Industry 4.0: Why Manufacturers Need to Keep Their Eye on the Long Game

Industry 4.0 is about a constellation of technologies that perform optimally when interconnected and intelligently coordinated across the parties and across the cyber-physical divide. It is this communication and collaboration that drive much of the business value that Industry 4.0 offers.

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Nigel DuckworthNigel Duckworth

An industrial revolution is a fundamental shift in the way industry works that forever changes the way manufacturing is done. However, besieged by bright shiny objects of Industry 4.0, manufacturers should focus on long term goals instead of being swept up by the abundance of new technologies, such as cloud, big data, IoT, mobile, location, additive manufacturing, edge computing, miniaturization, augmented and virtual reality, artificial intelligence (AI), automation, and robotics.

Without question, the blossoming of new disruptive technologies has raised the bar on what customers expect, putting pressure on manufacturers to deliver more product options faster and more conveniently. Yet similar to the first three industrial revolutions, it is this communication and collaboration that drive much of the business value that Industry 4.0 offers.

We all know the history and impact of past industrial revolutions: Industrial Revolution 1.0 (1760-1830) was characterized by mechanization powered by steam, which set the stage for bridges, trains, and shipbuilding; Industrial Revolution 2.0 (1870-1914) was driven by the development of mass production powered by electricity and the assembly line. But it was the Industrial Revolution 3.0 (1970-2000) known as the “computer revolution” that really helped set the stage for the next iteration. This revolution supplanted analog, electric, and mechanical devices with digital, and was quickly followed by the invention of the internet. Barely is it over and we have plunged into the fourth revolution. The next seismic shift in manufacturing and development is the Industrial Revolution 4.0 (2010-?), which is driven by a multitude of technologies, but in general, is characterized by a marriage between cyber-physical systems. New technologies like artificial intelligence (AI), robots, and the Internet of Things (IoT) interact to create smart factories, devices, and self-regulating systems.

According to Deloitte’s Forces of Change, “Industry 4.0 … marries advanced manufacturing techniques with the Internet of Things to create a digital manufacturing enterprise that is not only interconnected, but communicates, analyzes, and uses information to drive further intelligent action back in the physical world.”

Additive manufacturing, robotics, and automation all have a direct impact on the manufacturing process and are a key force behind Industry 4.0. The benefits of these technologies in manufacturing are undeniable. For example, the athletic shoe company New Balance uses 3D printing, not just for design prototypes, but also to customize parts of their shoes for athletes. But focusing on these immediate and obvious benefits of these technologies in isolation obscures the bigger picture, where huge opportunities lie. 

Thinking Outside the Silo

Though each of these technologies is powerful by itself, the real power of Industry 4.0 comes from the positive reinforcement, the virtuous circle that together they create. Unlike the previous industrial revolutions, the convergence of these technologies magnifies the power of each, to produce a powerful wave of transformation.  

As Bernard Marr writes in his article What is Industry 4.0?, “Ultimately, it's the network of these machines that are digitally connected with one another and create and share information that results in the true power of Industry 4.0.” 

The impact of this Industry 4.0 unsung hero, the digital business network, is evident in the consumer realm. Consider AirBnB and Uber. Demand and supply are disintermediated and decentralized. Both sides, consumers and service providers, connect directly to schedule and execute the service, to settle payment, and to review and rate the transaction. Similarly, Uber’s network collapses the chasm between demand and supply, while mediating the allocation of supply to demand autonomously with AI. The benefits of this direct matching of supply to the demand are enormous and undeniable. Reducing costs, delays and making for a much more frictionless transaction.   

An Intelligent Network for Manufacturers

Manufacturers can leverage the technology of Industry 4.0 enabled by a digital business network, to realize similar, if not greater, advances in their industry, as there are many more points of friction. Thus, some of the biggest opportunities for transformative advances, lie outside the four walls of the manufacturer, and in better coordinating and optimizing the manufacturing supply network.

From the customer to the factory floor, and back through layers of suppliers, the business-to-business (B2B) value chain is a lot more complicated, with multiple parties in multiple tiers, creating endless points of contact and more friction. Similar to the Uber and AirBnB examples, and driven by AI, these global real-time networks connect all parties to automatically match supply to demand at all nodes of the supply network.  

Multi-party digital networks, connect customers, manufacturers, suppliers, and logistics providers in real-time creating an intelligent network comprising factories, machines, vehicles, and devices and streaming services like weather and traffic. The network maintains an authoritative, single version of the truth to ensure critical information about demand, supply and logistics is propagated in real-time across all tiers. Manufacturers and their trading partners need only connect once to the network, then all connections between these partners are handled virtually by the cloud platform, eliminating complex IT connections and costly projects.

These networks enable much broader collaboration and coordination of manufacturers, suppliers, and logistics partners, which results in a smoother supply to factories while reducing inventory and expedited freight costs. They also support multi-tier planning, including supplier capacity representation to enable supply-demand matching to reflow supply autonomously, to where demand is most critical. AI-powered intelligent agents continuously monitor and incrementally plan and execute across the network to help achieve optimal service levels at the lowest cost. This just isn’t feasible without near-real-time connectivity between all parties and all systems. Higher “Altitude,” Higher Value.

The successful “meshing” of these technologies with the power of machine learning and AI, provides a complete, global view and enables these technologies to communicate and regulate processes autonomously. It promises to deliver profound and fundamental insights about where value lies, and identify countless value “leaks” across the ecosystem.  

In his book, Data Strategy, Bernard Marr gives a great example of a manufacturer fully exploiting the potential of Industry 4.0, including Big Data, IoT and AI. In addition to its renowned cars, Rolls Royce makes nearly half the passenger jet engines in the world. Each engine has sensors embedded which measure 40 different parameters and streams the data instantly to Rolls Royce HQ. This allows the company to monitor the performance of its engines in real time, and to follow up as soon as AI detects an anomaly. In some cases, the onboard computers can make adjustments to mitigate the issue, in others Rolls Royce makes immediate recommendations to the airline to address the issue. This type of data is also extremely valuable for determining optimal maintenance windows for products based on their actual performance, as well as informing the design of new products and improvements to existing products.

Here, AI, IoT, and the network play a critical role in connecting all parties in real-time so they can detect issues early, intervene, and collaborate to resolve them to enhance safety and performance, as well as improve products and run the factory more efficiently and safely.    

Ultimately, Industry 4.0 is about a constellation of technologies that perform optimally when interconnected and intelligently coordinated across the parties and across the cyber-physical divide. It is this communication and collaboration that drive much of the business value that Industry 4.0 offers. When better connected, manufacturers are better positioned to leverage the power of Industry 4.0, within the factory through 3D printing, robotics, and IoT, and they’re better positioned to align objectives and resources across the value chain to deliver the most value to the end customer at the lowest cost.

Nigel Duckworth is a writer and marketing strategist at One Network Enterprises.

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