1.

INTRODUCTION
1.1. What is Industry 4.0?
Smart industry or INDUSTRY 4.0 refers to the technological evolution from
embedded systems to cyber-physical systems. Put simply, Industry 4.0
represents the coming fourth industrial revolution on the way to an Internet
of Things, Data and Services. Decentralized intelligence helps create
intelligent object networking and independent process management, with the
interaction of the real and virtual worlds representing a crucial new aspect of
the manufacturing and production process. Industry 4.0 represents a
paradigm shift from centralized to decentralized production - made
possible by technological advances which constitute a reversal of
conventional production process logic. Simply put, this means that industrial
production machinery no longer simply processes the product, but that the
product communicates with the machinery to tell it exactly what to do.

Figure 1. The four stages of the Industrial Revolution

Industrialization began with the introduction of mechanical manufacturing

equipment at the end of the 18th century, when machines like the mechanical
loom revolutionized the way goods were made. This first industrial revolution
was followed by a second one that began around the turn of the 20 th century

and involved electrically-powered mass production of goods based on the

division of labor. This was in turn superseded by the third industrial revolution
that started during the early 1970s and has continued right up to the present
day. This third revolution employed electronics and information and
communication technology (ICT) to achieve increased automation of
manufacturing processes, as machines took over not only a substantial
proportion of the manual labor but also some of the brainwork. The
widespread adaptation by manufacturing industry and traditional production
operation of information and communication technology (ICT) is increasingly
blurring the boundaries between the real word and the virtual world in what
are known as cyber-physical system (CPS). Figure 1 shows the four staged of
industrial revolution

1.2. Cyber-Physical System

Cyber-physical systems (CPS) are enabling technologies which bring the
virtual and physical worlds together to create a truly networked world in
which intelligent objects communicate and interact with each other. Cyberphysical systems represent the next evolutionary step from existing
embedded systems. Together with the internet and the data and services
available online, embedded systems join to form cyber-physical systems.
Cyber-physical systems provide the basis for the creation of an Internet of
Things, which combines with the Internet of Services to make Industry 4.0
possible. They are enabling technologies which make multiple innovative
applications and processes a reality as the boundaries between the real and
virtual worlds disappear.
As such, they promise to revolutionize our interactions with the physical
world in much the same way that the internet has transformed personal
communication and interaction. The interplay between high performance
software based embedded systems and dedicated user interfaces which are
integrated into digital networks creates a completely new world of system
functionality. Modern mobile telephones are perhaps the most obvious
example of this, offering as they do a complete bundle of applications and
services which completely outstrip the devices original telephony function.
Cyber-physical systems also represent a paradigm break from existing
business and market models, as revolutionary new applications, service
providers and value chains become possible.
Industry sectors including the automotive industry, the energy economy and,
not least, production technology for example, will in turn be transformed by
these new value chain models. Global megatrends of globalization,
urbanization, demographic change and energy transformation are the
transformative forces driving the technological impulse to identify solutions
for a world in flux. In the future, cyber-physical systems will make
contributions to human security, efficiency, comfort and health in ways not
previously imaginable. In doing so, they will play a central part in addressing
the fundamental challenges posed by demographic change, scarcity of
natural resources, sustainable mobility, and energy change.

1.3. Using the Internet of Things and Services

The Internet of Things and Services makes it possible to create networks
incorporating the entire manufacturing process that convert factories into a
smart environment. Cyber-Physical Production Systems comprise smart
machines, warehousing systems and production facilities that have been
developed digitally and feature end-to-end ICT-based integration, from
inbound logistics to production, marketing, outbound logistics and service.
This not only allows production to be configured more flexibly but also taps
into the opportunities offered by much more differentiated management and
control processes.
In addition to optimizing existing IT-based processes, Industry 4.0 will
therefore also unlock the potential of even more differentiated tracking of
both detailed processes and overall effects at a global scale which it was
previously impossible to record. It will also involve closer cooperation
between business partners (e.g. suppliers and customers) and between
employees, providing new opportunities for mutual benefit. Figure 2 shows
ICT as innovation motor for all fields of demand-relevance of the internet of
the future

Figure 2. ICT as innovation motor for all fields of demand-relevance of the internet of the
future.
(Source: Germany Trade & Invest 2013 (based on IKT als Innovationsmotor fr alle
Bedarfsfelder die Relevanz des Internets der Zukunft in BERICHT DER
PROMOTORENGRUPPE KOMMUNIKATION IM FOKUS: DAS ZUKUNFTSPROJEKT INDUSTRIE 4.0
HANDLUNGSEMPFEHLUNGEN ZUR UMSETZUNG, Forschungsunion 2012))

In essence, Industry 4.0 will involve the technical integration of CPS into
manufacturing and logistics and the use of the Internet of Things and
Services in industrial processes. This will have implications for value creation,
business models, downstream services and work organization.

