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What is Industry 4.0?

A 101 guide outlining the features, functions and benefits that come from adopting Industry 4.0 solutions for your business.

What is Industry 4.0?

Industry 4.0 is a concept related to the fourth industrial revolution (4IR) which is associated with the advancements of cyber-physical systems. It describes the rise of automated systems and data exchange technology within the manufacturing industries. Examples of Industry 4.0 related technologies that are becoming more prominent on factory floors include:

  • The Internet of Things
  • The Industrial Internet of Things (IIoT)
  • Smart Manufacturing
  • Connected Manufacturing
  • Smart Factories
  • Cloud Computing
  • Cognitive Computing
  • Artificial Intelligence
  • Cyber-physical Systems

This type of automation creates a manufacturing system where all the devices and technology used in production are wirelessly connected and use sensors and monitors to visualize entire processes. It also provides a robust overview of a company’s manufacturing operations. These technologies are always advancing and, with the rollout of 5G, businesses can expect faster response times and real-time communication between systems.

The Evolution of Industry from 1.0 to 4.0

To understand the impact of the concept of Industry 4.0 on manufacturing processes, it’s important to understand the evolution of industry from 1.0 to 4.0.

Industry 1.0

Mechanical production facilities were introduced to the world in the late 18th century, paving the way for steam-powered machines to help workers in manufacturing. The increased production efficiency these machines provided helped small businesses grow into larger organizations with more owners, managers, and employees. The concept of Industry 1.0 is also deemed as the beginning of industry culture.

Industry 2.0

Industry 2.0 began at the start of the 20th century with the development of machines running on electrical energy. Electrical machines were more efficient to operate and maintain than their steam-powered counterparts, paving the way for a more cost-effective, productive factory floor. The first assembly line was built during this era, further streamlining the process of mass production.

Industry 3.0

Industry 3.0 was centralized around the advances in the electronics industry in the last few decades of the 20th century. The invention of technologies including transistors and integrated circuits revolutionized manufacturing, as they automated machines on the factory floor that resulted in reduced effort, increased speed, greater accuracy, and freed up the human workforce for more advanced tasks. The integration of electronic devices and machine automation created a requirement of software systems, fueling the software development market. The software systems paved the way for management processes such as enterprise resource planning, inventory management, shipping logistics, product flow scheduling, and tracking throughout the factory. As expected, the automation of machines and introduction of advanced software systems has evolved over the years as advancements are made in the electronics and IT industries. This is driven by the pressure to reduce costs and speed up production and has led to many companies moving their manufacturing to low-cost countries. This dispersion led to the formation of the concept of Supply Chain Management.

Industry 4.0

Industry 4.0 as a concept was introduced in the 1990s as the internet and telecommunications transformed the way we connected and exchanged information. This technology merged the boundaries of the physical and virtual world, and cyber-physical systems (CPS) further blurred this boundary in manufacturing, introducing an influx of new technologies into the industry. CPS allows machines on factory floors to communicate more intelligently with each other, eliminating physical and geographical barriers.

Industry 4.0 related technology uses CPS to share, analyze, and guide intelligent actions for different processes involved in manufacturing. Having all the different machines on a factory floor connected and sending real-time data to the cloud creates the concept of a Smart Factory. These smart machines monitor, detect and predict faults, suggesting preventive measures and remedial action before downtime occurs.

CPS also allows manufacturing processes to be completely virtually visualized, monitored, and managed from remote locations. Industry 4.0 puts machines, people, processes, and infrastructure into a single, connected manufacturing process, which provides businesses with full disclosure over the entire workings of their manufacturing and production. Using this information makes overall management highly efficient.

How is Industry 4.0 used in manufacturing?

One of the best ways to conceptualize Industry 4.0 is to think about how it is applied in manufacturing. Here are 3 use cases that will help you recognize the value Industry 4.0 can add to a manufacturing operation:

Supply Chain Management

Industry 4.0 technologies allow businesses to have greater insight, control, and data visibility over their supply chain. Smart manufacturing means companies can deliver products and services faster, cheaper, and with better quality. As more and more businesses use Industry 4.0 solutions for supply chain management, the market becomes more competitive, forcing companies to adopt a similar strategy or risk falling behind.

Predictive Maintenance

Industry 4.0 solutions and a connected factory floor can be used to predict potential downtime in machinery before it occurs. Without IoT systems, preventive maintenance must be done manually and happens based on routine or time. Industry 4.0 systems sense problems before they arise and can even provide insight on how to solve issues before they become a problem.

