Industry 4.0 Gathers Steam

01 November 2016

Say “Industrial Revolution” and a sepia-toned print, complete with antique oversized industrial equipment run by cap-and-suspender-donned workers, comes to mind. We have moved far beyond that first revolution marked by the commercial steam engine and mechanical loom back in the 1700s. Electricity-enabled mass production fueled the second revolution in and around 1900; post-WWII, the computer hummed along behind the third. But where are we now that the fourth revolution is said to have arrived?

I started writing about Industry 4.0 as a coming attraction approximately four to five years ago. Naturally, as with most things, it was said to be right around the proverbial corner as a well-adopted concept. The name, Industry 4.0, was first used to describe a government-sponsored initiative in Germany five years ago. The concept is that it is the culmination of several digital technology capabilities, such as artificial intelligence, advanced robotics, sensor technology, cloud computing, the industrial IoT, big data, additive manufacturing and more, either maturing or rapidly evolving simultaneously.

Digitization, Physical and Virtual Integration

Industry 4.0 trends are visible by looking at a global Industry 4.0 survey of approximately 2,000 industrial-based companies from 26 countries. Approximately a third of the companies surveyed claim that their companies had reached advanced integration and digitization levels, and more than 70% expected to be at the same point by 2020.

Within an organization, the digitalization of the full gamut of operations vertically and horizontally so that all levels access the data of the complete enterprise is one aspect of Industry 4.0. From transportation, sales, distribution, suppliers and manufacturing, based on such digitization, the company is less likely to experience supply chain problems; or when challenges occur, the reaction time is substantially accelerated. All aspects of business are transparent.

The ability to prototype new products and manufacturing assembly in software versus the long, drawn-out efforts of actual creation and sporadic changes is the virtualization aspect. This ability to prototype in software saves time and expense in creating manufacturing efforts as well as the design and test of new products. Custom software also is embedded into products and services so that tracking data is obtained and analyzed. Maintenance of machinery can also be handled via software that alerts the user when there is a potential mechanical problem. Software is also being created to perform repair via software upgrades rather than a truck roll for each major equipment or industrial vehicle repair.

As companies gather and harness the data from their own processes and products, it is possible to “see” where changes in both are required, and to use the data in the development of new products and services. The availability of data also makes Industry 4.0 more customer-centric as companies can tailor business models or offer products as services, and even provide for a manufacturing batch of one unit—easily moving from today’s prototype capability to delivering an end product that is specifically targeted to the unique needs and requirements of a customer. Data analytics becomes central to the corporation and its move to Industry 4.0.

Challenges to Industry 4.0 Implementation

As the study showed, it is not just the ability to gather data, but building the analytical capability in-house that is still a barrier to more rapid Industry 4.0 adoption. It is one thing to be able to gather the right data and have it be of sufficient quality to be useful; but it is quite another to attract the people with the in-depth expertise to actually drag out information that is truly of value. The human skills available are often not very experienced, making the leap to relying on mountains of data to be analyzed even more difficult to make.

Early Benefits to the Brave

Being an early adopter requires a tremendous leap of faith and courage. According to the survey, those that have jumped on board already are noticing huge gains in efficiency, cost savings and innovation. What it really has allowed them to do is beat out the competition because of a faster time-to-market. They are also taking advantage of the momentum of implementing Industry 4.0 to embrace industrial platforms that are offered by such providers as Siemens and GE. This is especially valuable to smaller companies that lack the extra resources or time to build their own platforms from the ground up.

It is not only the small companies that can benefit. Globally it is the emerging countries that will gain the most over time from the Industry 4.0 concept, as they can work seamlessly with partners and platforms, becoming more able to reach a larger customer base.

How to Start

A plan is the first step in every endeavor, and Industry 4.0 is no exception. The two most important aspects of ramping up is to begin with a project that will allow you to learn and establish proof of concept. Second, but no less important, is to either find expert data analysis, or grow your own. Use a combination of in-house or outsourced talent. Build your capabilities in identifying what is important to you, how to best gather it, and of course, what you need and want to learn from it.

How Big Is Big?

Industry 4.0’s importance can be gauged just by looking at industrial production output. In a 2012 study by McKinsey Global Institute, titled "Manufacturing the Future: The Next Era of Global Growth and Innovation," McKinsey estimated industrial production to be worth $75 trillion, or 16% of global GDP, providing 45 million skilled workers in industrial countries. When certain segments are considered, such as 3-D printing, the global market for that segment alone is estimated by Global Industry Analysts to be worth $5.2 billion by 2020. Industry 4.0 will continue to drive end-to-end digitization of physical and virtual assets. It will also create ecosystems with willing partners so that companies will harness the generation, analysis and communication of data seamlessly, reaping the benefits of higher revenues and lower costs, and that competitive edge.

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