1.4. The Smart Factory

The deployment of cyber-physical systems in production systems gives birth
to the smart factory. Smart factory products, resources and processes are
characterized by cyber-physical systems; providing significant real-time
quality, time, resource, and cost advantages in comparison with classic
production systems. The smart factory is designed according to sustainable
and service-oriented business practices. These insist upon adaptability,
flexibility, self-adaptability and learning characteristics, fault tolerance, and
risk management.
High levels of automation come as standard in the smart factory: this being
made possible by a flexible network of cyber-physical system-based
production systems which, to a large extent, automatically oversee
production processes. Flexible production systems which are able to respond
in almost real-time conditions allow in-house production processes to be
radically optimized. Production advantages are not limited solely to one-off
production conditions, but can also be optimized according to a global
network of adaptive and self-organizing production units belonging to more
than one operator.

Figure 3. INDUSTRIE 4.0 smart factory pipeline (cloud-based secure networks)

This represents a production revolution in terms of both innovation and cost

and time savings and the creation of a bottom-up production value creation

model whose networking capacity creates new and more market

opportunities. Smart factory production brings with it numerous advantages
over conventional manufacture and production.
These include:
CPS-optimized production processes: smart factoryunits are able to
determine and identify their field(s) of activity, configuration options
and production conditions as well as communicate independently and
wirelessly with other units;
Optimized individual customer product manufacturing via intelligent
compilation of ideal production system which factors account product
properties, costs, logistics, security, reliability, time, and sustainability
considerations;
Resource efficient production;
Tailored adjustments to the human workforce so that the machine
adapts to the human work cycle.

1.5. Industry 4.0 Environment

In a smart, networked world, the Internet of Things and Services will make
its presence felt in all of the key areas. This transformation is leading to the
emergence of smart grids in the field of energy supply, sustainable mobility
strategies (smart mobility, smart logistics) and smart health in the realm of
healthcare. In the manufacturing environment, vertical networking, end-toend engineering and horizontal integration across the entire value network of
increasingly smart products and systems is set to usher in the fourth stage of
industrialization.
Industry 4.0 is focused on creating smart products, procedures and
processes. Smart factories constitute a key feature of Industry 4.0. Smart
factories are capable of managing complexity, are less prone to disruption
and are able to manufacture goods more efficiently.
In the smart factory, human beings, machines and resources communicate
with each other as naturally as in a social network. Smart products know the
details of how they were manufactured and how they are intended to be
used. They actively support the manufacturing process, answering questions
such as when was I made?, which parameters should be used to process
me?, where should I be delivered to? etc. Its interfaces with smart
mobility, smart logistics and smart grids will make the smart factory a key
component of tomorrows smart infrastructures. All these new networks and
interfaces offered industry 4.0 within and internet of things and services
mean that manufacturing is set to undergo enormous changes in future. (See
Figure 4)

Figure 4. Industry 4.0 environment: Smart factories as part of the Internet of things and
services.

INDUSTRIE 4.0 will give rise to novel CPS platforms geared towards
supporting collaborative industrial business processes and the associated
business networks for all aspects of smart factories and smart product life
cycles.
The services and applications provided by these platforms will connect
people, objects and systems to each other (see Figure 5) and will possess the
following features:
Flexibility provided by rapid and simple orchestration of services and
applications, including CPS based software
Simple allocation and deployment of business processes along the lines of
the App Stores model
Comprehensive, secure and reliable backup of the entire business process
Safety, security and reliability for everything from sensors to user
interfaces
Support for mobile end devices
Support for collaborative manufacturing, service, analysis and forecasting
processes in business networks.

Figure 5. The Internet of Things, Services and People Networking people, objects and
systems

This will result in the transformation of conventional value chains and the
emergence of new business models. INDUSTRIE 4.0 should therefore not be
approached in isolation but should be seen as one of a number of key areas
where action is needed. Consequently, INDUSTRIE 4.0 should be
implemented in an interdisciplinary manner and in close cooperation with the
other key areas.