Tracking and Optimization

Industry 4.0 related technology makes it easier for businesses to track inventory, quality, and optimization opportunities related to logistics. Connected manufacturing and the IoT provides employees with visibility over company assets worldwide. Standard asset management tasks such as asset transfers, disposals, reclassifications, and adjustments can be streamlined and managed centrally and in real-time.

Real-world examples of Industry 4.0 technologies

  • Big Data & Analytics

    Advanced computer capabilities now make it easy to sift through massive amounts of data. Data sources can include everything from IoT sensors on factory floors and lighting systems to sales data or supply-chain factors. This data is used to make informed decisions to improve internal processes. Picture this: a plant floor using small sensors connected to every machine in a factory constantly logs and analyzes information both on-site and in the cloud. All this data is fed into a machine learning algorithm that determines equipment’s maintenance schedule. Big data helps factories like this care for their assets, reduce costs, and limit downtime. 

  • Artificial Intelligence

    Artificial intelligence and machine learning refer to algorithms used in manufacturing to process and learn from data, using it to reach conclusions that were not included in its original programming. A real-world example of how artificial intelligence is used in manufacturing would be in forecasting and predictive maintenance. AI uses the big data we previously mentioned to forecast market changes and predict machine downtime. 

  • Additive Manufacturing

    Additive manufacturing means creating items layer by layer, adding new material instead of subtracting it. 3D printing is a form of additive manufacturing and has been used by companies like Adidas. Shoe designs were created based on big data and are another real-world example of Industry 4.0 being used by businesses today. Industrial, metals and automotive manufacturers can turn to 3D printing not only for prototyping, but also for tooling/tool creation and eventually higher volume part creation.

  • The Cloud

    The cloud is a place that can be used for software and data stored on the internet. It is a server, usually located off-site instead of on a local machine for security reasons. The cloud can be used to hold the vast amount of sensor data collected on the factory floor and consumer data gathered through market analysis. In recent years, it has been used for “cloud manufacturing”, which refers to distributed manufacturing across different geographical locations. The cloud can be used to store data from numerous manufacturing plants in one easily accessible location. 

  • Industrial Internet of Things

    The Industrial Internet of Things (IIoT) refers to the deployment of small sensors that collect and monitor data in real-time throughout various business processes, including manufacturing. It is a foundational Industry 4.0 technology that can provide detailed insights for decision making at many different levels of the organization. IIoT technology is used in manufacturing to break bottlenecks and drive production. If each piece of machinery is connected to an IIoT device that monitors production, usage, and uptime then the data gathered can be used with a machine learning algorithm to fix inefficiencies. 

  • Cybersecurity Technology

    Using Industry 4.0 related technology requires certain security measures to be in place to keep hackers and nefarious agents out of your systems. Blockchain and artificial intelligence are used in modern cybersecurity technology and guard your IIoT devices from internal and external attacks. Manufacturers using Industry 4.0 solutions create plans in case they experience security breaches. Such plans include enabling protective cybersecurity technology to protect their data and equipment. 

What are the benefits and challenges of Industry 4.0?

Before adopting Industry 4.0 into your business, it’s important to understand the benefits and challenges and make sure it’s a good fit for you.

The Business Benefits of Adopting Industry 4.0

The benefits of digitalization include:

Revenue Gains

In European industry, digitized products and services create an additional €110 billion in revenue each year according to a PwC report. Nearly 50% of businesses with Industry 4.0 projects underway expect to see double-digit growth over the next five years. Using market data and machine learning, businesses gain a deeper understanding of customer wants and needs. This can be applied to product development and be used to increase interactions and conversions.

Increased Efficiency and Productivity

McKinsey predicts that switching to automated production can boost productivity in technical industries by 45-55%. Automated machinery can free up the human workforce from low-skilled parts of the production process, allowing them to focus on more technical solutions. Using machine learning and manufacturing execution systems provides management with the information they need to identify inefficiencies and improve internal processes. All this contributes to a more efficient, productive factory floor. MIT estimates that collaboration with robots can reduce workers’ idle time by 85%.

Reduced Downtime

We have discussed the different Industry 4.0 technologies that use predictive maintenance to reduce downtime. Machine learning spots repetitive patterns that lead to procedure failures, identifying them early and even scheduling inspections before the downtime becomes expensive. These algorithms are constantly improving, increasing the effectiveness of predictive maintenance using Industry 4.0 solutions. Deloitte estimates that predictive maintenance can:

  • Reduce maintenance planning time by 20-50%
  • Diminish total maintenance costs by 5-10%
  • Increase equipment uptime and availability by 10-20%

Improved Supply/Demand Matching – Instead of operating in an individual silo, Industry 4.0 solutions such as cloud-based inventory management enable better interactions with suppliers. Seamless exchanges ensure you have:

  • High service-parts fill rates
  • High levels of product uptime
  • Improved customer service

Pairing cloud-based inventory management with big data analytics solutions can improve demand forecasts by at least 85%. Using Industry 4.0 technology allows you to adjust your supply with market demand in the quickest possible time. You can also perform real-time supply chain optimization, identifying possible bottlenecks preventing your growth.

