The term ‘Industry 4.0’ is now almost a decade old, but the revolution itself is only in its infancy. During the 2011 Hannover Messe in Germany, one of the world’s largest trade shows, industry leaders coined ‘Industry 4.0.’ It describes the current influx of technology innovations in the fields of automation and data analytics. The dramatic shift in industrial technology is considered the 'fourth industrial revolution,' hence the term Industry 4.0.
Each of the previous three industrial revolutions carries some striking and vital characteristics for the period. The First Industrial Revolution began with the inception of power generation with water, steam, and coal. The Second ushered in electricity and mass production, and the Third introduced electronics and information technology. Technological competition is now the center of economic development.
Industry 4.0 is also profoundly and exponentially affecting companies. New technologies allow the fusion of the physical world and the digital world. While embracing these new tools, businesses must also continue to leverage advancements from the third industrial revolution. This includes intelligent computing and autonomous systems nourished by large amounts of data and machine learning.
With that in mind, we came up with a comprehensive guide to Industry 4.0.
What is Industry 4.0?
When we talk about Industry 4.0, it's important to note that it is a broad term and does not refer to any specific technology. It encompasses the various transformations we're witnessing in today's industrial landscape. Among the technologies behind the changes are cyber-physical systems, the Internet of Things, cloud computing, and cognitive computing.
The biggest differentiator in Industry 4.0 is how we integrate these technologies and relate them in unprecedented ways. One system can communicate transparently with another, offering integration and decision support. For technology to revolutionize manufacturing industries, it is necessary to create intelligent, connected, and capable factories of self-management.
Main Characteristics of Industry 4.0
What sets this latest industrial revolution apart is the fusion of technologies to save time, enable certain decisions, and reduce errors. This allows digital manufacturing to grow quickly and broadly. The technologies we're talking about have similar characteristics like decentralization, interoperability, and virtualization. Let's start by defining these features.
Decentralization is the movement away from one large administrative center, dispersing functions, and powers across an organization. An example of this is the move to open-sourced software, allowing more people access to information to fuel innovation.
In Industry 4.0, decentralization means machines do not depend on human interference to work. Physical systems have sensors connected to a network, capable of making automated decisions based on performance data.
Interoperability is a more recent term, related to technological systems. It is defined as 'the ability of a system to work with or use the parts of equipment of another system.'
A simple example of this is each web browser can work with every web page because both use open standards to allow everyone access. They work separately but depend on each other for success. For industry, it is the ability of physical systems, human systems, and computer systems to communicate with each other.
Virtualization is the act of creating a virtual instance of something rather than a physical version. Open Source describes it this way, applications appear like they are running on their own dedicated machine, but their operating system, libraries, and other programs are unconnected to the host.
Machines that use virtualization are better protected against malware and can be used to check for updates, run software tests, and test different configurations before presenting the end result. You can create a virtual copy of the smart factory for training and testing simulation without impacting the plant floor.
Real-Time Response is a new expectation for modern companies. This is because technology has advanced so much that sensors feed data and algorithms instantaneously. This real-time data and analysis provides immediate results for quicker responses to problems and even predictive maintenance.
Some companies already use this technology to provide complete information about the financial market, such as stock market quotes, indexes, and economic indicators.
Modularity allows any production line activity to change immediately. With the connection and disconnection of different modules, companies can manufacture unique products in sequence without reconfiguring the entire assembly line.
The automobile industry, for example, divides vehicle lines into modules that make it easier to assemble products. While the division is somewhat specific, the manufacturing line can handle multiple colors, configurations, and customer-specific requests at once.
Industry 4.0 Technology
As mentioned previously, Industry 4.0 is not a specific technology but the integration of several technologies for advanced industry automation. Here are some of those technologies and their definitions:
Cyber-Physical Systems (CPS): Smart systems that connect to physical devices into a cyber-network to allow for the collection of data.
Internet of Things (IoT): Similar to CPS, this is the addition of electronic devices and sensors to devices. The purpose is for the data collection, analysis, and automated actions. When applied to Industry, it can be referred to as the Industrial Internet of Things (IIoT)
Big Data: The volume of data collected by CPS and IoT creates its own challenge: it’s too large to be analyzed manually. Thus, big data arises to organize and store the information generated.
Cloud Computing: Cloud computing is a new way to store data and host systems. Instead of on premise data centers, companies ‘rent’ remote servers to store, manage and process data.
Cognitive Computing: With complex algorithms, computers can simulate human decision making automatically. Cognitive technology allows systems to self-learn with more data, recognizing patterns, and natural language processing.
Although we are still far from having all of these technologies connected, the first step is underway. Large industries already connect different internal sectors. The next step is to standardize that integration and extend it globally.
Benefits of Industry 4.0
Innovative companies are already experiencing the benefits of Industry 4.0. They recognized early on how investing in new technologies and their integration could improve both business processes and profitability. Here are some of the most significant benefits.