1.6. What will the future look like under Industry 4.0?
INDUSTRIE 4.0 will deliver greater flexibility and robustness together with the
highest quality standards in engineering, planning, manufacturing, and
operational and logistics processes. It will lead to the emergence of dynamic,
real-time optimized, and self-organizing value chains that can be optimized
based on a variety of criteria such as cost, availability and resource
consumption. This will require an appropriate regulatory framework as well as
standardized interfaces and harmonized business processes.
The following aspects illustrate the vision for Industry 4.0:

It will be characterized by a new level of sociotechnical interaction

between all the actors and resources involved in manufacturing. This
will
revolve
around
networks
of
manufacturing
resources
(manufacturing machinery, robots, conveyor and warehousing systems
and production facilities) that are autonomous, capable of controlling
themselves in response to different situations, self-configuring,
knowledge-based, sensor equipped and spatially dispersed and that
also incorporate the relevant planning and management systems. As a
key component of this vision, smart factories will be embedded into
inter-company value networks and will be characterized by end-to-end
engineering that encompasses both the manufacturing process and
the manufactured product, achieving seamless convergence of the
digital and physical worlds. Smart factories will make the increasing
complexity of manufacturing processes manageable for the people
who work there and will ensure that production can be simultaneously
attractive, sustainable in an urban environment and profitable.
The smart products in Industry 4.0 are uniquely identifiable and may
be located at all times. Even while they are being made, they will know
the details of their own manufacturing process. This means that, in
certain sectors, smart products will be able to control the individual
stages of their production semi-autonomously. Moreover, it will be
possible to ensure that finished goods know the parameters within
which they can function optimally and are able to recognize signs of
wear and tear throughout their life cycle. This information can be
pooled in order to optimize the smart factory in terms of logistics,
deployment and maintenance and for integration with business
management applications.
In the future under Industry 4.0, it will be possible to incorporate
individual customer- and product specific features into the design,
configuration, ordering, planning, production, operation and recycling
phases. It will even be possible to incorporate last-minute requests for
changes immediately before or even during manufacturing and
potentially also during operation. This will make it possible to
manufacture one-off items and very small quantities of goods
profitably.
Implementation of the Industry 4.0 will enable employees to control,
regulate and configure smart manufacturing resource networks and
manufacturing steps based on situation- and context-sensitive targets.
Employees will be freed up from having to perform routine tasks,
enabling them to focus on creative, value-added activities. They will
thus retain a key role, particularly in terms of quality assurance. At the
same time, flexible working conditions will enable greater compatibility
between their work and their personal needs.
Implementation of the Industry 4.0 will require further expansion of the
relevant network infrastructure and specification of network service
quality through service level agreements. This will make it possible to
meet the need for high bandwidths for data-intensive applications and

for service providers

applications.

to

guarantee

run

times

for

time-critical

2. MAIN CHARACTERISTIC
The following four main characteristic of industry 4.0 demonstrate the huge
capacity that industry and traditional manufacturing have for change: vertical
networking of smart production system, horizontal integration via a new
generation of global value chain networks, through-engineering across the
entire value chain and the impact of exponential technology

2.1. Vertical networking of smart production system

Figure 6. Vertical networked manufacturing systems

This vertical networking uses CPS to enable plants to react rapidly to changes
in demand or stock levels and to faults. Smart factories organize themselves
and enable production that is customer-specific and individualizes. This
requires data to be extensively integrated. Smart sensor technology is also
needed to help with monitoring and autonomous organization.
CPS enable not only autonomous organization of production management but
also maintenance management. Resource and products are networked, and
materials and parts can be located anywhere and at any time. All processing
stages in the production process are logged, with discrepancies registered
automatically. Amendments to orders, fluctuations in quality or machinery
breakdowns can be dealt with more rapidly. Such process also enable wear
and tear materials to be monitored more effectively or pre-empted. All in all,
waste reduced.
Significant emphasis is attached to resource efficiency and in particular, the
efficient use of materials, energy and human resource. The demands on
workers engaged in operational tasks such as production, warehousing,
logistics and maintenance are also changing, meaning that new skills in
efficient working with CPS are required. Table 1 shows the examples of how
companies adapt to industry 4.0 in term of vertical networking.
Table 1. Vertical networking solutions - examples
IT Integration
The vertical networking of industry 4.0
requires new IT solutions. In many casesexisting
IT
infrastructure
are
very

Analytics and data management

Cloud-based applications

Operational efficiency

fragmented and result in poor networking.

New, combine solutions need to be
developed from a range of components from
suppliers of sensors, modules, control
system, communication networks, business
application
and
customer-facing
applications.
Industry 4.0 will generate enormous
quantities of data. Gathering, analyzing and
processing such big data will generate new
insight, support decision and create a
competitive advantages.
The simple networking of cloud-based
solutions offers excellent opportunities to
host and make efficient use of big data
generated by industry 4.0.
There are particular advantages for decent
rally networked smart-production system,
where preciously unimaginable computing
power will enable cloud-based application to
deliver universal, anytime access to all key
data. This makes it simpler to gather,
monitor, distribute and analyze data not only
between factories but also across the entire
global value chain network.
The effective analysis, assessment and
application of data collected from machine
and sensors enabled rapid decision-making
to
improve
operational
safety,
work
processes, servicing and maintenance.
Transparency not only makes development
and production processes more efficient but
also offers substantial operational cost
reduction for customer.

