Industry 3.0 and 4.

Top 5 Reasons Why Industry 4.0 Is Real

And Important
Karola Schmitt

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As physical and digital worlds merge, manufacturing processes will change dramatically in the

future. That’s for sure. But will this change be a

revolution? The German Academy of Science and Technology says it will be and coined the term
“fourth industrial revolution” (“Industry 4.0”). It states that today’s emerging technologies will have a
similar effect on our society as water power and steam engines had at the end of the 19th century
(and the succeeding technology waves that enabled mass production and automation in the
20th century).

So what’s new? Traditional “mechanical chains” in production are being transformed into “digital
chains.” Take the example of 3D printing. It allows producing spare parts locally and whenever you
need them. This will make many traditional production and logistic processes obsolete. Smart items
are another key technology: In 2020, 50 billion devices will be connected to the Internet (see “More
than 50 billion connected devices”, Ericsson 2011). A good share of them will be part of the
production process. Equipped with sensors and actors (devices that act on their environment),
products, tools, and machines will provide a digital shade of all kinds of activities and means for
faster decision making and control. Plant managers get real-time insights from the shop floor and
immediate control of production processes (as it is already the case at Harley Davidson, see the
blog post Turning Cold Steel Into Harley-Davidson Motorcycles). The use of smart items will enable
more flexible and autonomous manufacturing units.

Will these technologies transform our society as we would expect from a (industrial) revolution?

Here are 5 reasons why “Industry 4.0” is relevant and important – and likely to be revolutionary:
1. It eases current challenges for manufacturers.

In a world of increasing market volatility, shorter product life cycles, higher product complexity, and
global supply chains, companies are seeking to become more flexible and responsive to business
trends. The Industry 4.0 vision provides recommendations how companies can ease these
challenges: The digitalization of the whole product lifecycle will allow companies to use data from
production, service, and social media which will lead to faster product improvements. Smart items
will bring stronger integration of top floor and shop floor and thus more intelligence and flexibility to
production. With these technologies, companies can react faster to demand changes and implement
new configurations easier or even re-plan production much faster.

2. It leads to an innovation economy.

Digital chains will not only improve efficiency but also speed up innovations as new business models
can be implemented much faster (see Industry 4.0 Leads Into The Innovation Economy). Here are
two examples how Industry 4.0 speeds up innovations: 1. Manufacturers can generate new business
by sharing equipment or selling capacity they don’t need on marketplaces. 2. Thanks to sensors and
connectivity, products will be enriched by services (such as predictive maintenance) or even
transformed into services. An engine manufacturer might not sell engines anymore in the future but
provide them as a service to customers. He then would only charge the power of the engines the
customer uses.

3. It puts the consumer in the center of all activities.

Today’s consumers demand individually made products and services (“Made-for-Me”). Smart items,
products and machines will enable manufacturers to get down to lot size one and produce
customized products without extra cost. Digitalization will lead to an easier crowd sourcing which will
lead to a faster design process.

4. It even puts humans into the center of production.

As machines are becoming smarter, the work in production lines will be enriched and humanized.
Simple manual tasks will disappear. Workers will become coordinators who ensure a smooth
production and only intervene when a machine calls for action. Flexibility will be a key success
factor. Workers will be assigned where help is needed. This will place higher demands in terms of
managing complexity, problem-solving and self-organization, but also allow the work force to
become more flexible. Fixed shifts per day will be complemented by dynamic and self-organized
capacity planning that takes employees’ preferences into consideration. This will improve the life-
work-balance of all employees and allow shorter response time to a changed order situation.

5. It will enable sustainable prosperity.

The old models of industrialization run out: Economies and with it societies increasingly recognize
the risks of globalization, job losses and resource shortages. Generating profit and realizing growth
have to be put into a more long-term perspective, for example by finding ways to cope with
constraints on energy, resources, environment, and social and economic impacts. Industry 4.0 can
help to find solutions to these challenges. If it is smart and innovative, production can reduce energy
consumption, help companies to sustain their business with existing and new business models and
use new technologies to produce all over the world (even at high cost locations) close to the
markets and at the tact of the workers.
https://www.digitalistmag.com/industries/2013/10/15/top-5-reasons-industry-4-0-real-important-
0833970

The Importance of Industry 4.0 in

Manufacturing
According to one survey, German manufacturers will invest over $150 billion annually in
Industry 4.0 applications. They're seeking a number of key competitive advantages.

