Industry 4.0: When The Blockchain Meets The Supply Chain

Andre Smith

Imagine a future run by cold emotionless machines, where the lives of human beings are just an afterthought. Perhaps you’d prefer to picture a world where blockchain-based equipment and new manufacturing processes have allowed automated processes to take over almost every difficult job, and most people live in relative luxury without ever having to raise a finger.

Both of these very different visions are often associated with what engineers and cyberneticists refer to as Industry 4.0 technology.

While some very drastic changes are on the horizon, the new industrial revolution might not look like either of these Hollywood fantasies. It’s useful to consider the three previous revolutions and how these altered the market.

Four stages of the Industrial Revolution

According to experts, mechanization and the mass introduction of steam engines brought about the Industrial Revolution studied by conventional historians. Engineers married assembly lines and electrical power in the late 19th and early 20th centuries, which brought about the Industry 2.0 phase.

Information technology and robotics brought us to where we are today. This third phase of industrialization has seen the institution of digital solutions into almost every manufacturing process. Industry 4.0 paradigms leverage the growth of autonomous systems, machine learning, and IoT devices to automate the decision-making process as well as the actual work.

True Industry 4.0 operations would use AI algorithms to monitor data collected from networked sensors in a way that current factory managers could only dream of.

An end to overproduction

According to a recent study, over 80 percent of executives agree that IoT equipment has helped their businesses connect production chains with consumer demand. Collecting data from consumers about how they use their products helps to predict what they might order in the future and when they might order it. With some B2B workshops switching to a manufacture-on-demand model, it’s only a manner of time before many consumer goods are produced this way.

Industry 3.0 factories have made manufacturing extremely efficient. It’s easy to pump out large amounts of goods in a relatively short period of time, but many of these products sit unsold in warehouses for months before they’re finally disposed of in fire sales. Inventory management has become just as important as having a solid product or interested customers. This is because it’s hard to tell when someone might need something. Factories simply produced more than they could ever sell in the hopes of meeting consumer demand.

Analytics software can feed information to robotic assembly lines, which would ensure they produce only as many goods as can actually be sold at any given time. It’s easy to imagine end users ordering a product from an online retailer, which then passes the order to a manufacturer.

Storing and processing production chain data

In some cases, the manufacturer might even be able to fulfill the order instantly if they’d predicted that the client would order it in the future. Industry 4.0 organizations that collect information from IoT devices installed in an end user’s place of business could end up knowing a significant amount about their buying habits. Several pundits have referred to data as the new oil.

Storing and monitoring that data has quickly become a major challenge. Anything a company saves from reducing overproduction could end up getting wasted on server energy consumption. Solutions that Industry 4.0-geared technologists have developed to tackle this issue are already starting to shape the world we currently live in.

Blockchain cryptography and self-balancing trees have made it possible for distributed processes to handle almost any kind of storage task. Records stored either as entries on a chain or in a conventional database are indexed in such a way that even the most atomic operations aren’t expensive in terms of CPU or GPU power.

This is making it possible for the miniature RISC chips installed in IoT devices to do heavier lifting than they ever could before. Smart thermostats, sensors, and alarms are adding functionality that will be important for migrating processes to an Industry 4.0 setting.

Industry 4.0 business models are already shaping the world

Several businesses, including Apple, have already implemented many of these changes, implementing new greener processes that produce less waste and rejects. Managers, however, have found that four steps are needed to implement Industry 4.0 technology at the enterprise level:

  • Compatibility between all connected devices to ensure they can talk to each other
  • Transparency between software and hardware so everyone involved knows that the data they’re seeing is genuine
  • Strong technical support from the human side of the equation to keep these devices moving
  • Decentralization of managerial decisions by delegating them to machines

While this last one might sound scary, it’s not actually about reducing the number of jobs in the economy. Industry 4.0 paradigms instead promise to redefine the human role in manufacturing. Those who fear an increased focus on automation might be surprised in the near future to find out that they have more employment opportunities ahead because of it.

For more on the digital supply chain, see “Putting The Customer At The Center Of Your Supply Chain.”

About Andre Smith

Andre Smith is an Internet, marketing, and e-commerce specialist with several years of experience in the industry. He has watched as the world of online business has grown and adapted to new technologies, and he has made it his mission to help keep businesses informed and up to date.