2.2. Horizontal integration via a new generation of global value

chain networks

Figure 7. Horizontal integration through value networks

These new value-creation networks are real-time optimized networks that

enable integrated transparency, offer a high level of flexibility to respond
more rapidly to problems and faults, and facilitates better global optimizing.
Similar to networked production system, these (local and global) networks
provide networking via CPS, from inbound logistic through warehousing,
production, marketing and sales to outbound logistic and downstream
service. The history of any part or product is logged and can be access at any
time, ensuring constant traceability (a concept known as product memory)
This creates transparency and flexibility across entire chains from
purchasing through production sales for example, or from the supplier
through the customer. Customer-specific adaptations can be made not only in
the production but also in the development, ordering, planning, composition
and distribution of products, enabling factors such as quality, time, risk, price
and environmental sustainability to be handled dynamically, in real time and
at all stages of the value chain.
This kind of horizontal integration of both customers and business partners
can generated completely new business models and new models for
corporation, representing a challenge for all those involved. Legal issues and
questions of liability and protection of intellectual property are becoming
increasingly important. Table 2 shows the examples of how companies adapt
to industry 4.0 in term of horizontal integration.
Table 2. Horizontal integration solutions - examples
Business model optimization
Industry 4.0 means getting to grips with
radical new approaches to business rather
than
merely
making
incremental
improvement to establish business models.
To achieve this companies need to develop
new skills, both at individual employee level
and within the organization as a whole. A
solely top-down approach will create
resistance in the organizations, while
introducing pockets of innovation within
traditional business will provoke a reaction
from less engaged employee.
Smart supply chains
There will be a particular focus on new
models that are tailored more closely to
individual customer needs and enable new
cooperative models with business partners.
The digital transformation will create a single
database, making supply chains matter,
more transparent and more efficient at every
stages, from customer needs to delivery.
Research and development, procurement
and purchasing, production and sales
functions are becoming more closely aligned
as digitization advances.
Smart logistics
In the wake of digitization, logistic processes
will have to become smarter right across
new generations of global value chain
networkers. This applies to inbound logistic,

IT security management

New taxation models

New IP managements

intra-logistic and outbound logistic.

Major challenges are posed by the
integration of autonomous technologies,
flexible logistic system, new service, new
warehousing and distribution models and the
interlinking of internal production, preassembly and external service provide.
The high levels of data sharing involved in
industry 4.0 will greatly increase the demand
made on data security.
It needs a tailored risk management system
and a security strategy geared to cyber
security and aimed at improving operational
security and protection from attack right
across the value chain Existing factories and
structures will have to be equipped and will
also have to develop secure solutions for the
new networks.
In future 3D printing technology will allow
the printing of products across countries and
continents, with no physical crossing of
national borders anymore. This will make
new demands in terms of value-added tax
and customs duty regulations.
Management of intellectual property (IP) will
also have to change as a result of the digital
transformation to industry 4.0. New business
models and new models for cooperation that
arise as a result of industry 4.0 will requires
new, individual solution to digital IP issue.
A broad application of 3D printing will make
special demands in this respect. Issues of
intellectual property focus not only on
printers, printer technology and materials
but also on system and plans.

2.3. Through-engineering across the entire value chain

Figure 8. End-to-end engineering across the entire value chain

The third main characteristic of industry 4.0 is cross disciplinary through

engineering across the entire value chain and across the full life cycle of both
products and customer.
This engineering occurs seamlessly during the design, development, and
manufacture of new products and services. New products need new and/or
modified production systems. The development and manufacture of new
products and production systems is integrated and coordinated with product
life cycles, enabling new synergies to be created between product
development and production systems.
Characteristic of this through-engineering is that data and information are
also available at all stages of a products life cycle, enabling new, more
flexible processes to be defined from data via modelling to prototypes and
the product stage. Table 3 shows the examples of how companies adapt to
industry 4.0 in through-engineering.
Table 3. Through-engineering solutions - examples
Innovation
Innovation
has
traditionally
related
predominantly to product offering, but its
major potential lies in the area of company
structure, processes, networks and profit
models, together with customer-facing
function, such as new service and
distribution channels, new uses for a strong
brand and distinctive customer engagement.
Efficient management of innovation
The digital transformation to industrial 4.0
will make it possible to improve further the
efficiency of innovation management in all
these areas.
In project portfolio management, industry
4.0 solutions make it easier not only to track
the return on investment (ROI) in innovation
but also to identify risks by using global
comparative project data for monitoring and
remedial purpose. In the area of product
development, information technology can be
used to speed up research and development.
Efficient life cycle management
The digital transformation to industry 4.0 will
make it possible to provide relevant data for
life cycle management at any time and from
anywhere. These data will comprise not only
information and reports but also the results
of big data processing to generate relevant
early indicators through the use of artificial
intelligence (AI).
AI will use global cross-checking and assess
the plausibility of generating relevant bases
for decision-making supported by data. It will
enable companies to understand and meet
their customers needs better, as well as to
customize product cycles.