Increasing productivity through automation and process optimization is one of Industry 4.0's main goals. This means reducing costs and losses, increasing profitability, increasing production speed, preventing errors and delays, among others.
Specific process efficiencies include:
Improved business continuity
When a computer or other equipment breaks, it needs repair. This demands time, money, and movement of teams, especially in the information technology sector. As a result, production is affected, and work slows down, costing money and customer frustration.
If the machines are connected and supervised through the Internet of Things, problems can be monitored and predicted. Everything is controlled proactively and in real time. With artificial intelligence algorithms, it is possible to perform more predictive and advanced system maintenance.
Better working conditions
Improving working conditions and enabling employees to engage in less stressful occupations are essential objectives for industry. EHS Today lists several new digital pieces of equipment to help employee safety: drones, robots, wearables for workers, proximity sensors for vehicles, and smart PPE. These can tackle high risk jobs, replacing humans entirely or in the case of some wearables, assisting humans performing manual tasks like lifting heavy objects.
Also, new digital technologies in manufacturing allow you to quickly detect and identify faults to increase protection against accidents. An examples of this is the recognition of a heat increase before a fire can fully ignite.
The behavior and preferences of the current consumer have changed. At the same time, digital transformed the way we work, buy, relate and live.
Customers are more demanding, so we must meet those demands with personalization. One example is sneakers: initially offering only a few colors was enough. Today, in addition to comfort and functionality, it is necessary to offer multiple models, color combinations, and sometimes specific customization.
Along with getting precisely what they want, personalization allows people to interact with the company directly. It is the key to promoting a better customer experience. In this way, organizations that want to gain competitive advantage and scale their customization services need to understand and implement Industry 4.0 techniques.
Flexibility, scalability, and agility are prominent benefits of Industry 4.0. The industry is now embracing many of the same methodologies I.T. uses to adjust quickly, adapt, and scale. DevOps and Agile allow for an iterative process where we can continuously improve processes and products.
Artificial intelligence, big data, cybernetic systems, and robotics are essential to meet and anticipate seasonal demands and fluctuations in production. These technologies allow businesses to be agile and even predict upcoming changes.
Impacts of Industry 4.0
The changes underway in the 4th revolution will impact every industry. Similar to the previous revolutions, no business segment goes untouched.
One of the most visible impacts of Industry 4.0 will be IoT and connected devices. Data from Juniper Research shows the number of connected devices will reach 38.5 billion in 2020, up from 13.4 billion in 2015. That’s a jump of more than 285%!
Another example is asset maintenance where digital solutions facilitate production management to increase operational capacity and planning. An essential factor already mentioned is the ability to monitor equipment to identify problems in advance.
The Future of Work
One of the most significant impacts of Industry 4.0 will be on the workforce. A 2018 report by the International Labor Organization (ILO) found industrial robots experienced an annual growth rate of 17% since 2010. Although, most of that proliferation is in only five countries.
Naturally, all these technological transformations cause a certain discomfort - the same has happened in other industrial revolutions. Many professionals see automation as a risk to employees. However, many executives believe automation could lead to job creation.
That same ILO report found 'half of the surveyed executives also suspect that automation spurs creativity since it frees up employees to do the work they want to do. Indeed, 91% of respondents confirmed that their skilled employees spend too much time on administrative tasks.'
Further backing this theory, a study by the Boston Consulting Group (BCG) shows by 2025 the number of jobs will increase 6% in Germany. The theory is the demand for technology roles increases faster than the decline of operational positions.
World Economic Forum Research points out that 65% of children entering elementary school will work in positions that do not yet exist. These new careers will likely fall in the areas of mobile, internet, math, robotics, programming, engineering, and data analysis. The main characteristic of these jobs is critical thinking. It will be crucial for problem-solving related to intelligent machines and systems.
Projections for the future labor market reveal the survival of companies and professionals depends on their ability to innovate and evolve. In the future, job requirements will focus on qualification, creativity, resilience, and the ability to work as a team.
The Industry 4.0 market in the U.S.
The United States is the second largest manufacture in the world, only behind China. But it suffered significant declines since the turn of the century. According to U.N. estimates, China displaced the United States as the largest manufacturing nation in 2010. The fall of U.S. manufacturing has leveled since 2012, partly because China’s share steadied.
Despite the decline, companies are investing heavily in Industry 4.0. According to U.S. Congressional research, manufacturers in the United States spend far more on research than those in any other country, save China. In fact, 'manufacturers have been responsible for around 68% of all R&D conducted by businesses in the United States in recent years.'
An HSRC report found U.S. tech giants are leading the Industry 4.0 market race. They are investing billions into business solutions, improving and connecting supply, manufacturing, maintenance, delivery, and customer service.
That doesn’t mean these solutions are making it into full production. On average global companies are piloting eight different Industry 4.0 solutions according to a McKinsey study. The U.S. is slightly above average at 8.5 but well below China’s 10.2. However, across the globe, only 30% of those pilots are rolled out company-wide.
