Imagine a fully autonomous factory full of interconnected machines producing goods based on real-time order flows, all without human intervention.

Believe it or not, this scenario is already a reality.

In the early 2000s, the Internet gave rise to the third Industrial Revolution, where electronic and IT systems spurred the adoption widespread automation across industries.

Now, machines have become so powerful they can do much more than simply process information and perform basic tasks: they are evolving into super-intelligent and autonomous systems that can interact with each other independently. In a word, they are becoming more ‘human-like’ and capable of exchanging information, analyzing data, and performing advanced tasks much faster than humans can.

Businesses around the world are capitalizing on this development by applying these advancements to manufacturing, creating “smart factories” that are powered by these futuristic technologies.

This phenomenon is called “Industry 4.0”, and it will exponentially increase every industry’s efficiency and productivity, while also slashing costs and eliminating waste.

What is Industry 4.0?

To understand Industry 4.0, we must first explain its origin: the Fourth Industrial Revolution.

The world’s economic history is marked by four so-called “Industrial Revolutions”, which are described as periods of fundamental technological disruption:

  • 1st Industrial Revolution (mid 1700s): mechanization, steam and water power.
  • 2nd Industrial Revolution (1870s): mass production and electricity.
  • 3rd Industrial Revolution (1970s): electronic and IT systems, automation.
  • 4th Industrial Revolution (2010s): interconnected “smart” cyber physical systems.

Industrial Revolutions reshape the world economy – and Industry 4.0 will prove to be a phenomenon of the same impact.

Thus, the fourth industrial revolution is a natural extension of the third, where electronic and IT systems are connected to one another and gradually become autonomous, in a bid to help operators streamline operations, perform holistic data analytics in real time, and progressively remove the burden of dangerous work from humans.

This is made possible thanks to the advent of highly sophisticated technologies.

What is Powering Industry 4.0?

There are 9 key technologies powering the rise of Industry 4.0.

  • Big Data Analytics

The first technology powering Industry 4.0 – and it is arguably most important – is the Big Data revolution. Big Data refers to modern machines’ ability to ingest, process, compute, categorize, and analyze enormous quantities of data from disparate sources in real time, allowing operators to address business problems they were unable to tackle before.

  • Enterprise Cloud

Industry 4.0’s second major technological feature is cloud computing: the on-demand delivery of IT services over the internet with pay as you go pricing. This helps organizations store data on a service provider’s remote servers, eliminating the need to pay for the installation, maintenance, repair, and update of expensive IT infrastructure.

Cloud computing has fundamentally changed business’ relationship to sophisticated IT technology.

Additionally, the service provider is responsible for investing to ensure his clients have access to the latest IT technology, maximum system security, minimal downtime, and effective crisis management. Once again, this translates to substantial savings for businesses.

  • Artificial Intelligence (AI)

Artificial Intelligence is the third major technology powering Industry 4.0. In fact, modern AI has evolved well beyond the point of simply beating the chess world champions at their own game.

Now, thanks to Deep Learning, these systems can continuously improve on their own, without requiring further programming.

  • Robotics

Robotic equipment is now widely used in many factories around the world because their ability to independently manufacture and move goods increases efficiency, safety and operational management.

Robots are not a new sight in factories, but autonomous AI-powered robots are quickly taking over the industry.

  • Industrial IoT

Industrial IoT is the application of the IoT to industrial sector: creating interconnected warehouses, factories, and production lines where machinery and robotics interact with each other, and a central operating system collects all the data and performs high level analysis to help the business anticipate problems and increase overall efficiency.

  • Cyber Physical Systems

Cyber physical systems refer to devices that can perform tasks autonomously in a controlled space. Robots, intelligent buildings, implantable medical devices, and autonomous cars and planes are some examples of cyber physical systems.

  • Augmented Reality/Virtual Reality and Digital Twin

Augmented reality is a type of technology that makes it possible to display digital images and information on physical systems. This allows organizations to visually change the environment or provide additional information to users.

Augmented reality is a powerful tool that can radically enhance a business’ ability to manage, maintain and manipulate sophisticated machinery and physical systems.

A digital twin is a dynamic virtual copy of a physical asset, process, system, or environment that looks and behaves exactly like its physical counterpart. This virtual copy ingests data and simulates the behaviour of the physical twin to simulate its performance and anticipate potential real-world issues it might experience.

  • Cyber Security

Cyber security focuses on defending IT hardware – such as computers, systems, networks, servers, mobile devices, and electronic systems – from digital attacks. Clearly, smart factories relying on interconnected devices need to ensure the environment’s security to avoid malicious attacks such as theft, fraud, and sabotage.

These 9 technologies can be used individually, but their true potential is unleashed when they are combined to create an autonomous, “smart” interconnected Big Data environment.

The 5 Benefits of Industry 4.0

Corporations around the world are rapidly adopting Industry 4.0 because doing so provides clear benefits.

  1. Increased Competitiveness

The globalized world economy has never been more competitive: transnational companies have vast resources, which grants them the ability to innovate faster than everyone else. By adopting Industry 4.0, they can achieve even greater economies of scale than ever before, which will allow them to become more profitable and gain ever more market share.

For smaller entities, the only way to survive is to follow suit and adopt modern technologies.

