Industry 4.0 – Where The World Is Going

January 23, 2019 Wojciech Szczepucha

While everyone may be talking about it, not everyone has fully implemented industry 4.0 technology into their business. In fact, a lot of companies are in two minds over whether it is even here at all yet.

For those that have started on the 4.0 journey, these digital solutions represent the direction the world as a whole is going in. Those that have yet to make the plunge, however, are very much aware of the hype, as well as the need to adapt.

So, if this is the inevitable direction business is going in, why are some companies actively paving the way forward, while others are facing numerous bottlenecks and challenges before they can finally join the revolution?

What Is Industry 4.0?

As the name might suggest, Industry 4.0 is the fourth industrial revolution. This was naturally preceded by three previous stages:

  • The first industrial revolution (1.0) occured with the invention and implementation of steam powered factories and machines
  • Industry 2.0, which marked when electronic equipment and production took over
  • Industry 3.0, which is arguably still ongoing since the 1970s, refers to the introduction of IT support in manufacturing, supply chains, and other areas of industry

This fourth revolution, then, is said to focus on smart integration. This is where many of the more recent IT developments, including the IoT, Cloud technology and Big Data, all come together – along with improved hardware support, such as 3D printers – to give industrial businesses numerous benefits that previously were not available.

Why Is It Important?

Whereas the previous revolutions focused on certain areas, Industry 4.0 – also known as the Industrial Internet of Things (IIoT), the digital revolution, and a handle of other names – is much more broad in both its scope and scale.

Industry 4.0 will help businesses to use the IoT, Cloud, Big Data and other modern tools to streamline various processes. Data analytics, for example, can now be achieved at near instant speed, giving users a fully informed view, while still allowing them to make on-the-spot decisions.

Likewise, the integration with smart devices is another big impact. There are few industries today that don’t rely on computers, smartphones or other data devices. While these may have been introduced during Industry 3.0, it’s 4.0 that sees them connected and combined, creating one seamless source of data that is generated automatically.

In some areas, such as manufacturing, this new technology allows companies to expand their automated systems with the likes of self-diagnosis, instant communication and supply chains that are much more streamlined and optimised. From the moment it’s sent from the supplier to the final product, Industry 4.0 can potentially enable organisations to view, oversee and control the entire chain.

In other situations, a company that utilises its own 3D printing, engines or other facilities can use 4.0 technology to adjust usage on the fly. During low periods of activity, such devices can be rented or hired to other companies in a method not unsimilar to serverless services.

So what does it offer in a nutshell? Higher productivity and reduced costs – but this is just the biggest advantage. It also allows for quicker thinking and decision making, using the most of the available data as it’s generated, while also identifying and solving problems as they arise, which frees up human time for the more important tasks.

Is It Already Here?

The general consensus is that Industry 4.0 has not been fully adopted by industries as a whole. However, this is not to say that it isn’t being implemented at all; currently, those that are the most proactive are gaining the strongest benefits compared to those who are not.

It’s clear that various companies have already taken steps to digitise and integrate their supply chains, value chains or even customer integration, but this are only the first steps in a longer process.

Others, for example, are using smart technology to change how they utilise equipment. The so-called “machine-as-a-service” model involves payment plans based on preselected key performance indicators (KPIs) for the respective machinery. Rather than paying a flat fee at the very start, a company’s direct investment is related to each respective device’s output or usage. In this manner, machine-as-a-service is very similar to how Serverless solutions offer ‘functions-as-a-service’ – businesses can optimise their usage and only pay for this activity, ensuring costs don’t scale above returns. The equipment itself might still be made of oil and steel, but it’s increasingly controlled, monitored and surrounded by digital systems.

That said, a lot of organisations simply aren’t ready. In a report from Deloitte, only 14 percent of Chief Experience Officers (CXOs) asked believed their firm is currently ready to make the most of 4.0 and its associated changes.

One key issue here seemed to be expertise, as 4.0 certainly requires digital skill sets that more traditional manufacturing lacks. While 84 percent state they are doing as much as possible to create such a suitable workforce, only 25 percent believe they have the talent necessary. It’s clear, then, that finding experienced teams to build the necessary infrastructure and support is a common bottleneck.

What’s Next?