There is a lot of potential ahead. The United States has a competitive advantage in a few industries that could increase manufacturing value if the right investments are made. These include automotive, aerospace, and computer electronics.
McKinsey believes U.S. manufactures must better coordinate and strengthen the domestic suppliers. ‘Large firms can benefit from identifying which of their suppliers provide critical, high-value components. Instead of just monitoring them, large firms could solicit their ideas, invest in their capabilities, and build trust to create a preferred relationship.’
Challenges of Industry 4.0
The implementation of Industry 4.0 will bring significant changes in many industrial and business sectors. That is why we must be aware of the challenges and how to address them in this moment of transformation.
Low security and stability
Probably the biggest obstacle is security. Integrating a massive amount of data into different systems through the computer network is not a simple task. With newly connected devices (CPS and IoT) as well as cloud computing, there are new risks to your network. As the access to information is extended, the more opportunities for risk.
Keeping information out of the reach of malicious people is a top priority for the I.T. industry. There are new measures and tools to track and prevent issues, ensuring data transmission is safe and secure.
Stability is another important point for the fourth industrial revolution to deliver the expected benefits. Avoiding technical problems produces more successful innovation. After all, stable and robust systems are the basis of communication between machines.
Lack of knowledge
The future workforce will need new skills and knowledge, and most companies are struggling to fill specialized skill positions. The lack of training is delaying development and causing the companies to lose competitiveness in the market.
To better train employees, Workforce apprenticeships are gaining traction in the United States according to McKinsey. However, for regional success these programs need to happen on a larger scale. Such a program could cost $40 billion a year.
It’s also key for managers to decision makers to be able to think innovatively. Industry 4.0 can open up new business models for organizations but design thinking concepts must be appropriately applied. INSEAD offers executive education in digital disruption and creating an ecosystem to nurture innovation. We’ll likely see more demand for education like this.
High deployment cost
The high value to deploy services is one of the main barriers of the fourth industrial revolution. While the price of robots is falling, newer technologies are still expensive. It will take time for these technologies to become widespread and more affordable. However, by then, you'll be behind your competitors in digital disruption.
One solution to this problem is to work with service partners. Manufacturers recognize they are not experts in I.T. and rely on service professionals to implement the right solutions. This can help them reduce costs and reach a high level of development.
It is also important to remember that in most cases, the performance gains outweigh the investment in technology. By saving energy and reducing failures, it is possible to increase the productivity and efficiency of the organization.
In the coming years, you can expect to see technologies revolve more around software, platforms, and apps. These solutions aim to take Industry 4.0 to a new level, with simulations, connected automation, 3D mini-printers, etc. Here are a few of the leading technology trends:
Integrating, connecting, and collaborating is the motto of the fourth industrial revolution. It's more than putting sensors on every machine for a lot of data. Instead, you need to know how to use sensors (and their data) efficiently.
Everything related to integrated automation must be connected: applications, software, and IoT platforms. In addition to capturing information, you need to know how to filter that data.
This technology allows you to create a digital model of almost anything, from a product itself to the full production line step-by-step. It is no longer necessary to spend time and money on physical prototypes, nor to paralyze processes to perform tests. Simulation allows you to analyze and test virtually to find and correct errors early in the process.
It's important to recognize the benefits to small businesses as well as large corporations. Smaller companies have more to lose if a physical prototype fails. However, for them to see the benefits of a digital twin, we must democratize access to technology. Today, there is already software explicitly designed for this market share. The solutions adapt to the reality of the projects and budgets of such companies.
3D printing technology is advancing quickly with its popularity growing as well. Many companies are already thinking of new solutions with technology - primarily to reduce the cost of replacing parts or developing models.
The impact of 3D printing goes beyond manufacturing. In education, for example, universities can use 3D printers to develop models for studying. Even in botany, you can print a flower to learn the structure and dissect it, without destroying a real flower. This is simultaneously teaching students about new technology and developing digital skills.
Many companies argue that the factories of the future will be more collaborative rather than fully robotic. The cobot, in this sense, refers to robots that perform manual tasks, but work together with people.
The investment in this technology is much smaller than in industrial robots, which automate everything. One example of a cobot is a wearable device that transforms the human arm into a pneumatic version, connecting the collaborator to the machine. This creates both the sensitive and flexible movement of humans as well as the precision and agility of a robot.
Industry 4.0 is redefining manufacturing with new trends, insights, and technologies made easily accessible with digital solutions designed to streamline factory operations and drive efficiency.
Through automation and big data analytics, digital manufactures will rely on equipment that can make proactive, evidence-based decisions. The new face of manufacturing will also demonstrate customized and personalized production at a high scale, with the optimization of behavior patterns and more engaged customers.
As the pace of technology speeds up, smart manufacturing will rely on agile, iterative methods to keep up. Companies who learn, adopt, and implement Industry 4.0 techniques will be better equipped to succeed in the digital future.
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