2.4. The impact of exponential technology

The fourth main characteristic of industry 4.0 is the impact of exponential
technologies as an accelerant or catalyst that allows individualized solutions,
flexibility and cost savings in industrial processes.

Figure 9. Exponential technologies

Industry 4.0 already requires automations solutions to be highly cognitive and

highly autonomous. Artificial intelligence (AI), advanced robotics and sensor
technology have the potential increase autonomy further still and to speed up
individualization and flexibilization.
AI cannot only help to plan driverless vehicle routes in factories and
warehouses more flexibly, save time and cost in supply chain management
(SCM), increase reliability in production or analyses big data, but can also
help to find new construction and design solutions or enhance the
cooperation between humans and machine to the point of services.
Functional Nanomaterials and Nano sensors can also be used in production
control function to make quality and management more efficient or allow the
production of next generations robots that work hand-in-hand and safely
with humans.
Flying maintenance robots in production halls and using drones to make
inventories of warehouse stock level and deliver spare parts, at any time of
day or night and in any terrain and weather, are further applications that will
become simply routines in the autonomous and smart factories of the future.
3D printing (additive manufacturing) is one of the example of an exponential
technology that is accelerating industry 4.0. It allows new production
solutions (e.g. functionality, higher complexity without additional cost) or new
supply chain solutions (e.g. inventory reduction, faster delivery times), or
combination of both that lead to disruptive new business models (e.g.
disintermediation of supply chain members, customer integration). While 3D

printing already exist for all materials (metal, plastic, ceramic, living cell etc.),
not all materials fulfill industrial requirements with regards to porosity and
other characteristic.

Figure 10. Break-even analysis of conventional manufacturing and 3D printing

3D printing, sensor technology, artificial intelligence, robotics, drones, and

nanotechnology are just a few examples of exponentially growing
technologies that are radically changing industrial processes, accelerating
them and making them more flexible. Table 4 shows the examples of how
companies adapt to industry 4.0 in exponential technology.
Table 4. Exponential technology solutions - examples
Corporate venturing
Corporate venturing offers companies good
opportunities for investing in new trends at
an early stage and for benefitting from
disruptive
innovation
and
exponential
technologies.
Investing in start-ups enables companies to
be involved in developing innovations and to
secure their long-term competitiveness.
Such investment allow early and convenient
insight into new technologies.
The learning organization
Companies need to become learning
organizations if they are to make full use of
the potential of exponential technologies in
achieving the digital transformation to
industry 4.0
The use and integration of exponential
technologies need to be gradual but steady.
Learning is
the key to sustainable
organizational development. Change that is
too rapid can be counterproductive.
New
ideas,
processes
and
business
segments are most successful when they
start off as a niche where learning goes on,
and the gradually migrate to the center of
the organization to establish themselves as

a new leading segments.

3. PRIORITY AREAS FOR ACTION

Through Industry 4.0 it will also be enabling a paradigm shift in humantechnology interaction. It will be machines that adapt to the needs of human
beings and not vice versa. Smart industrial assistance systems with
multimodal user interfaces will bring digital learning technologies directly into
the workplace.1

3.1. Standardization
architecture

and

open

standards

for

reference

If Industry 4.0 is to enable inter-company networking and integration through

value networks, the appropriate standards will need to be developed.
Standardization efforts will need to focus on stipulating the cooperation
mechanisms and the information that is to be exchanged. The complete
technical description and implementation of these provisions is referred to as
the reference architecture. The reference architecture is thus a general model
that applies to the products and services of all the partner companies. It
provides a framework for the structuring, development, integration and
operation of the technological systems relevant to Industry 4.0. It is provided
in the shape of software applications and software services (see e.g. Figure
11).