AUTHORS Srivats Ramaswami

The term Industry 4.0 signifies the computerization of manufacturing as the “Fourth Industrial
Revolution.” Coined in Germany, the term has quickly gained traction across manufacturing as
the primary descriptor for the increased digitization of manufacturing.

Industry 4.0 has six key design principles:

1. Interoperability. The ability of cyber-physical systems, humans and digital factories to connect and
communicate via the Internet.
2. Virtualization. Monitoring actual processes that take place in the physical factory to create virtual
models or simulations.
3. Decentralization. The ability of systems within digital factories to make decisions on their own,
with no human intervention.
4. Real-Time Capability. The gathering of data in each step of the process, including feedback and
monitoring, in real time. This is in contrast to legacy systems that tend to “batch process” data, and
produce reports that are hours or days old.
5. Service Orientation. Offering cyber-physical systems services via an Internet of Services.
6. Modularity. Adapting to changing circumstances and requirements.

Why Is 4.0 So Important?

According to a survey by PWC, German manufacturers will invest over $150 billion annually in
Industry 4.0 applications. The advantages they’re seeking could include:

 Increased competitiveness: For an industry that has relied heavily on low-wage regions for
manufacturing cost reduction, investments in digital technology enable higher wage countries such
as Germany to compete with offshore manufacturing hubs for the first time in a generation. This
will enable manufacturers to select production locations according to technical capabilities and
proximity to consumer demand, rather than decisions driven primarily by wages.
  Increased productivity: With the increased use in automation and in AI systems that can make
autonomous decisions, output is projected to increase greatly.
 Increased revenue and profitability: Although the implementation of Industry 4.0 is predicted to
require heavy investment by manufacturers, the seamless integration of pre-production (i.e.,
engineering and design), production, and post-production (e.g., field performance and service)
data is predicted to give rise to new revenue opportunities. Additionally, the closed-loop feedback
created by this data integration is forecast to increase quality and reduce waste.
 Manufacturing Process Optimization: M2M communications and integrated systems will drive
greater collaboration among producers, suppliers, and other stakeholders along the value chain.
 Seamless record-keeping and traceability. Unlike traditional relationships where feedback on
products and services takes time to gather, the automated closed-feedback loop is an inherent
component of Industry 4.0. The seamless record-keeping enabled by digital systems will speed
traceability, while limiting liabilities, warranty costs and recalls.

The first fully digital factories have been implemented by companies who have integrated
software platforms that link all aspects of manufacturing, from initial product design to factory
layout and manufacturing process optimization to customer feedback after delivery. This
integration ties together each aspect of the manufacturing process, and the related software
platform.

These software systems do more than trade data. They eliminate many of the mistakes that goes
with human-managed production. This next generation of automation is one of the most
important drivers behind digital manufacturing and Industry 4.0.

A Real World Example of Eliminating Downtime

Consider this example from 42Q, a cloud manufacturing execution system. In many factories,
components, work-in-process (WIP) and finished sub-assemblies have been physically managed
on a production floor. Production planners, component buyers and customer service personnel
need information about quantity and location, work-in-process and finished sub-assemblies.

Typically, they get this data from a material requirements planning (MRP) system. Using the
older MRP model in a batch manufacturing environment, components are issued to production
and consumed as products are manufactured.

As the work order progresses in traditional batch manufacturing environments, once components
are consumed in production, an operator has to “consume” them in the MRP system, online. This
consumption is part of a process called “backflushing.”

Financial statements use the data from this step and production and materials teams depend on
this information to manage the production and material supply process.

A common problem is that these transactions can be late, because of the large number of people
involved. Production schedulers and planners may think they have enough components to meet
production schedules, but they are looking at pre-backflush data.

Using 42Q, one factory automated the backflushing operation and removed the dependency on
people, while moving to a real-time data consumption and reporting model. Under the new
system, when a product completes automatic optical inspection (AOI), its serial number is sent
by the AOI machine to MRP for backflushing.

This eliminates the previous manual communication from the shop floor to the planner, as well
as the associated delay and potential errors. In the year before this automated system was
implemented, the factory had lost the equivalent of 17 days of production due to inaccurate
inventory and WIP data.

For many manufacturers, change equals risk. Disrupting the supply chain or factory lines can
cost millions, with untold damage to a brand and a company’s reputation. However, changes are
coming, and the widespread adoption of systems and technologies that implement Industry 4.0 is
already happening among forward thinking manufacturers.

