Industry 4.0: The Source of New Value?

Industry 4.0 is increasingly likely to become a reality thanks to continually improving technological conditions. Ever more devices and machines are designed to be compatible with the Industrial Internet of Things (IIoT) and are becoming part of a value chain that is connected from start to finish.

But what specific benefits can companies gain from these new advances?

The digitalization of the economy is more than a trend. It’s a fundamental transformation that first took hold of the screens in offices. With Industry 4.0, production, logistics, and customer services are also aligning themselves with digital technology. By connecting all the components in an IIoT, organizations can build an end-to-end supply and value chain. This brings flexibility and leaner processes, and makes companies more agile.

Artificial intelligence (AI) has found its way out of the research laboratories. Business software is now capable of learning and thinking for itself. It takes on increasingly complex tasks and can further optimize production, thus accelerating processes, cutting the number of errors, and reducing costs.

Ultimately, modern software makes the devices and machines themselves smarter, so they can function independently within the framework of a company’s operations. This too can save costs and make processes more flexible.

More Revenue with Digital Value Creation

Independent market research and consulting company for IT and telecommunications IDC anticipates that at least half of value creation in the world will already be digitalized by 2021. For small and midsize businesses, embracing Industry 4.0 early on means they will retain their competitiveness and be compatible with the value chain of tomorrow. Companies that digitally transform themselves will become drivers of connected business and place the data they gather at the heart of their processes.

IDC has identified three categories into which the application areas of Industry 4.0 can be divided. How companies implement them determines the value they will create.

Smart Manufacturing: Powerful Production

Smart manufacturing aims to increase throughput, improve quality, and maximize the utilization of equipment. Three productivity factors play the key roles:

  • Automation: Production steps and processes are automated as far as possible. Advanced robotics can make a big contribution here.
  • Operational data: With automation, the number of sensors in the machines, equipment, and logistics vehicles also increases. If units are connected, the data from all the sensors can be merged and made accessible to the entire network.
  • Advanced analytics: This comprises analysis methods that draw on AI and machine learning to glean deep insights from a company’s data.

In smart manufacturing, machinery, plants, and tools connect through a platform, enabling them to communicate with each other. The platform software can, for example, analyze the data collected and therefore predict malfunctions before they happen or adapt processes to changed production conditions.

If likely machine downtimes can be detected at an early stage, companies can dispense with regular maintenance slots and switch to predictive maintenance. Necessary maintenance can be scheduled in good time, while unnecessary maintenance can be avoided.

Smart tools increase quality and reduce the error rate. For example, smart cordless screwdrivers can autonomously adjust their torque to their current position within the manufacturing process, and thus adapt to the manufacturing context.

The goal is to boost productivity along the whole value chain by using prepared data to make the system transparent. The data is available to the right parties at the right time in the context of the relevant process and product, so employees can take the best action possible.

The Connected Supply Chain: Perfect Coordination

The connected supply chain is the second category. In Industry 4.0, networks are not limited to in-house manufacturing. They also include other areas of the company, from marketing and sales to HR and customer service. Even more so, digital companies form networks with both their external suppliers and purchasers.

The more the supply chain is connected beyond a company’s walls, the better incoming and outgoing transactions can be coordinated. It becomes possible to react to events and requirements faster – in fact, almost in real time. Increased demand can be met faster and supply bottlenecks can be resolved more quickly if suppliers grant more direct access to their stocks and capacities. The same applies to a digital company’s customers. They can make changes to their orders at short notice, be it in terms of volume or product design. For all parties, the supply chain becomes more transparent and orders can be tracked more easily.

With Industry 4.0, production becomes more agile thanks to improved and automated coordination. Idle times and lead times are reduced, and delivery dates can be confirmed with greater certainty.

Sales and customer service profit from the ability to provide more reliable information about prices and delivery dates faster.

Learn More with Connected Products

The third important category is that of connected products. If requested or authorized by customers, connected products can be controlled, configured, and monitored remotely.

If machines and devices become smarter when combined with software and have the right sensors, they are “clued in on” their own state. They can sign up for maintenance themselves, if the number of operating hours or load cycles make preventive maintenance necessary in the near future or if sensors specifically indicate that maintenance is required (predictive maintenance, see above).

Advanced robotics means that robots can act increasingly autonomously. They recognize a workpiece, read the production order from it, and seek out the required schedules and materials themselves. The same applies to smart 3D printers, which request the necessary print forms within the company network or purchase them from a third-party provider.

Furthermore, if a company’s own products are connected, it enables that company to find out more about how they are used. It opens up the potential for new sales models. Customers don’t buy the product. Instead, they pay according to how much they actually use it.  In addition, customers can be offered new services, for example, automatic supply when consumable materials or – as in the case of 3D printers – print forms run out.

Fast Track to an Industry 4.0 Strategy

None of this is pie in the sky. In a few years’ time, it will be industrial normality. That’s why every company should take a long close look at the specific opportunities Industry 4.0 can create.