Figure 11. Reference architecture for connecting the Internet of Things with the Internet of
Services

Prof. Dr rer. nat. Dr h. c. mult. Wolfgang Wahlster. CEO of the German Research Center for
ArtificialIntelligence (DFKI GmbH). Member of the Communication Promoters Group of the Industry-Science
Research Alliance

The example of a manufacturing system serves to outline some of the

different perspectives that would need to be integrated into a reference
architecture:

The perspective of the manufacturing process in terms of processing

and transport functions
The perspective of specific networked devices in a manufacturing
system, such as (smart) automation devices, field devices, fieldbuses,
programmable logic controllers, operating devices, mobile devices,
servers, workstations, Web access devices, etc.
The perspective of the software applications in the manufacturing
environment, such as data acquisition through sensors, sequential
control, continuous control, interlocking, operational data, machine
data, process data, archiving, trend analysis, planning and optimization
functions, etc.
The perspective of the software applications used by one or more
businesses, e.g. for business planning and management, intercompany logistics or supporting value networks, including the relevant
interfaces and integration with the manufacturing environment
The engineering perspective in a manufacturing system (Product
Lifecycle Management/PLM). For example, this could involve using data
derived from the manufacturing process to plan the necessary
resources (in terms of both machinery and human resources). It would
subsequently be possible to successively optimize machines in terms
of their mechanical, electrical and automation technology properties,
right up to the point where the manufacturing system is set up and
brought online, whilst also taking operation and maintenance into
account.

3.2. Managing complex systems

Products and their associated manufacturing systems are becoming more and
more complex. This is a result of increasing functionality, increasing product
customization, increasingly dynamic delivery requirements, the increasing
integration of different technical disciplines and organizations and the rapidly
changing forms of cooperation between different companies.
Modelling can act as an enabler for managing this growing complexity.
Models are a representation of a real or hypothetical scenario that only
include those aspects that are relevant to the issue under consideration. The
use of models constitutes an important strategy in the digital world and is of
central importance in the context of Industry 4.0.
A fundamental distinction can be drawn between two types of model:

Planning models provide transparency with regard to the creative

value-added generated by engineers and thus make it possible for
complex systems to be built. An example of a planning model would be
a schematic used by an engineer to explain how he or she has
implemented appropriate functions to meet the requirements placed
on a system. As such, the model contains the engineers knowledge.

Explanatory models describe existing systems in order to acquire

knowledge about the system through the model. This typically involves
using different analysis processes such as simulation. For example, a
simulation can be used to calculate a factorys energy consumption.
Explanatory models are often used to validate engineers design
choices.

The digital world thus exerts a significant influence over real-world design via
planning models, whilst the real world also influences the models used in the
digital world via explanatory models.
The fact that models usually contain formal descriptions means that they can
be processed by computers, allowing the computer to take over routine
engineering tasks such as performing calculations or other repetitive jobs.
One of the benefits of models is therefore that they allow manual activities to
be automated and enable actions to be performed in the digital world that
previously had to be performed in the real world.
Models offer huge potential and not only in the context of Industry 4.0. For
example, they allow the risks involved in a project to be reduced through
early detection of errors or early verification of the demands placed on the
system and the ability of proposed solutions to meet these demands. Or they
can provide a transparent information flow that enables more efficient
engineering by improving interdisciplinary cooperation and facilitating more
consistent engineering data. Explanatory models that describe interactions
and behaviors in the real world are not only useful for validation purposes
during the development and design stages. In the future, they will be
primarily deployed during the production stage in order to check that
production is running smoothly, detect wear and tear without needing to halt
production or predict component failure and other disruptions.

3.3. Delivering a comprehensive broadband infrastructure for

industry
If CPS are rolled out on a widespread basis, it will in general terms be
necessary to build an infrastructure that enables significantly higher-volume
and higher-quality data exchange than provided by current communication
networks. A core requirement for Industry 4.0 is therefore the enhancement
of existing communication networks to provide guaranteed latency times,
reliability, quality of service and universally available bandwidth.
High operational reliability and data link availability are crucial for mechanical
engineering and automation engineering applications. Guaranteed latency
times and stable connections are key, since they have a direct impact on
application performance. Network operators should do more to meet the
wishes of businesses.
Binding and reliable SLAs (Service Level Agreements)
Availability and performance of traffic capacity
Support for data link debugging/tracing, especially provision of the
relevant technical aids

Provision
of
widely
available/guaranteed
traffic
capacity
(fixed/guaranteed broadband)
SMS delivery status notification across all mobile network operators
Standardized
Application
Programming
Interfaces
(APIs)
for
provisioning covering all providers (SIM card activation/deactivation)
Tariff management
Cost control of mobile service contracts
Quality of service (fixed bandwidth)
Affordable global roaming
Widely available embedded SIM cards
Satellite-based solutions for areas with no reception (N.B. in sparsely
populated areas).