According to most experts, 4.0 and the IIoT is only going to expand over the next few years as the integration between manufacturing and digital solutions becomes more and more commonplace. Gartner estimates, for example, that the market will rise close to $3.7 trillion in 2020 – just 2 years away.

Of course, because 4.0 is not one singular item, but a collection of interconnected sections, some sectors will also grow at their own pace. Cybersecurity will naturally become more vital, as the need for online protection rises. Morgan Stanley estimate that this market alone will be worth $183 billion by 2020 as well. The logic behind this is flawless; as businesses that were previously mostly offline move more and move into the digital world, the global need for cybersecurity also increases.

Similarly, IDC suggests VR and AR will expand to around $162 billion in their own right, in no small part due to the rise of 4.0 needs. Both virtual and augmented reality allow engineers, designers and other specialists to analyse and examine without the need for expensive, physical prototyping – while customers can use it to view and experience products before they’re even constructed – helping businesses to operate free of traditional manufacturing restraints.

What Are The Main Challenges?

At this point, the benefits of 4.0 are clear, so why are some companies unable – or currently unwilling – to make further progress?

One of the biggest issues is finding skilled and experienced people. With a higher digital focus than some industries are used to, companies can struggle to find all the expertise they need. In fact, according to Deloitte’s Report on 4.0 (The Fourth Industrial Revolution is here – are you ready?), a little over 30% of organisations stated that finding and keeping talent is a clear challenge – a number that rises when asking companies that have already noticed strong returns on investment (ROI) for existing efforts.

In some areas, such as user interface design (17%), the need for skilled experts is clear, but the budget simply doesn’t exist. Other spheres of expertise include data science and software development, where many companies express their existing teams are lacking enough staff to offer all the support needed.

Of course, one way to get around some of these challenges is to rely on external sources, whether its helping with development or training internal staff to be able to use such new systems.

Other issues faced include a latency to change internal mindsets. For example, the supply chain is one of the biggest areas for innovation, but is often seen as the exact opposite – perhaps, in part, because this has been a long established view. While many are transforming (or plan to) their supply chain, only around 34% claim they are seeing strong digital innovation from it. This is further enhanced by the fact that Chief Supply Chain Officers (CSCO) have some of the least involvement when it comes to digital and technological investments in their company. If those in charge of potentially innovative areas aren’t actively involved in digital transformation, it’s naturally more difficult for such organisations to change and innovate.

How Can You Prepare?

The biggest challenge, when it comes to entering Industry 4.0, is the investment in new machinery if your current equipment is not designed with digital integration in mind. However, you are often using digital devices and connecting to the internet in many areas already, which means you may have already made your first steps.

To get started with 4.0, you can take these devices, connect them together where possible (or use microservices), before converting what’s left or adding new features. This is a reasonably safe area to start your roadmap, before moving into bigger investments.

When it comes to the larger changes, it’s vital to have a roadmap in place, to ensure that the systems you choose and implement meet your exact needs. You need to identify your own priorities and determine which sectors need to be improved, before deciding on how to best accomplish this.

For example, one of the biggest Industry 4.0 trends is interoperability: the ability for your systems to elegantly and seamlessly interact with each other. For this to happen, now is the perfect time to audit your systems and see what protocols you are using. Here, you can identify which systems share similar data, open APIs or otherwise work well together.

You can also look at other paper based systems and see what can be replaced. Is one department manually compiling paper reports (or even periodic reports via email) to others? Seamless Cloud Data services can put all of this in one place, allowing for real-time reporting whenever one department needs it – rather than reports that are increasingly out of date.

Conclusion

While Industry 4.0 is arguably not firmly established, an increasing number of companies are recognising its presence and can no longer see it as an optional extra. For many, it is a basic requirement to compete and thrive. Not integrating their business with digital solutions only invites latency via comparison to those that do.

Considering that it gives businesses access to more data and integration across various facilities, operations and supply chains, the long term benefits are certainly clear to see. The best thing about persistent results, of course, is that the earlier they are implemented, the sooner you can start reaping the rewards.

Business Perspective

When it comes to Industry 4.0, many companies are at different stages, but the benefits apply to virtually any business. Adopting streamlined, digital systems now, rather than later, can give you these advantages earlier, helping you to compete in your field. While this may require more investment than you are use to, the long term benefits and solutions far outweigh the costs.

Sources

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