Industry 4.0 and the Fourth Industrial Revolution

 

Industry 4.0 is the digital transformation of manufacturing/production and related industries and value creation processes.

            Industry 4.0 is used interchangeably with the fourth industrial revolution and represents a new stage in the organization and control of the industrial value chain.

            Cyber-physical systems form the basis of Industry 4.0 (e.g., ‘smart machines’). They use modern control systems, have embedded software systems and dispose of an Internet address to connect and be addressed via the Internet of Things (IoT).

            This way, products and means of production get networked and can ‘communicate’, enabling new ways of production, value creation, and real-time optimization. Cyber-physical systems create the capabilities needed for smart factories. These are the same capabilities we know from the Industrial Internet of Things like remote monitoring or track and trace, to mention two.

            Industry 4.0 has been defined as “a name for the current trend of automation and data exchange in manufacturing technologies, including cyber-physical systems, the Internet of things, cloud computing and cognitive computing and creating the smart factory”.

            Industry 4.0 is a vision that evolved from an initiative to make the German manufacturing industry more competitive (‘Industrie 4.0’) to a globally adopted term.

            Industry 4.0 is often used interchangeably with the notion of the fourth industrial revolution. It is characterized by, among others,

·         even more automation than in the third industrial revolution,

·         the bridging of the physical and digital world through cyber-physical systems, enabled by Industrial IoT,

·         a shift from a central industrial control system to one where smart products define the production steps,

·         closed-loop data models and control systems and

·         personalization/customization of products.

            The goal is to enable autonomous decision-making processes, monitor assets and processes in real-time, and enable equally real-time connected value creation networks through early involvement of stakeholders, and vertical and horizontal integration.

            Industry 4.0 is a vision, policy, and concept in motion, with reference architectures, standardization and even definitions in flux. Most Industry 4.0 initiatives are early-stage projects with a limited scope. The majority of digitization and digitalization efforts, in reality, happen in the context of third and even second industrial revolution technologies/goals.

            In essence, the technologies making Industry 4.0 possible leverage existing data and ample additional data sources, including data from connected assets to gain efficiencies on multiple levels, transform existing manufacturing processes, create end-to-end information streams across the value chain and realize new services and business models.

            To understand Industry 4.0, it is essential to see the full value chain which includes suppliers and the origins of the materials and components needed for various forms of smart manufacturing, the end-to-end digital supply chain and the final destination of all manufacturing/production, regardless of the number of intermediary steps and players: the end customer.

            Enabling more direct models of personalized production, servicing, as well as customer/consumer interaction (including gaining real-time data from actual product usage) and cutting the inefficiencies, irrelevance and costs of intermediaries in a digital supply chain model, where possible, are some goals of Industry 4.0 in this customer-centric sense of increasingly demanding customers who value speed, (cost) efficiencies and value-added innovative services.

            In the end, it remains business – with the innovative twist of innovation and transformation of business models and processes: increase profit, decrease costs, enhance customer experience, optimize customer lifetime value and where possible customer loyalty, sell more, and innovate to grow and remain relevant.