Challenges of Adopting Industry 4.0 Technologies

At the current stage of Industry 4.0 development, there are certain challenges that business leaders should be aware of before they begin implementing solutions. 6 out of 10 manufacturers implementation barriers meant they only achieved limited progress with their Industry 4.0 initiatives. The top-cited challenges were:

  • Lack of unified leadership that makes integration and cross-unit coordination difficult
  • Difficulty selecting third-party vendors for hosting and operationalizing company data
  • Lack of courage to launch the digitalization plan
  • Lack of in-house talent to support the integration of advanced technologies and solutions
  • Difficulties integrating data from various sources to enable connectivity
  • Lack of knowledge about Industry 4.0, vendors, and IT outsourcing partners

It’s important that businesses consider they have everything in place to successfully integrate Industry 4.0 technology. The first step to becoming an Industry 4.0 company is to estimate the ROI that digital solutions will generate for your business.

Is Industry 4.0 Right for My Business?

We have put together a list of considerations to help you understand if Industry 4.0 technology can advance your business. Clearly identifying your specific needs will help when it comes time to invest in integration.

  • Industry 4.0 solutions can benefit your organization if:
  • The industry you serve is highly competitive and tech-savvy
  • Recruiting for vacant job roles within your organization is difficult
  • You experience frequent production disruptions as a result of machine downtime
  • Visibility over your supply chain is poor or non-existent
  • A lag time exists between identifying and addressing issues on your plant floor.
  • Boosting efficiency and productivity throughout the business is a priority
  • Employees currently don’t have access to informed, up-to-date reports on production and processes
  • Maintaining consistent product quality is difficult
  • You want a consistent and flexible view of production and operations with timely and rich analytics

If a number of the above apply to you then it’s safe to start evaluating Industry 4.0 technology and allocating resources for deployment.

How do you implement Industry 4.0 related technologies?

Finally, now that we understand Industry 4.0, its role in manufacturing, and whether it’s right for your business, we are going to discuss how you can successfully implement this technology throughout your organization.

1. Understand Your Starting Position

This means reviewing your present state of maturity and reviewing areas of improvement for your team. Laying the foundations for successful adoption will make the implementation process smoother.

2. Prioritize Industry 3.0

In order to implement Industry 4.0 concepts, Industry 3.0 principles must be in place. Most companies aren’t ready to implement Industry 4.0 solutions because they are yet to implement Industry 3.0. Here are some areas to focus on:

  • Management Buy-In: Your entire team must be on board with the planned changes and adaptations. A secure management buy-in should be one of your first steps.
  • Connect OT and IT: Information technology (IT) and operational technology (OT) departments must work together for Industry 4.0 related solutions to work. For example, an integrated production scheduling system should be in place before the Industry 3.0 vision can be successful.

3. Define a Strategy

Having a plan is a necessity before adopting Industry 4.0 solutions. Define your level of target maturity, lay out a detailed implementation plan, and assess the potential roadblocks in order to achieve your objectives.

4. Start Small

This applies to both Industry 3.0 and Industry 4.0. Avoid rushing into Industry 4.0 or you could face one of the many challenges highlighted above, such as a lack of unified leadership or in-house talent. Pick one challenge at a time and show your organization how you resolved it using Industry 4.0 solutions. This will gain support within the business, and once the first objective is achieved you can move onto the second pain point.

5. Create a Friendly Ecosystem

If your organization isn’t ready to embrace the concept Industry 4.0, you won’t be successful. Create a manufacturing ecosystem wherein the physical and digital elements of your business communicate to establish a friendly landing pad for efficient integration.

6. Improve Internal Processes

It is smart to focus on end-to-end process improvements to promote collaboration. This could mean investing in education and training, promoting process automation, and exploring hardware and software that could help streamline your business. This will help you overcome the main challenges cited by other businesses who struggled integrating Industry 4.0 concepts and provide employees with insight into why you are introducing new technology.

Industry 4.0 Solutions for a Connected Plant Floor

Industry 4.0 is the next big thing for manufacturing, and those who don’t adopt elements of this technology within their industries could risk falling behind in competitive markets. At Plex, we offer a range of Industry 4.0 solutions to help you make your manufacturing processes more cost-effective, productive, and efficient.

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