Industry 4.0 – The fourth Industrial Revolution – Industrial Internet of things
Digital transformation: Automation and connectivity
The fourth Industrial revolution includes advancement in automation, internet of things (IoT), cloud computing and cognitive computing. There is a significant change in the way we produce products and services based on digitization. The name of this transformation is called Industry 4.0 and is representing the fourth industrial revolution. As advancements in technology are improving this digital transformation has started to transform our way of living, working and connecting.
The key aspect is data exchange where cyber-physical systems can communicate and monitor physical processes, cooperate with each other and communicate with humans in real-time. In a factory setting, this means that machines will be automated and digitally connected and communicate with each other and their human co-workers to become more efficient and productive.
The term “Industry 4.0”
To start with, Industry 4.0 is not a business discipline or a new technology; rather it is best described as a new approach to achieving greater efficiency and productivity.
The term “Industry 4.0” originates from a project done in the high-tech strategy of the German Government. The project promotes computerization of manufacturing. The term has also some historical perspective referring back to the first, second and third industrial revolution.
The first industrial revolution in the 19th century saw the rise of mechanization, water power and steam power which brought factory production. The second industrial revolution from the 1850s to World War I introduced mass production, assembly lines and electricity. The third industrial revolution took place from the 1950s to the late 1970s and refers to change to from mechanical and analog technology to digital technology. And the fourth industrial revolution is about the move towards digitization, big data, and data analytics.
Concepts in Industry 4.0
In this section, we will describe some of the concepts related to Industry 4.0
Big Data and Analytics
The term big data is referring to a large volume of data – both structured and unstructured. Data will play a key role in this new transformation as products will be “smarter” embedded sensors. This means that data can be generated in real-time for gathering and analysis to identify patterns and insights. With the volume of data increasing it will be possible in higher context apply analytics to business data to describe, predict and improve performance. One area of specific interest is machine learning that by using mathematical models of sample data can make predictions, learn from data and identify patterns.
Internet of things and Services
Sensors, software’s, actuators and connectivity technology will enable new products, services, and business opportunities. Applications will help the consumer, commercial, industrial, and infrastructure providers to create seamless processes with real-time visibility, monitoring, and rapid feedback and thus enable new sources of value creation. It is expected that more than 20.4 billion connected things will be in use worldwide in 2020. Sensor technology will enable physical products to become aware of its environment (e.g. temperature and humidity) and enable a new type of service solutions for maintenance and reparation and thus add value for customers depended on regular use of those products.
The Smart Factory
The concept of the Smart Factory refers to a fully connected and flexible system that uses a constant flow of the big volume of data from connected machines and systems to adapt the production based on demand. The aim is to connect the entire value chain to become an end-to-end and holistic manufacturing system. By integrating data from a wide range of machines and system, it is possible to track inventory, digitize operations through digital twins (digital representation of a physical object) and become agile (e.g. adapt production scheduling and implement new product changes). One area of promise is the capability to advanced planning and scheduling by real-time data predictions or use of augmented reality technology for assembly and maintenance processes.
Supply Chain 4.0
In the Supply Chain 4.0 concept, logistics providers and their customers are working together using advanced analytics and digitalization technology to create an agile and efficient supply chain. The warehouse is interconnected and linked to transportation systems which can track assets in real-time. Real-time data will create better visibility of the operations and thus results in greater operational efficiency and reduce operating costs. On-time delivery could be improved with the use of digital technology enabling the sharing of real-time information from customers, internal manufacturing and distribution nodes. Further on, advanced analytics can be used to mining historical customer and sales data for forecasting and auto-replenishment of products. With the increase in data generated from smart vehicles (e.g. trucks and forklifts), it can improve route optimization and operational capacity planning.
Business Model implications in the era of Industry 4.0
The speed and depth of this industrial revolution are significant compared with the other societal transformation. This means that organizations need to ask some serious questions concerning their operational capabilities and assess the opportunities to create value-added solutions for customers and end-users. How can organizations continue satisfying customer needs and make a profit on it? This is a relevant question and will be disrupted by agile competitors realizing the industry 4.0 potentials.