3.4. Safety and security as critical factors for the success of

Industry 4.0
Safety and security are two key aspects with regard to manufacturing
facilities and the products they make (see info panel). On the one hand, they
should not pose a danger either to people or to the environment (safety),
whilst on the other both production facilities and products and in particular
the data and know-how they contain need to be protected against misuse
and unauthorized access (security). In contrast to security, safety issues have
been an important consideration in the design of manufacturing facilities and
the products they make for many years. Safety is regulated by a whole host
of regulations and standards governing the construction and operation of
such systems.
Since information technology first came into contact with mechanics and
electronics towards the end of the 1960s (Industry 3.0) there has been a
dramatic increase in safety and security requirements in the manufacturing
environment. In addition to the fact that it became far more complex to
provide hard evidence of operational safety, it gradually became apparent
that security was also a problem. Many of the safety and security issues that
arose in Industry 3.0 (the beta version of Industry 4.0) have yet to be fully
resolved. Security measures in particular are often slow to be implemented
and frequently only provide partial fixes. With the advent of Industry 4.0, a
number of additional safety and security requirements are set to arise.
Industry 4.0s CPS-based manufacturing systems involve highly networked
system structures incorporating large numbers of human beings, IT systems,
automation components and machines. High-volume and often time-critical
data and information exchange occurs between the technological system
components, many of which act autonomously.
At the same time, a far greater number of actors is involved across the value.
However, safety and security are always properties of the entire system.
Thus, in addition to operational safety issues, the extensive networks and at
least hypothetical potential for third-party access mean that a whole new
range of security issues arise in the context of Industry 4.0. It will only be
possible to implement Industry 4.0 and get people to accept it if the following
points are put into practice:

1. Security by Design as a key design principle. In the past, security

against external attacks was usually provided by physical measures
such as access restrictions or other centralized security measures. In
CPS-based manufacturing systems, it is not enough simply to add
security features on to the system at some later point in time. All
aspects relating to safety, and in particular security, need to be
designed into the system from the outset.
2. IT security strategies, architectures and standards need to be
developed and implemented in order to confer a high degree of
confidentiality, integrity and availability on the interactions between
these highly networked, open and heterogeneous components. They
also need to provide an appropriate, reliable and affordable solution for
protecting the digital process know-how, intellectual property rights
and data in general of each individual manufacturer and operator, both
vis--vis the outside world and with regard to components belonging to
different operators and/or manufacturers vis--vis each.
In Industry 4.0, it is therefore always necessary to adopt a global approach to
safety and security. It is essential to consider the impact of security measures
(cryptographic processes or authentication procedures) on safety (timecritical functions, resource availability) and vice versa (does a particular
critical safety function of a subsystem increase the risk of cyber-attacks?).
Firstly, existing factories will have to be upgraded with the safety and
security measures needed to meet the new requirements. The typically long
service lives of machinery and short innovation cycles, together with
heterogeneous and in some cases very old infrastructures that are difficult to
network mean that this will not be an easy task. Secondly, solutions for new
factories and machinery will have to be developed. The transition from the
third to the fourth industrial revolution should be as seamless as possible and
should be implemented in a way that can be clearly understood by all the
relevant stakeholders. One key aspect for both pillars of the strategy is for all
the actors throughout the entire value chain to reach a consensus on safety
and security issues and the relevant architecture before implementation
begins.

3.5. Work organization and work design in the digital industrial

age
What impact will Industry 4.0 have in the workplace? What responsibilities
will have to be met by businesses and society in a decentralized high-tech
economy where CPS are commonplace? How should the world of work
respond to these changes? In a future characterized by increasing automation
and real-time oriented control systems, how can we ensure that peoples jobs
are good, safe and fair? The answers to these questions will determine
whether or not it is possible to mobilize existing reserves of innovation and
productivity and secure a competitive advantage through the widespread
deployment of automatically controlled, knowledge-based, sensor-equipped
manufacturing systems.
Innovation efforts cannot be allowed to focus exclusively on overcoming the
technological challenges. The remit of innovation needs to be consistently
widened to include smart organization of work and employees skills, since

employees will play a key part in implementing and assimilating technological

innovations. It is likely that their role will change significantly as a result of
the increase in open, virtual work platforms and extensive human-machine
and human-system interactions. Work content, work processes and the
working environment will be dramatically transformed in a way that will have
repercussions for flexibility, working time regulation, healthcare, demographic
change and peoples private lives. As a result, in order to achieve successful
integration of tomorrows technologies they will need to be smartly
embedded into an innovative social organization (within the workplace).

