industry 4.0, you won’t be successful. Create a manufacturing ecosystem wherein the physical and digital elements of your business communicate to establish a friendly landing pad for efficient integration.

6. Improve Internal Processes

It is smart to focus on end-to-end process improvements to promote collaboration. This could mean investing in education and training, promoting process automation, and exploring hardware and software that could help streamline your business. This will help you overcome the main challenges cited by other businesses who struggled integrating Industry 4.0 and provide employees with insight into why you are introducing new technology.