Updated: Dec 17, 2019
This post is an attempt to help the readers fully grasp the paradigm change needed for smart manufacturing, also known as industry 4.0. The 4th industrial revolution/evolution, is here to stay, empowering already many companies around the world.
1. What is Industry 4.0 / Industrie 4.0 / Smart Manufacturing?
According to German Trade and Invest (GTAI), Industry 4.0 is described as "a paradigm shift, made possible by technological advances, which constitute a reversal of conventional production process logic". Also known as Smart Manufacturing or Industrial Internet of Things – IIoT, it is Germany´s answer to globalization. Its objective is to help companies, especially in manufacturing and engineering sectors, achieve unparalleled levels of performances and efficiency. To do this, flexible tools are being used which lead to digitization and integration of:
Vertical & Horizontal Value Chains,
Product & Services,
Business Processes & Customer
2. What is the difference between Industry 4.0 and Lean manufacturing?
Lean manufacturing or lean production is a method created in Japan around late 1980. It is an industrial philosophy that consists in the use of ongoing systematic models to minimize waste and maximize resource usage.
Industry 4.0, leads to the next level of performance. By focusing on the end-to-end digitization of everything, using cyber-physical systems, it connects and integrates digital environments with value chain partners. This wide network of new technologies and exchange of information in real-time between both men and systems, allows companies to experience unparalleled levels of performance, efficiency and quality.
3. What are Cyber-Physical Systems?
Cyber-Physical Systems (CPS) mark the next chapter in industrial advancements. Those systems enable technologies bring together the virtual world of computers and networks, with physical processes, in order to create an environment which allows "intelligent" objects to talk and respond to one another.
Cyber-Physical Systems like Enterprise Management Solution (EMS) systems empower companies with:
Transparency across whole operations, processes and planning,
Simplicity to implement, connect, operate and maintain equipment,
Interoperability through unlimited horizontal and vertical integration of whole operations,
Instantaneous data, meaning highest quality of data.
By being intelligently linked with all existing systems, machines, locations, etc., EMS systems, in real-time, interchange data via interconnected networks like sensors, interfaces and software systems, as well as actuator systems for influencing physical processes. This empowers companies with information presented to them instantly, allowing sharing of high quality data across multiple location and business units.
This new generation of systems:
Does not require plant shut down, thus there is no distortion of data or production,
Can be operated as stand-along or part of a preexisting IT infrastructure,
Are fully customizable, adaptable and intuitive requiring minimum training and supervision.
4. What is the difference between Industry 4.0 and the Internet of Things (IoT)?
Both Industry 4.0 and Internet of things have very similar concepts, in particular connecting a variety of "things" together via networks so that those can talk and respond to one another proactively, without the need for human interaction.
However, the main differentiation is that IoT is largely focused on connecting everyday consumer projects together, while Industry 4.0 is much more focused on the manufacturing process, creating smart factories and leading to smart products.
5. How can Industry 4.0 benefit your company?
By combining the digital world and that of industrial production, "smart" manufacturing facilities are being created. Industry 4.0 solutions lead to value innovation, increased revenues, market share, and profits, mainly through much more reliable and consistent productivity and output. The empowerment to manufacture complex configure-to-order products on a mass scale, in a cost efficient way, is just one of the benefits Industry 4.0 is set out to address. Production equipment networked within such smart factories will be able to self-diagnose, and then repair, in advance of causing production down time.
Early adopters will be rewarded for their courage jumping into Industry 4.0. Those who avoid this change risk becoming irrelevant and left behind.
Below is a brief list of benefits of Industry 4.0 leading to your companies value innovation.
6. How can Industry 4.0 help your company achieve value innovation?
Value innovation is the strategic logic of high growth. It is the process, which a company introduces new technologies or upgrades that are designed to achieve product / services differentiation, at low costs. New data and new configurations, capabilities of smart connected products restructure the traditional functions of a business.
Industry 4.0 helps companies achieve value innovation by reducing or increasing certain aspects of their business. Some of those reductions and increases can be seen bellow.
More configuration and less programming
Simplification of process solutions
Independence of low value consulting
Flexible multi-lingual translator
No user license (some cases)
Short & efficient implementation time
Maximized resources efficiency
Cost driver elimination due to real data usage
Reduced training required (intuitive user guidance)
Reduced system maintenance
Leasing model availability (some cases)
Flexible system implementation (step by step)
Installation and updates while production runs
Decision making on real, instant data
Scrap minimization, leading to elimination
Energy consumption usage maximization
Operators are relieved from administrative tasks
Client managed system - configured to specific clients’ needs
External consulting limited to added value creation
100% transparency of operations
Real conditions usage
Learning system routines
Intuitive windows like system user interface
Standardized data transfer and system integration
Training of system, use of existing resources, people
Global instant access to all generated data,
Multiple metrics integration
Total transparency between alternative business processes, variable locations, departments, software solutions, machines, etc.
Holistic factory monitoring capabilities
Interface configuration and customization
Connectivity with all technical equipment
100% solution adaptability to customer requirements
Simulation and forecasting capabilities
Horizontal and Vertical Integration
Day one of implementation gains
Transparency and traceability
Added Value tasks creation (New Business Processes, solutions, etc.)
Multiple Metrics Comparison
Simulations and Forecasting
7. How can you implement Industry 4.0?
Although connectivity is the key to any data-driven manufacturing implementation, having the right tools does not guarantee a successful transition to Industry 4.0. A holistic approach is the best approach. Below are a few steps to a successful implementation of Industry 4.0.
Identify your biggest issue and start small scale
Industry 4.0 can be implemented in phases and doesn’t have to be done all at once. Implementation as a process includes multiple stakeholders and step gates. Focus on what is the most important challenge that your company is facing. By starting small it will help you figure out the advantages of adopting new technologies at scale, and the issues linked with this. It will also allow you to achieve a fast ROI, while it will help your people adjust to the new tools of empowerment they will have.
