August 3, 2017    4 minute read

An Insight into Industry 4.0 – The Next Industrial Revolution

Automating Automation    August 3, 2017    4 minute read

An Insight into Industry 4.0 – The Next Industrial Revolution

In the current age, Cloud Computing is already necessary for backing up data, Smartwatches monitor and evaluate our health details, and Augmented Reality apps can be downloaded onto smartphones. What if all these technologies could be integrated, making processes more efficient in an industrial workplace?

Industry 4.0 hopes to increase the productivity and growth in a range of industries via recent technological innovations. These include: Cloud Computing, Big Data and Analytics, Autonomous Robots, Smart sensors, Augmented Reality, Additive Manufacturing and the Internet of Things (IoT). By implementing these technologies into the industrial infrastructures currently seen, large firms can expect to save time and increase capital.

A New Technology-Focused Business Structure

The future of industry is expected to be “Cyber-Physical” – where an entire production process is digitised (computers control all stages). With Industry 4.0, firms can expect to have “Vertical and Horizontal System Integration”. This means firms, suppliers and customers are closely linked enabling “automated value chains” through connected IT networks.

Although organisational structures exist today which can combine different departments in a firm (e.g. Engineering and Finance), universal data collaboration in industry allows for live tracking of components, which provide real-time data, hence saving cost. Firms will also find it easier to offer more personalised and customizable products through “Modular Manufacturing”, rather than batch-produced products made by old techniques.

The current manufacturing model is not built to permit customers in having the latest, unique products. Adidas recently proposed a strategy to build a “Smart Factory”. This would enable them to 3D print selected shoe soles, and then customize these to the consumers’ needs. Similarly, Okuma, a machine tool manufacturer in Japan, has also devised a plan for manufacturing operations to occur autonomously, 24 hours and 7 days a week. This uses previous data to manage its portfolio of raw materials for the demand required at any given time. Tim Cooke, Apple’s CEO, recently mentioned that they too have been investigating uses of Autonomous systems in their business.

Data Is Important to Business Decisions

As the growth of technology in industry intensifies, the rate of information collected rises. With this information, data analytics can be carried out to find methods which can maximise profits for a firm. Software can be manipulated to model industrial processes, track machine usage in real-time and estimate delays or track time constraints. This can be automatically managed to improve performance for a process.

In the 2016 PWC Global Industry 4.0 Survey, which includes over 2000 firms worldwide from 9 different industries (Aerospace and Defence, Automotive, Chemicals, Electronics, Engineering and Construction, Packaging, Industrial Manufacturing, Metals and Transportations), data analytics is forecasted to become more dominant by approximately 33% in the next 5 years (see figure Y). In this survey, less than half the companies currently use data analytics to drive their business decisions. It is expected that this will drastically change in the next 5 years.

Expected Cost Reductions

By 2020 cost reductions are expected to increase in every industry. This is an amalgamation from all the technologies being used in Industry 4.0 to make processes more effective. A weighted average of 3.6% in cost reductions is expected across the 9 industries, saving in total $421bn. The most effective cost saving methods from Industry 4.0 include automated inventory management, which enhances both the supplier’s and buyer’s business performance.

Future Investments

Large Investments are expected by firms who hope to transform their current industrial processes. In the PWC Global Industry 4.0 Survey, $907bn p.a. is expected to be invested. The electronics industry is predicted to invest the most at $243bn p.a. While these figures seem staggeringly high, the benefits from these investments should outweigh the costs. It is expected that ROI for Industry 4.0 will be within 2 years for over half the firms who invest. PWC predicts that first-movers of Industry 4.0 are likely to experience massive increases in profits and efficiency, while those who lag in investments may see a decrease in performance.

Challenges for Industry 4.0 Participants

There are many problems associated with Industry 4.0, the main being the heavy use of data. For all participants to benefit, data collaboration must be embraced. Many large firms may be unwilling to share so much of their own data. There is also a considerable amount of risk with investing money into Industry 4.0 technologies. Today, there are no definitive strategies on how these new technologies can be implemented to improve current industrial processes. Automated manufacturing techniques may make some jobs today obsolete, leading to further unemployment. Alternatively, entirely new job families may form, however, these will require “hard skills”, which involves setting up a new educational programme for employees.

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