Srivats Ramaswami, CTO at 42Q, has worked at both OEM’s and contract manufacturers, most
recently as vice president of IT Operations. His expertise includes the architecture and
implementation of IT solutions, making the global supply chain visible and more efficient. Srivats
is now responsible for customer acquisition and engagement, technology development and
deployment for 42Q.

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https://www.ien.com/advanced-manufacturing/blog/20837756/the-importance-of-industry-40-in-
manufacturing

262,946 viewsJun 20, 2016, 02:16am

 What Everyone Must Know About Industry
4.0
Bernard Marr
Contributor

First came steam and the first machines that mechanized some of the work our ancestors did.
Next was electricity, the assembly line and the birth of mass production. The third era of
industry came about with the advent of computers and the beginnings of automation, when
robots and machines began to replace human workers on those assembly lines.

And now we enter Industry 4.0, in which computers and automation will come together in an
entirely new way, with robotics connected remotely to computer systems equipped with machine
learning algorithms that can learn and control the robotics with very little input from human
operators.

Industry 4.0 introduces what has been called the “smart factory,” in which cyber-physical
systems monitor the physical processes of the factory and make decentralized decisions. The
physical systems become Internet of Things, communicating and cooperating both with each
other and with humans in real time via the wireless web.

For a factory or system to be considered Industry 4.0, it must include:

 Interoperability — machines, devices, sensors and people that connect and

communicate with one another.
 Information transparency — the systems create a virtual copy of the physical world
through sensor data in order to contextualize information.
 Technical assistance — both the ability of the systems to support humans in making
decisions and solving problems and the ability to assist humans with tasks that are too
difficult or unsafe for humans.
 Decentralized decision-making — the ability of cyber-physical systems to make simple
decisions on their own and become as autonomous as possible.
Industry 4.0 (source: Shutterstock)

But as with any major shift, there are challenges inherent in adopting an Industry 4.0 model:

 Data security issues are greatly increased by integrating new systems and more access
to those systems. Additionally, proprietary production knowledge becomes an IT
security problem as well.
 A high degree of reliability and stability are needed for successful cyber-physical
communication that can be difficult to achieve and maintain.
 Maintaining the integrity of the production process with less human oversight could
become a barrier.
 Loss of high-paying human jobs is always a concern when new automations are
introduced.
 And avoiding technical problems that could cause expensive production outages is
always a concern.

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Additionally, there is a systemic lack of experience and manpower to create and implement these
systems — not to mention a general reluctance from stakeholders and investors to invest heavily
in new technologies.

But the benefits of an Industry 4.0 model could outweigh the concerns for many production
facilities. In very dangerous working environments, the health and safety of human workers
could be improved dramatically. Supply chains could be more readily controlled when there is
data at every level of the manufacturing and delivery process. Computer control could produce
much more reliable and consistent productivity and output. And the results for many businesses
could be increased revenues, market share, and profits.

Reports have even suggested that emerging markets like India could benefit tremendously from
Industry 4.0 practices, and the city of Cincinnati, Ohio has declared itself an “Industry 4.0
demonstration city” to encourage investment and innovation in the manufacturing sector there.

The question, then, is not if Industry 4.0 is coming, but how quickly. As with big data and other
business trends, I suspect that the early adopters will be rewarded for their courage jumping into
this new technology, and those who avoid change risk becoming irrelevant and left behind.
NEVER MISS ANY OF BERNARD MARR'S POSTS:
Simply join here for a weekly update from Bernard

His new book is Artificial Intelligence in Practice: How 50 Companies Used AI & Machine
Learning

https://www.forbes.com/sites/bernardmarr/2016/06/20/what-everyone-must-know-about-industry-4-
0/#41fe6781795f

Visibility In Manufacturing: The Path To Industry 4.0

Tue, 05/12/2015 - 3:11pmComments
by Adrian Jennings

DEEPER INSIGHTS

Software Selection for High Tech and Industrial

Manufacturing

Everyone is talking about how Industry 4.0, or the use of cyber-physical systems connected
in real time across the entire value chain, is the next Industrial Revolution. Integrating data
from many kinds of sensors can help manufacturers gain the necessary visibility to predict
issues and self-optimize as problems occur. To some manufacturers, the coming age of
cyber-physical systems is the inevitable next step. For most, however, these concepts feel
quite distant from today’s reality where many plants have yet to fully adopt the automation
technologies of Industry 3.0.