  1. Attract Younger Workers

The second main benefit of adopting Industry 4.0 is the ability to attract talent. Indeed, the Baby Boomer generation is on the cusp of retirement, and companies are fighting to find workers who will fill the void.

The truth is that younger workers are attracted to companies that innovate and adopt cutting-edge technology. Thus, investing in Industry 4.0 maximizes the chances of attracting and retaining top talent.

  1. Strengthen your Team

Another benefit of Industry 4.0 is the ability to deepen collaboration between an organization’s different departments, which leads to better overall communication, minimal information loss and misinterpretation, and thus better results.

  1. Anticipate Problems

Being able to rely on intelligent machines that analyze vast swaths of data is a major benefit because it helps businesses anticipate problems and identify anomalies in real time. This means that businesses can react more quickly and reverse the course immediately.

  1. Boost Profits

Finally, Industry 4.0 is a holistic management system that helps businesses optimize every aspect of their operations. Ultimately, it eliminates waste and errors, which inevitably reduces costs and increases profits. Over time, this accelerates the growth.

Industry 4.0: Two Real-World Examples

Up until now, we have listed the technologies powering Industry 4.0 and explained how they will benefit businesses. But how does this translate to companies operating in the real world?

There are hundreds of examples of Industry 4.0 being deployed around the world with great success. Here are just two examples.

  1. Bosch: Automotive Factory

Bosch, a German multinational engineering and technology company, recently adopted Industry 4.0 technology to increase the efficiency of its Automotive Diesel System factory in Wuxi, China.

Specifically, Bosch is relying on IoT and Big Data to monitor the overall production process. The company embeds sensors it its machines to collect data about their conditions and cycle times.

This data is analyzed by advanced analytics tools and workers are informed in real time of any issues with the machines. This approach helps the company predict failures, so maintenance operations are scheduled in advance, well before any problems arise.

Bosch’s state of the art factory has adopted Industry 4.0 technology with resounding success.

Thanks to Industry 4.0 technologies, Bosch can maximize its machines’ lifespan and total efficiency, while reducing downtime and maintenance costs. In parallel, Bosch can honour its delivery schedule, which streamlines the supply chains and increases customer satisfaction.

This model can easily be replicated across factories all over the world.

  1. Alibaba’s “Smart Warehouse”

Another eloquent example of Industry 4.0 in action is Alibaba’s “smart factory Xunxi” in Hangzhou, which is described as a “digitalized end-to-end manufacturing supply chain that allows for fully-customized, demand-driven production”.

In this factory, robots do 70% of the work: they can carry loads of up to 500kg, are equipped with sensors that help them avoid collision, and take themselves to a charging station before they run out of battery.

If you thought this means that humans have become irrelevant, think again.

Alibaba developed this smart factory with advanced technology in total secrecy. Watch this YouTube video to gain a better understanding of how this factory operates.

In fact, human intervention remains crucial to the factory’s success: designers rely on analog rendering of digital fabrics to avoid wasting dye during experimental phases; garment workers are assisted with AI-powered cutting machines and sewers; and managers can track production progress remotely using a computer or a mobile phone.

The gain of efficiency is simply astonishing, as Alibaba claims the smart factory reduces order delivery time by 75%.

Is this the future of manufacturing?

Well, it is already the present, but not every organization will be able to make the transition to Industry 4.0 as seamlessly as Bosch and Alibaba.

Industry 4.0: Challenges to Adoption

Despite its numerous benefits, Industry 4.0 also presents four major challenges for businesses looking to make the transition.

  1. Lack of Skills

Unfortunately, implementing Industry 4.0 infrastructure is not as easy as it sounds. In fact, its implementation requires trained staff that is well versed with the latest technologies. Since this is still a new area even for the savviest tech workers, most early Industry 4.0 adopters will struggle to find workers with significant experience in the areas of user interface, data science, software development and machine-level controls.

  1. Cyber Security

The second major challenge is the IT risk posed by the adoption of Industry 4.0 technologies. Indeed, setting up a network of interconnected devices requires diligent and efficient system security. This also requires vast resources, not only for the initial set up but also for the constant monitoring and updating of software, as well as for swift interventions when threats are detected.

  1. Priorities

The third challenge is the fact that organizations face their own internal conflicts, and capital expenditure for ambitious (and expensive) paradigm-shifting technology adoption is not always at the top of the list. For most businesses, the priority is short term profitability and responding to immediate challenges.

  1. Culture Shock

Industry 4.0 radically changes how businesses operate. This means that the entire organization must embrace change, and the individuals leading the project must be prepared to lead by example and deal with blowback if the plan is not executed properly right away. Thus, most organizations will need to proceed with caution and implement changes step by step.

  1. Lack of Capital

Finally, widespread adoption of Industry 4.0 technologies is expensive. While virtually all visionaries dream of an immediate, one-time radical transformation of business processes, most will have to proceed pragmatically and establish priorities.

This means implementing small but regular changes.

Closing Thoughts

Industry 4.0 refers is a revolutionary development that will transform how businesses organize the division of labour, but full adoption is still years away, as business have yet to fully understand how to get started. In any case, the movement is well under way and will accelerate in coming years.