Industry 4.0 will change what is produced, the way it will be produced and the way it is used. We will look at the three effects to consider when designing new business models:
Mass Customization:
One development is the concept of mass customization where individual customer requirements need to be met. Customer will be able to design their own specific product – e.g. shoes or clothes. The product development process will be more collaborative, adaptive and transparent. Further on, the life-cycle of a product will be extended to include services to be added together with products and thus create additional value for end-users. These services will enable new pricing models such as Pay per X or Pay as you need. One example of this is driver-less cars for subscriptions.
Automation:
With the rapid development of technology, automation in industrial production is inevitable. As robots will get smarter with sensors it is possible to have self-optimizing production facilities. Robot process automation will be able of completion of routine works such as customer service tasks. With driver-less trucks and automated drones, transportation systems will change how we transport and deliver products.
Big data and connected products and services:
With the big amount of data generated in this transformation, it will change problem-solving, decision-making, technology and communications. In problem-solving, machine learning algorithms can be used to find patterns. In decision-making, already forecasting in the supply chain is improved by utilizing data from customers, suppliers, and users. In technology innovation, the use of 3D printing and blockchain technology can enable a new type of products and services. Finally, communications will also be impacted by new technology innovations such as augmented reality and virtual reality. Already, there are several cases in the construction industry where virtual reality technology is used to improve design, safety, and training, and to avoid costly overruns. Imagine video conferences for constructing inspections by the use of virtual reality where computer-generated experience is taking place within a simulated environment.
Challenges and Impact:
Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum is convinced that this industrial revolution will change the way we live, work and relate to one another. This shift and disruption have major positive potential; it can help to connect billions of people, make the organization more efficient and also help in meeting climate change goals. However, as Mr. Schwab explains there are also concerns; as new technologies emerge governments could fail to employ regulations, societies and organization might not be unable to adapt in a sustainable way leading to the growth of inequality. There are also of course security concerns on data privacy and the security of the connected devices.
Nevertheless, there is great potential to a shape a future together and as Mr. Schwab puts it:
We need to call for leaders and citizens to together shape a future that works for all by putting people first, empowering them and constantly reminding ourselves that all of these new technologies are first and foremost tools made by people for people.
Another topic of concern is job profiles, working skills, and co-working between human and robots. As working conditions will change with automation and artificial intelligence it will affect personal development and skills shortage. One solution is to establish ecosystem re-skilling workers. Governments should take proactive actions for future skill development and find learning techniques to help low-skilled labor workforce get the skills necessary for digitalization.
Case Studies:
John Deere – intelligent precision farming
John Deere is a manufacturer of agricultural, construction and forestry machinery. The company has revitalized itself by using IoT, telematics and satellite technologies to drive precision farming. They have changed their business model going from a traditional role as a manufacturer to offer value-added services to farmers seeking to produce more food using less land. Their machines are now more efficient and intelligent by using Big Data and IoT technology. John Deere has also created an Operations platform enabling machine optimization to drive efficiency and productivity.
Stockholm – the smart city:
The City of Stockholm has adopted a strategy to make the city more sustainable, innovative and including. This strategy utilizes digitalization and new technology to offer the highest quality of life for residents, visitors and businesses.
For other tools and methods in Industry 4.0 see – 19 examples of Future Technology Trends:
For a playlist of Industry 4.0 concepts in a variety of industries, we have created playlist below. Make sure to follow us on our Youtube channel for latest updates:
Final words:
Many of the technologies we have explained here are not new; industrial robots, analytics, and sensors. However, as computer power and bandwidth, the cost associated with these technologies has become cheaper. This means that firms and governments have reached a point that these technologies can be used with an economic benefit. As a result, we will see changes in business models, how we work and consume goods and interact with each other in a globalized world. How these changes will look like will be up to us to decide. I am hoping that this can revitalize our economy and bring people closer to each other. Another opportunity is that this new technology can help us in achieving our climate goals and bring sustainable economic, social and environmental impact.
I am advocating that we should use technology to make life better and not worse. If we deploy technology to bring down wages, neglect climate change and grow inequality then our future will be gloomy. We have great opportunities to build a better world with technology made by people for people.
Are your organization ready for Digitalization and Industry 4.0?
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Digital Transformation & Industry 4.0 
Thanks for a informatve post. / Patrick
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