With technology rapidly impacting all areas of our lives, it was naive to believe that manufacturing would be exempt from the digital revolution. We’re officially in the midst of Industry 4.0, dubbed the ‘fourth industrial revolution’ — but has it lived up to expectations?
Here, I take a look at how the current manufacturing landscape has been shaped by Industry 4.0:
What is Industry 4.0?
Before I begin, let’s clarify exactly what Industry 4.0 is. Essentially, it’s the by-product of merging the digital world with physical operations. Creating the ‘smart factory’, Industry 4.0 involves developing and implementing technology to digitise manufacturing, leading to increased efficiencies, more flexible working practices and lower costs.
For an example of Industry 4.0 in action, take a look at our award-winning Internet of Things (IoT) solution for Arlington Automotive NE.
Now we’re clear on what Industry 4.0 is, what kind of impact has it had?
The Impact of Industry 4.0
Since the term ‘Industry 4.0’ emerged a few years ago, it’s become clear that it’s more than just industry jargon. We’re past the speculation stage and now, manufacturers who have adopted digitisation are reaping the benefits. Our latest infographic shows how prepared UK manufacturing companies are for Industry 4.0.
In a PwC survey of 2,000 companies across 26 countries, 33% said they had achieved advanced levels of digitisation. Almost three quarters (72%) said they expected to do so by 2020.
Industry 4.0 is having the biggest impact on core business activity. Product development and engineering was found to have the highest level of digitisation and integration (42%), closely followed by vertical value chain integration (41%) and customer access, sales channels and marketing (35%). Every activity is expected to become more digital-dependent in the next five years.
If the plan is to increase digitisation in the coming years, manufacturing companies must truly believe in the potential Industry 4.0 offers. By 2020, those surveyed anticipate a reduction in their operational costs of 3.6% per year and an efficiency improvement of 4.1%. Likewise, annual revenues are expected to increase by 2.9% on average, a result of the new opportunities increased digitisation brings.
Globally, in the next five years, 35% of manufacturing companies expect revenue gains over 20%, while 43% predict costs will drop by more than 20%. Clearly, Industry 4.0 is here to stay and should be a key focus in every manufacturing company’s strategy in the future.
Although Industry 4.0 is still in its early stages, many manufacturers have implemented its cornerstones across their business. These include:
Big data & analytics
Data is the driving force behind Industry 4.0. The PwC survey found that half of all companies saw data analytics as an important factor in decision making—a figure that’s expected to grow to 83% by 2020.
Big data has already made an impact on manufacturing. ERP software, for example, provides a real-time overview of your business, enabling easy access to and analysis of your important business data.
Most companies are currently using this data to help control and improve planning and operations within their business. However, these aren’t the only opportunities big data offers. In the future, it’s expected big data will be used in more progressive ways, enabling a predictive approach to customer behaviour and market developments, essentially giving manufacturers a more competitive edge.
Of course, capturing the data is one thing, but understanding the actions it can drive is quite another. Take purchasing data for example; one car manufacturer used this data to establish the most popular customisation options, allowing them to streamline their offering to reduce both production time and costs. It is insights like this that can be crucial to maximising efficiencies across your business, so investment and training in data analysis is essential to ensuring you get the most from the data you collect.
Physical goes digital
Of course, technology plays a fundamental part of Industry 4.0 manufacturing. Machinery is constantly advancing, and we’ve witnessed a new wave of improved systems in recent years, from 3D printing to new ways of human-machine interactions.
To use our work with Arlington Automotive NE as an example, we implemented a solution whereby Wi-Fi automaton devices were connected to a micro-switch on two of their production presses. This transformed them into internet-connected devices and monitored real-time performance data. As a result of our solutions, the average productivity output per minute per machine rose from six to seven — a 16% gain.
This is just one example of how the digital world is colliding with physical manufacturing techniques to improve performance. Although I have discussed big data separately, as you can see from the above example, it feeds into the physical-technological aspects of Industry 4.0. In fact, it is quickly becoming manufacturing’s lifeblood.
Recently I wrote about how manufacturing companies can unlock the opportunities offered by Industry 4.0. It’s clear that Industry 4.0 is not a fad or thrown-around industry lingo. In the coming years, we can expect Industry 4.0 to continue its dominance, as more businesses adopt and develop IoT processes across many areas.
While no one knows exactly what will happen next on this pathway to business efficiencies, this in an incredibly exciting period for manufacturing companies — are you in?