Industry 4.0 Essentials: Storyline, Technologies, Adoption

What is Industry 4.0? Why adopting it is becoming essential to factories around the world

A basic definition: Industry 4.0 is a new approach to manufacturing and its value chain, charged by smart-systems, data and machine learning

Why Industry 4.0 is becoming essential to factories and why you should adopt it

Industry 4.0 integrates your factory’s digital and physical systems with mainstream automation, old and next-generation technologies. This framework supports real-time collaboration between factory divisions, like operations, research, design, assembly, production. It brings together employees with partners and vendors, helping create a personalized production line and fuel your growth strategy.

 5 features easy-to-remember: New and fully automated approach to manufacturing production, supply chain and life cycle management Charged by smart systems, real-time data and machine learning  Connects digital and physical systems with mainstream automation Supports instant collaboration between factory divisions Helps you define your factory’s growth strategy and transform the way your factory operates5 features easy-to-remember:

1. New and fully automated approach to manufacturing production, supply chain and life cycle management

2. Charged by smart systems, real-time data and machine learning 

3. Connects digital and physical systems with mainstream automation

4. Supports instant collaboration between factory divisions

5. Helps you define your factory’s growth strategy and transform the way your factory operates

These qualities alone should be good enough reasons for you to jump right into the Industry 4.0 hype. Automation, smart factories and a streamlined value chain create a great competitive advantage. However, some manufacturers still have challenges to overcome before getting the most out of Industry 4.0 and adopting new technologies. Understanding the correct context, terminology (buzzwords) and technologies could make all the difference in setting up the correct strategy. 

Let’s put Industry 4.0 into context

This is what we know for a fact: the term “Industry 4.0” was coined in 2011 at Hannover Messe. It was released as a high-tech strategy project in an effort to define the digitisation strategy of the German Industry and model the 4th Industrial Revolution. The research had to achieve a smart factory vision by combining factory automation not only with data and machine intelligence, but also with high-quality services, custom products and intelligent monitoring. The end result? A fully automated approach to manufacturing and its entire value chain. 

Understanding Industry 4.0 by understanding manufacturing buzzwords

To understand “Industry 4.0”, you need to know there are many buzzwords online, often used interchangeably with Industry 4.0 and with one another. Deloitte says many buzzwords have to do with geography and that “german manufacturing” prefers Industry 4.0, while the US and European 'English-speaking countries prefer IoT, IoE  & Industrial Internet'. Probably neighboring countries have the same taste for terms.

Most sources that use the words wrong might actually mistake “Industry 4.0” with “the 4th Industrial Revolution ''. Why is it easy to lose context? Because Industry 4.0 revolutionizes manufacturing and in a similar way, Industrial Revolutions introduced unique and ground-breaking innovation models: 

  • 1st Industrial Revolution introduced steam power to mechanize production
  • the 2nd Industrial Revolution introduced electric power to create mass production
  • the 3rd industrial Revolution introduced electronics and Information Technology to automate production
  • the 4th Industrial Revolution introduced the internet and smart machines to connect the entire value chain

It’s also easy to lose track that “Industry 4.0” was only later developed (as explained above) & in the German version it’s supposed to “help shape the fourth industrial revolution”. It unifies known technologies like cloud computing, IoT and cyber-physical systems with newer ones, like big data, 3D printing and artificial intelligence

The right answer is that Industry 4.0 means the 4th Industrial Revolution in the Manufacturing sector and its value chain.  It connects everything: from IoT to the Industrial Internet, Smart Manufacturing and Lights-out factories and moving forward, we want to show you why Industry 4.0 is so important and what happens if you don’t adopt it.

Challenges and Industry 4.0 benefits. Technologies and trendsetters


What are the biggest challenges in manufacturing?

As a leader in manufacturing, there’s a big chance you have at least one of these challenges on your to-do list: how to improve your decision-making process, how to enhance your team’s productivity, how to streamline your operation process, how to reduce costs or how to deliver faster, better products. In present days, manufacturing leaders tap into next generation technologies to overcome their challenges by responding to society needs and customer demand.

There are many benefits to keeping up with trends and implementing Industry 4.0 technologies in manufacturing

Industry 4.0 is all about connectivity and promises growth, evolution and innovation. Achieving this status doesn’t just mean a key advantage that sets you apart from the competition, but a resolution to solve your factory’s pain points in an innovative way.  

Adopting Industry 4.0 in your product lifecycle you leverage a smart manufacturing process and you innovate. Your machines easily communicate with each other, collect and analyse live data, exchange insights and make smart decisions without or with minimal supervision. Your employees can focus on high-value tasks. You make fast, data-driven business decisions and are able to: Streamline operations, Maximize capacity, Extend equipment lifespan, Improve production and quality, Offer custom products, Enhance your supplu chain, Increase your employee productivity, Increase talent retention, Cut costs. 

