Before we dive in, it should be noted that just 10% percent of small-to- medium-sized, Michigan-based businesses currently have an Industry 4.0 strategy in place. This low number is not only shocking—, it’s bad for business. Industry 4.0 is not just another buzz term; it provides significant improvements in productivity, quality, product purchasing costs, and manufacturing costs. To put it simply, companies cannot afford to ignore it.
Welcome to Industry 4.0, the new age where smart technology and smart appliances are moving us closer and closer to a fully digitized society. Potentially valued at almost $4 trillion by 2020, studies show that businesses everywhere will be able to benefit by embracing the fourth industrial revolution. And, with the emergence of blockchain, we’re already on the pathway there.
What is Industry 4.0?
Industry 4.0 is not a new technology, nor is it a new business structure. It is our society’s current trend of data exchange and automation in the creation and development of new technologies. It is simply an acknowledgement that technology had advanced so much since the 19th century, where we saw the beginnings of mass production.
IoT, IIoT, and Industry 4.0, chances are you’ve heard these terms tossed around at some point, but still can’t quite put a finger on what they mean. This article aims to solve the confusion surrounding each of these, along with outlining the benefits to businesses that choose to embrace them. To accomplish this, we will cover the basics of connected devices and how they can change our world. We will focus on industrial products and applications rather than trending IoT sensations (like Pokemon Go), so that organizations can better understand their everyday practicality and uses.
The leading technologies driving this new revolution are:
- Big Data – generated by the Internet of Things
- Machine Learning – enabled by big data
- Real-time feedback through network and internet technologies
- Industrial Blockchain that enables smart contracts, connected ERP systems, traceability, and auditability to name a few
Industry 4.0 is conceptually defined as follows:
- Intuitive interoperability between humans and machines
- Virtualization and simulation of systems to test alternate scenarios and support quick re-configuration
- Decentralization of decision making by utilizing artificial intelligence and machine-learning to take care of simple tasks
- Real-time capability – collect data from multiple sources, including customers, for immediate feedback into the entire ecosystem of raw materials, manufacturing, supply chains, and distribution
- Service Orientation – Ability to use a vast array of internet cloud services
- Modularity – Provides resilience by enabling quick reconfigurations of manufacturing, supply chains, and distribution
The First and Second Industrial Revolutions
In the 19th century, we witnessed Britain move from farming to an industrial sector, focusing on factory production. The Second Revolution, introduced mass production and steel. Factories were becoming more ‘electrical,’ giving birth to Henry Ford’s assembly production line, allowing for voluminous production and mass distribution to come into play.
The Third Industrial Revolution
The third revolution is where our country went “digital.” Up until the 1950’s, technology operated on an analog, mechanical, and electronic scale.
Since the 1970’s, we have become more and more digital, moving closer to completely digitizing our society, whether it’s smart home assistants to smart security systems. Industry 4.0 uses the Internet of Things (“IoT) to digitally enhance factories, turning them “smart.” In this structure, we allow for the creation of “cyber-physical” systems, mechanisms monitored by tightly integrated algorithms and software, which duplicate the physical systems onto a virtual network that makes decentralized decisions. With the introduction of the Internet of Things (“IoT”), cyber-physical systems are able to communicate and work together, providing users with real-time system interactions.
What is Innovation?
Anything you can do to remove excess from the system or find ways to do more with the existing system is innovation. For example, look at 15 of your processes, can you remove any of them? Can you combine any of them? Can you re-architect a group of operations by looking at it from the outside-in to your company? What does technology now make possible that wasn’t possible before? Not for technology’s sake, but as an accelerant to the business model.
Another goal is to become digitally resilient. You don’t want technology to lock you into a process that will be painful to get out of in the future. Many companies create technology processes that remain for years, even though they are no longer necessary. Make sure you hold your technology team accountable to produce modular technology functions that can be replaced or re-configured without affecting the entire operation. Industry 4.0 is based in part on the principle of easy re-configuration.
Why Should You Care?
I’m sure you are familiar with Gartner’s Hype Curve. A technology trigger can cause a rocket ship trajectory in expectations. The more disruptive the technology seems, the steeper the trajectory. Once people start to realize that the technology isn’t the next best thing to sliced bread, the descent into the trough of disillusion occurs. I think that’s where we are with Bitcoin and digital currencies. (There should be a “crash of uselessness” on the Gartner chart!) Finally, there is the slope of enlightenment and plateau of productivity where the rubber finally meets the road and provides a path to profitability.