Follow a change management process
Industry 4.0 is a paradigm change and needs to follow a change management process. It requires broad collaboration between the workforce and leadership. Education and communication is the key. You do not want your people to sabotage your efforts, based on wrong assumptions they have about Industry 4.0. Corporate culture is a key factor in the success or failure of implementing Industry 4.0. The senior management must understand both the clear benefits of a smart plant of the future, but also the potential pitfalls. They must be brought into the ethos of Industry 4.0 and be a major part of the decision making, to ensure absolute “buy in” from day one.
Find a clear connection between Operational Technology (OT) and Information Technology (IT).
This is key in capitalizing on your investment fast. Most companies use different software solutions. Acquisitions and mergers, continues growth can mean that companies might have a number of different software solutions which are having issues communicating between them or require human input to transfer data between different sources. If the OT does not integrate the new platform, your investment might have little effect on your operations. Connect your IT with OT on conversations, workshops and work streams to make sure that they realize that it is a joint responsibility to move the company towards industry 4.0. Both sides need support and engagement for a successful transition.
Pick the right software solution
There is a say that goes along the lines, ¨If nothing changes, nothing changes¨. New types of software solutions (CPS) offer added benefits, both with products and services. There are many solutions available in the market, however finding the right one can result in long decision times and many complications. Existing IT solutions have to be considered (ERP, MES, company own, etc.), as well as, existing operational equipment. Interoperability and real-time data are an important factor here, thus the importance of EMS systems which empower companies with unparalleled interconnectivity. No license model, flexible payment methods, zero downtime are important aspects which might also be offered by Smart software solutions.
My advice; Look for solution that offer what your company needs. Try a pilot option and readjust. A pilot program will give you direct benefit but also clear insights. Look at the implementation period, costs and support required to install and adjust. It is important to note the way the decision is being taken on choosing the right CPS/EMS software. Many of the existing software solutions are too rigid, too complex, too expensive and with a very late ROI. The reason many companies chose those is down to safety. Picking a ¨safe¨ option for an employee is maybe not the best choice for the long term strategy and growth of the entire company. Differentiation can bring added advantages.
After the first win, focus on the next needs of your company
Identify your next immediate needs and requirements. Modular smart software solutions might be the best option. Those systems can replace redundant legacy systems, such as those for operations management and enterprise resource planning, with a single, enterprise-wide, interoperable system.
8. Why should you implement industry 4.0 solutions?
The manufacturing industry has always focused on building out lean processes. Consumers want things faster, cheaper, and expect better quality than ever before. This keeps operators on their toes, pushing them to build products with the highest throughput, lowest cost, least amount of material and fastest cycle time. Once manufacturers crack the code on creating a lean process, they challenge themselves to push further through continuous improvement.
The problem, however, is that continuous improvement has become status quo as everyone is doing it. If you want a competitive advantage, you need to do more than what everyone else is doing. Everyone is pursuing continuous improvement and that status quo is simply not good enough. This reason alone should be enough to implement Industry 4.0 solutions – the resulting benefits will move operations into an entirely new playing field. This differentiation will help you move from a ¨red ocean¨ to a ¨blue ocean¨ strategy. As with everything, first movers advantage can be huge here.
9. How much does it cost to implement an industry 4.0 solution?
Costs depend on a variety of factors including the number of machines to connect, the addition of hardware components to enable connectivity, the price of associated software licensing, and the level of individualization of the software, so pick what is important to you.
There are software solutions that do not have license fees. Others are based on modules which offer added flexibility. Some can even use different payment models that suit your budget and allow you to see returns before reinvesting. Companies can install those solutions on just one critical piece of equipment, on a handful of machines, or on every tooling station on the shop floor. This versatility means manufacturers can focus their technology budgets on the tools that have the biggest impact on their business.
10. What are the risks of an industry 4.0 solution?
A connected cyber-system must be thought out carefully before implementation and should address a few questions like: How is data managed at this moment in time? Can the end user manage the velocity, variety, volume and veracity of its current information flow? What would happen if this was tripled or quadrupled?
First, consider your corporate culture. As mentioned before, it is a key factor in the success or failure of implementing Industry 4.0. Senior management must be brought into the paradigm shift and ethos of Industry 4.0 and be a major part of the decision making, to ensure absolute “buy in” from day one.
Cybersecurity is also a key concern. The best solution is to use private cloud. There is a strong need for any connected vision of the future to be designed, implemented and managed by unified IT and OT resources.
There is a systemic lack of experience and manpower to create and implement Industry 4.0 solutions — not to mention a general reluctance from stakeholders and investors to invest heavily in new technologies. Identify current but also future company needs and use this opportunity to partner and create educational programs that will allow your people the opportunity to benefit from Industry 4.0.
Finally, there is no doubt your competitors are looking into Industry 4.0 to achieve maximum efficiency and profitability. The biggest risk to your company is not doing anything at all! Start small, with a top-down approach, involve all lines of business and engage partners you can trust and you will succeed at moving your business towards Industry 4.0.
Hopefully this blog post has answer some of your initial questions related to industry 4.0. The rapid pace of change taking place within the exciting industrial landscape will revolutionize the manufacturing world as we know it today.
Georgio Stergiou is a partner & management consultant at XINTRIX S.R.L. with over 17 years’ experience in optimizing company’s performance. His passion lies in creating value and making a difference to people, companies and industries. He does this through applications of strategy differentiation and blue ocean creation.
For the last few years he has been focusing in Industry 4.0 and the benefits this paradigm swift will bring to companies and industries.