Now let’s see the trends worth adopting & Industry 4.0 technologies that deliver competitive edge and help solve factory challenges:

  • Cloud computing Industry 4.0 is all about flexibility and adopting cloud computing fits very well with this mindset, as it gives you the perfect opportunity to scale infrastructure based on specific needs. Applications: cost and overhead reduction by cutting necessity to update and maintain own servers, operational scalability and access to automatic updates, efficiency surge through real-time shop floor access and analysis, basis for on-demand delivery, streamlined collaboration and transparency between business units and key stakeholders, improved risk management; business continuity in case of unexpected failures, through data backup in a safe and secure environment
  • 3D Printing Above all else it offers production flexibility, avoiding the downside of traditional manufacturing by accommodating fast improvements and new product releases. Applications: rapid prototyping, factory performance, production time save and cost reduction in research & development 
  • Virtual Reality and Augmented Reality Supports design, maintenance, assembly, training and rapid prototyping. Applications: process improvement, design and product optimization, real-time decision support
  • IoT (Internet of Things) enhances your cloud connectivity with mission-critical data collected in real time directly from your machines. Applications: production visibility for productivity increase, asset tracking for inventory management, predictive maintenance to reduce downtime (by up to 25%), accurate ship-to or bottom-up forecasting, process quality improvement, operational and energy efficiency improvement
  • Cognitive manufacturing connects sensor-based data (IoT) with AI and advanced Analytics to search for patterns in the newly collected data, apply analytics and make real-time, informed decisions based on what will happen in the future and what you should do about it. Applications: performance asset management, resource and supply chain optimization, process improvement, digital twins, change management, product personalization, sales and improvement dashboards
  • Cyber-physical systems: Creates a highly-adaptable smart factory system integrating networked computers and computational algorithms with the physical world. Applications: automated guiding vehicles, distributed robotics, process control systems, smart grid

Industry 4.0 technologies introduce operational excellence, transparency, flexibility and efficiency of the production processes, infuse your supply chains with data-driven knowledge, deliver incredible customer experiences. There’s a massive digital potential in manufacturing that proves to innovate & disrupt entire sectors - and industry leaders are taking advantage, committed to change the rules of the game.

We live in a highly disruptive and digital-driven age that mandates factories to deliver a new generation of leaders. They need to be flexible, open-minded, have a keen eye to study successes and a critical mind to study failures, they must innovate and be models for innovation. 

Manufacturing Trendsetters

Leaders like Shell, Bosch or GM pave the way and disrupt the future of the workforce thanks to massive R&D programs, innovation labs and external partnerships with well-known, off-the-shelf vendors. 

Innovation: how it’s done and what it teaches you

R&D programs are built in house and innovation labs are driven through partnerships with Universities, the private sector, other government bodies or start-up scenes. Though great for branding and long-term vision, these two options usually require long-term investments, dedicated departments and can’t set a clear ROI strategy. If you’re confident your Industry 4.0 strategy is already delivering on its promise and you want to compete directly with top leaders, you should think of investing in one of the two. 

 If you’re not there yet, you should know that external partnerships are faster to handle. They give you the means to leverage specific needs based on ROI assessments, require less time & budget commitment and they’re integrated in an Industry 4.0 strategy roadmap with ease. This means it’s definitely more cost-effective to lean on technology providers to scale up your capacity on demand. External partnerships can be successfully deployed either with off-the-shelf vendors (explore the most popular ones in 360 Quadrants’ Vendor’s List or IOT Analytics 2019) or with artificial intelligence vendors for custom solutions. 

While the proverbial “one size fits all” is not applicable to manufacturing, it helps to research different real-world applications and see how they add considerable value to the business strategies.

Let's look at some examples:

  • BMW IoT digital transformation: BMW Manufacturing is known in the Automotive sector for its many innovation ventures. Their IoT digital transformation plan and Open Manufacturing Platform are integral parts of their Industry 4.0 journey. The IoT digital plan is combined with robotics and factory automation to deliver real-time adjustments and upgrade production, enhanced with predictive modeling and maintenance to anticipate system failures, prioritise inspections, reduce downtime
  • Adidas Speedfactory: Adidas launched a Speedfactory model (a robotic, micro-factory) combining factory robotics with additive manufacturing to shorten development, production, shipping time, innovate and achieve real-time customer satisfaction through hyper-relevant products. This project is controversial in industry circles: although it achieved fast progress in automation and additive manufacturing, it seems that factory robotics are too expensive to handle as technologies are still evolving. The original goal was achieved, but the project was deemed ahead of its time and closed down. In any case, this is a solid step forward for smart factories and a great lesson learned
  • Airbus AI-driven business learning: Airbus is a leader in Aerospace and a promoter of emerging technologies. A great Airbus innovation example is AI-driven project designed to enhance employee collaboration in Airbus 350 production. Designing and manufacturing complex projects poses challenges in production and allows for quality errors due to miscommunication or lack of real-time data collection and analysis. To solve this problem at a business level, Airbus implemented an Ai-driven learning environment based on data collection, cleanups and machine learning, that allows all employees to see project status and changes being made in real-time. They also tap into a recommendation system to learn who might have encountered a similar issue to theirs or see who might answer a specific problem. This helps the teams learn faster, save time, improve their production rate and become extremely efficient overall
  • Rise of Digital Twins: Digital twins are simulation environments combining IoT’s sensors collections and data reconstruction technologies. Delivering countless benefits, are used by companies like Chevron for predictive maintenance in oil fields and refineries, Formula 1 for performance upgrades in race-simulation environments and NASA for building next-gen aircrafts
  • Schneider’s EcoStruxture: This example shows off the release of a smart factory product model, a legacy factory modernization as a service if you will. It’s designed for industries and data-centers, integrating embedded systems with innovative technologies such as connected products, edge control or analytics 
  • Invisible AI & Toyota demo: A collaboration between Toyota and an off-the-shelf next-gen computer vision vendor in quality manufacturing. The Invisible AI product promotes a visual intelligence platform measuring critical features of the human-factor in an assembly line, helping clients reduce errors and improve quality production in real-time