All of the technologies underlying Industry 4.0 are past the trough of disillusion, in my opinion. Machine learning and artificial intelligence have been around at least three decades. It might not seem like it, but block-chain has been around for over a decade, fuelling the growth of digital currencies. While digital currencies remain in doubt, block-chain, which is the underlying technology, is being used by companies such as Maersk, Walmart, IBM, Oracle, and Amazon to name a few. Walmart can trace a food product in two seconds with a query of their block-chain that used to take 6 days of paper trail research.
The time to maximize return on investment in new technology is during the transition from the trough of disillusion to the slope of enlightenment. This return trajectory is where the profit and productivity boosts from new business models are at their maximum. This is where you gain competitive advantages and accelerate past your competition. If you choose to wait until a technology wave reaches comfortable, widespread adoption, you may be too late to catch up. Success favours the uncomfortable path. In other words, it’s time for your company to invest in these technologies. One final reason is worth mentioning. If you don’t adopt a mindset of continual innovation and transformation, you will have a hard time attracting the best talent.
This new age is attractive to those companies whose business culture is reading, willing, and able to receive the effects of the digital-age evolution. Rather than spend time and energy in raising awareness to companies who aren’t ready for the change, or simply, aren’t comfortable making the change, the target then shifts on those entities who already see themselves thriving and growing, because of the advancements. But, it’s a double-edged sword, because it’s important to understand those companies who aren’t making the switch, and why they aren’t.
While many organizations might still be in denial about how Industry 4.0 could impact their business or struggling to find the talent or knowledge to know how to best adopt it for their unique use cases, several others are implementing changes today and preparing for a future where smart machines improve their business. Here are just a few of the possible applications:
Identify opportunities: Since connected machines collect a tremendous volume of data that can inform maintenance, performance and other issues, as well as analyze that data to identify patterns and insights that would be impossible for a human to do in a reasonable timeframe, Industry 4.0 offers the opportunity for manufacturers to optimize their operations quickly and efficiently by knowing what needs attention. By using the data from sensors in its equipment, an African gold mine identified a problem with the oxygen levels during leaching. Once fixed, they were able to increase their yield by 3.7%, which saved them $20 million annually.
Optimize logistics and supply chains: A connected supply chain can adjust and accommodate when new information is presented. If a weather delay ties up a shipment, a connected system can proactively adjust to that reality and modify manufacturing priorities.
Autonomous equipment and vehicles: There are shipping yards that are leveraging autonomous cranes and trucks to streamline operations as they accept shipping containers from the ships.
Robots: Once only possible for large enterprises with equally large budgets, robotics are now more affordable and available to organizations of every size. From picking products at a warehouse to getting them ready to ship, autonomous robots can quickly and safely support manufacturers. Robots move goods around Amazon warehouses and also reduce costs and allow better use of floor space for the online retailer.
Additive manufacturing (3D printing): This technology has improved tremendously in the last decade and has progressed from primarily being used for prototyping to actual production. Advances in the use of metal additive manufacturing have opened up a lot of possibilities for production.
Internet of Things and the cloud: A key component of Industry 4.0 is the Internet of Things that is characterized by connected devices. Not only does this help internal operations, but through the use of the cloud environment where data is stored, equipment and operations can be optimized by leveraging the insights of others using the same equipment or to allow smaller enterprises access to technology they wouldn’t be able to on their own.
While Industry 4.0 is still evolving and we might not have the complete picture until we look back 30 years from now, companies who are adopting the technologies realize Industry 4.0’s potential. These same companies are also grappling with how to upskill their current workforce to take on new work responsibilities made possible by Internet 4.0 and to recruit new employees with the right skills.
As America pushes to remain competitive with manufacturing throughout the rest of the world, it is imperative that all companies—large and small—investigate and embrace Industry 4.0. In most cases, the technology will provide such enhancements to the bottom line that the investment will pay for itself within just a year or two. Yes, you can hold out and wait for the technology prices to drop, but competitors might not share that mentality. You really cannot afford to wait.