3.6. Training and

Industry 4.0

continuing

professional

development

for

The implementation of Industry 4.0 should result in a labor-oriented sociotechnical factory and labor system. This will in turn pose new challenges for
vocational and academic training and continuing professional development
(CPD). These challenges include the need to expand provision for the
developers of manufacturing engineering components and their users. It is
likely that Industry 4.0 will significantly transform job and skills profiles as a
result of two trends.

Firstly, traditional manufacturing processes characterized by a very

clear division of labor will now be embedded in a new organizational
and operational structure where they will be supplemented by
decision-taking, coordination, control and support service functions.
Secondly, it will be necessary to organize and coordinate the
interactions between virtual and real machines, plant control systems
and production management systems.

Effectively, what this means is that the convergence of ICT, manufacturing

and automation technology and software will result in many tasks now being
performed as part of a much broader technological, organizational and social
context.

3.7. Regulatory framework

Just like any other fundamental technological innovation, the new
manufacturing processes associated with Industry 4.0 will find themselves
confronted with the existing regulatory framework, a situation that raises two
interconnected challenges. On the one hand, uncertainty regarding the
legality of a new technology or the associated liability and data protection
issues could inhibit its acceptance and slow down the innovation process.
Conversely, the de facto power of new technologies and business models can
be so great that it becomes almost impossible to enforce existing legislation.
Consequently, short technological innovation cycles and the disruptive nature
of new technologies can result in the danger of a chronic enforcement
deficit whereby current regulation fails to keep pace with technological
change.
While Industry 4.0 does not, on the whole, tread completely uncharted
regulatory territory, it does significantly increase the complexity of the
relevant regulatory issues. Two things are required to reconcile regulation and
technology: the formulation of criteria to ensure that the new technologies

comply with the law and development of the regulatory framework in a way
that facilitates innovation. In the context of Industry 4.0, it will often be
possible to achieve this through common law contracts. Both factors require
the regulatory analysis of new technologies to begin as early as possible
during the R&D phase rather than being left until they are already in use.
Some challenges are e.g. protecting corporate data, liability, handling
personal data, and trade restrictions.

3.8. Resource efficiency

The nature of manufacturing industry means that it is by far the largest
consumer of raw materials in industrialized nations. Together with the private
sector, it is also the principal consumer of primary energy and electricity. In
addition to the high costs involved, this situation entails risks to the
environment and security of supply which need to be minimized by
regulation. Consequently, industry is undertaking major efforts to reduce its
consumption of energy and resources or find alternative sources. However,
these efforts will need to be sustained over many years if they are to have
any chance of succeeding. Ultimately, this will involve changes in
manufacturing processes and the design of machinery and plant, since these
are the only areas where material and energy consumption can really be
influenced.
The starting point is the amount of resources that are used by manufacturing
companies, both within the company itself and throughout the rest of the
value network. It is possible to draw a distinction between three categories of
resources and how they are used:
1. Raw materials, additives, operating supplies and all the different kinds
of energy carriers, including conversion from one type of energy into
another
2. Human resources, i.e. human labor
3. Financial resources, i.e. the necessary investment and operating costs
In terms of how these resources are used, it is possible to focus on
maximizing the output achieved with a given quantity of resources, or on
using the lowest possible quantity of resources to achieve a given output. In
the first scenario, the emphasis is on calculating resource productivity, whilst
in the second scenario the focus is on calculating resource efficiency. A range
of metrics are now available to perform these measurements (Life Cycle
Assessments, carbon foot printing, etc.).

4. WHERE IS TAIWAN TECH IN THE INDUSTRY 4.0

PROCESS?
4.1. Competitiveness
4.2. Opportunities and Risks
Opportunities for integration and boosting quality and efficiency
Risk to data security

4.3. The question of resources

IT infrastructure
Talent

4.4. Potential for individual segments

Current transformation segments
Future potential

4.5. Impetus from exponential technologies

REFERENCES
1. Prof. Dr. Henning Kagermann, Prof. Dr. Wolfgang Wahlster, Dr. Johannes
Helbig. Securing the future of German manufacturing industry
Recommendations for implementing the strategic initiative INDUSTRIE
4.0 Final report of the Industry 4.0 Working Group. Acatech National
Academy of Science and Engineering. Germany. April 2013.
2. Dr. Ralf C. Schaepfer, Markus Koch, Dr. Phillip Merkofer. Industry 4.0:
Challenges and solutions for the digital transformation and use of
exponential technologies. Deloitte AG. Zurich. 2014.
3. William MacDougall, INDUSTRIE 4.0 Smart Manufacturing for the
Future. Germany Trade & Invest, July 2014.