While Industry 4.0 may only be an aspiration today, every company can benefit from
greater visibility throughout the production process. In fact, visibility is one of the key
foundations of both Industry 3.0 and 4.0. The adage “you can’t improve what you can’t
measure” is certainly true, but it omits one important fact: you can’t measure what you
can’t see. In the context of manufacturing operations, “seeing” might be better described as
“sensing” since no individual can expect to literally see all aspects of a complex, scattered
process.

According to a 2014 Smart Manufacturing Technologies survey, 40 percent of manufacturers

have no visibility into the real-time status of their company’s manufacturing process. The
survey also revealed that most manufacturers are working within the constraints of Industry
2.0 and 3.0 concepts which present a plethora of blind spots that make it difficult for plant
managers, designers, and engineers to identify the right fixes that will have a positive
impact throughout the manufacturing process.
So, how can manufacturing facilities transition towards Industry 4.0? First, let’s take a look
at the technologies of Industry 3.0 in four areas and how each one adds layers of value
along the way.

Asset Visibility
The cost of not having asset visibility is quite clear. If people are spending time searching
for products or tools, that adds up to a lot of wasted time. It can also slow down cycle-time
if products are sitting being searched for and not being processed, leading to decreased
throughput and higher inventory levels. The solution is to use sensors and tracking
technology to know where everything is at any given time. This requires infrastructure and
networking, so it must be done in partnership with the IT department to find, deploy and
support these kinds of technologies.

Process Visibility
Process visibility involves the task of answering the question: where is my product in the
process? This will require another level of sensing technologies. It can be measured in many
ways such as feedback from robotic elements or monitoring the movement of products
physically through the plant. Motion is an important indicator of the status of the process,
but the location information needs to be much more granular and precise. This can be
achieved with sensors that measure flow and identify bottlenecks, providing objective data
to support process improvement decisions.

Error Proofing
Error proofing can help guide line workers confronted with increasingly variable tasks and
prevent them from making mistakes. With exact knowledge of the location of tools and
products there is full control over which task is performed on which vehicle. Further
integration with device controllers allows tools to be disabled rather than let them execute
the wrong task.

Reactive Controls
Reactive controls help take error proofing one step further by understanding the current
situation and responding accordingly. On an assembly line, workers usually have a short
task time and if the work isn’t completed within a specific timeframe, an error propagates or
the line stops, both of which are very costly. Reactive controls provide more flexibility to
give line workers a few extra seconds if needed. This can also be done locally on a single
process but provides exponentially greater benefit as it is implemented along the entire
assembly line.

Virtualized Workstations
Fixed workstations (takts) have traditionally been used in order to achieve a level of process
control and quality assurance. However, with modern plants producing increasingly high
levels of product variation, the concept of the fixed workstation is strained to the point of
breaking. Virtualized workstations create software-defined process controls and quality
gates and these can be varied in real time. Such workstations can easily accommodate
variable process times for different product types, overlapping or overlaying processes for
rare options, and many more examples of flexibility.

All of these are important steps along the path to Industry 4.0, but how can manufacturers
get from here to there? First, start small and start local — trying to create large scale cyber-
physical systems as a single effort presents too many challenges to be successful. Pick a
problem or pain point and tackle it to prove that these solutions work and provide value. As
benefits surface, roll this out to other processes keeping the ultimate goal of end-to-end
visibility in mind. Be sure to invest in the right infrastructure at the outset and create
islands of cyber-physical systems throughout the operation. Only then, look at how the
entire organization can benefit by integrating these islands together into a true Industry 4.0
system.

No matter where a plant is along this path to Industry 4.0, the key to identifying problems
and improving efficiency is greater visibility. Gaining visibility throughout all aspects of the
manufacturing process enables manufacturers to:

 Reduce cycle time (increase throughput, shorter lines, less people)

 Reduce WIP inventory
 Minimize non value-added work
 Gain detailed insight by correlating operational data with real-time process
interactions
 Enable more flexible manufacturing practices by uncoupling processes from fixed
work zones

Through this enhanced visibility, manufacturers can gain a number of benefits that
contribute to dramatic resource and cost savings and significantly improved productivity.

Adrian Jennings is vice president of manufacturing industry strategy at Ubisense.

https://www.manufacturing.net/news/2015/05/visibility-manufacturing-path-industry-40