Top 5 Reasons Why Industry 4.0 Is Real And Important

Karola Schmitt

As physical and digital worlds merge, manufacturing processes will change dramatically in the

Industry 4.0 in Manufacturingfuture. That’s for sure. But will this change be a revolution? The German Academy of Science and Technology says it will be and coined the term “fourth industrial revolution” (“Industry 4.0”). It states that today’s emerging technologies will have a similar effect on our society as water power and steam engines had at the end of the 19th century (and the succeeding technology waves that enabled mass production and automation in the 20th century).

So what’s new? Traditional “mechanical chains” in production are being transformed into “digital chains.” Take the example of 3D printing. It allows producing spare parts locally and whenever you need them. This will make many traditional production and logistic processes obsolete. Smart items are another key technology: In 2020, 50 billion devices will be connected to the Internet (see “More than 50 billion connected devices”, Ericsson 2011). A good share of them will be part of the production process. Equipped with sensors and actors (devices that act on their environment), products, tools, and machines will provide a digital shade of all kinds of activities and means for faster decision making and control. Plant managers get real-time insights from the shop floor and immediate control of production processes (as it is already the case at Harley Davidson, see the blog post Turning Cold Steel Into Harley-Davidson Motorcycles). The use of smart items will enable more flexible and autonomous manufacturing units.

Will these technologies transform our society as we would expect from a (industrial) revolution?

Here are 5 reasons why “Industry 4.0” is relevant and important – and likely to be revolutionary:

1. It eases current challenges for manufacturers.

In a world of increasing market volatility, shorter product life cycles, higher product complexity, and global supply chains, companies are seeking to become more flexible and responsive to business trends. The Industry 4.0 vision provides recommendations how companies can ease these challenges: The digitalization of the whole product lifecycle will allow companies to use data from production, service, and social media which will lead to faster product improvements. Smart items will bring stronger integration of top floor and shop floor and thus more intelligence and flexibility to production. With these technologies, companies can react faster to demand changes and implement new configurations easier or even re-plan production much faster.

2. It leads to an innovation economy.

Digital chains will not only improve efficiency but also speed up innovations as new business models can be implemented much faster (see Industry 4.0 Leads Into The Innovation Economy). Here are two examples how Industry 4.0 speeds up innovations: 1. Manufacturers can generate new business by sharing equipment or selling capacity they don’t need on marketplaces. 2. Thanks to sensors and connectivity, products will be enriched by services (such as predictive maintenance) or even transformed into services. An engine manufacturer might not sell engines anymore in the future but provide them as a service to customers. He then would only charge the power of the engines the customer uses.

3. It puts the consumer in the center of all activities.

Today’s consumers demand individually made products and services (“Made-for-Me”). Smart items, products and machines will enable manufacturers to get down to lot size one and produce customized products without extra cost. Digitalization will lead to an easier crowd sourcing which will lead to a faster design process.

4. It even puts humans into the center of production.

As machines are becoming smarter, the work in production lines will be enriched and humanized. Simple manual tasks will disappear. Workers will become coordinators who ensure a smooth production and only intervene when a machine calls for action. Flexibility will be a key success factor. Workers will be assigned where help is needed. This will place higher demands in terms of managing complexity, problem-solving and self-organization, but also allow the work force to become more flexible. Fixed shifts per day will be complemented by dynamic and self-organized capacity planning that takes employees’ preferences into consideration. This will improve the life-work-balance of all employees and allow shorter response time to a changed order situation.

5. It will enable sustainable prosperity.

The old models of industrialization run out: Economies and with it societies increasingly recognize the risks of globalization, job losses and resource shortages. Generating profit and realizing growth have to be put into a more long-term perspective, for example by finding ways to cope with constraints on energy, resources, environment, and social and economic impacts. Industry 4.0 can help to find solutions to these challenges. If it is smart and innovative, production can reduce energy consumption, help companies to sustain their business with existing and new business models and use new technologies to produce  all over the world (even at high cost locations) close to the markets and at the tact of the workers.

Further Reading: SAP white paper about Idea to Performance