If you scroll the web, you can find many other examples of Industry 4.0 technologies being used to disrupt different sectors. We believe the ones mentioned could provide an overall feel of what you can do, what you should do and what you can learn from. You might also enjoy reading a PwC 2020 study to discover other trendsetters and some interesting statistics. In fact, the above report reveals that "more than 90% of industrial companies are investing in creating digital factories in the EU”.

2020 proves to be a good time to learn from examples, successes and failures and reap the benefits for your factory. 

Industry 4.0 technologies are trending and here to stay, at least until full automation becomes factory-norm and we reach Industry 5.0. Note that this term is widely speculative - voices believe Industry 5.0 will mean human-robot collaboration, but there’s no way of telling if it will be achieved through working with factory-like Rosie from The Jetsons or managing advanced lights-off factory models. So the question now is: how do you get your factory ready for Industry 4.0? We’ve collected some useful advice from consulting and industry experts.

How to get your factory ready for Industry 4.0

What is the right strategy approach? 

We’ve seen that factories invest more or less in Industry 4.0 technologies, depending on market status and technology adoption. After all, Industry 4.0 combines multiple technologies to achieve a fully automated, smart status and not all factories are prepared to implement them all for a complete transformation.

This is why we searched for expert advice to learn what consulting leaders believe, based on their extended findings. From Deloitte we took the key next steps you can take as you consider the correct approach to Industry 4.0:

  • Assess your factory’s digital maturity and technical capabilities - Build a support ecosystem
  • Understand what impact each Industry 4.0 technology has on your business and why implementing it would drive change - Embrace Innovation
  • Scale at the edges - Choose a flexible project, one that doesn’t put pressure on you to deliver and doesn’t impact your day-to-day operations (Think of Shell’s R&D program at a micro level and lower costs)
  • Start small - This is what we @Qwertee like to call building a Proof of Concept
  • Adjust. Adjust. Adjust - Keep iterating constantly

Implementing Industry 4.0 will become your brand differentiator, will increase your customer satisfaction and loyalty, it will lead to a smart factory transformation. New ideas, improved products, and an upbeat emotional effect on your factory's workforce will get you one step closer in competing with industry leaders. Getting your strategy right is essential. But understanding what makes a right strategy right for your factory should be your number-one concern. 

Iteration means trial and error. But how can you iterate while escaping errors?

Innovating manufacturing is different from innovating other sectors, as factories rely on massive hardware and production equipment to drive production - these are integral parts of strategy planning and delivery. A strategy based at least in part on hardware updates/replacements needs to carefully weigh in the benefits of how this will ultimately disrupt the factory value chain.

This means a longer assessment period, therefore getting the strategy right on the first try is essential. The key steps we’ve gone through focus on starting small, with a Proof of Concept. Beginning with a pilot project to prove a delivery model works is ideal, as it takes the pressure off and the overall commitment is minimal. Even so, you still want to succeed and make sure it delivers on its Industry 4.0 promise the first time. You don’t want to risk getting stuck in pilot purgatory.

“Pilot purgatory” is what McKinsey thinks happens when you make strategy errors in definition and implementation and fail to scale up sustainable impact. Fortunately, McKinsey also gives us the means to move past trial and error and escape proof of concept purgatory:

  • Create a pilot process strategy: start with the basic principles and work your way up, work on a clear vision and roadmap
  • Innovate the infrastructure: design a detailed technology stack and build the stack’s roadmap and ecosystem
  • Engage the factory: let your top leaders drive transformation and assess capabilities assets and liabilities (get on top of your skills gap)

As we approach the end of our blogpost, we look at the future of Manufacturing

We take a final peak into other’s manufacturing strategies, management practices and 5-year investment strategies in this exhaustive Kronos report that captures everything you need to consider before planning your Industry 4.0 strategy. Some takeaways based on 2020 statistics: 

  • Manufacturing leaders are optimistic in regards to their prospective business growth
  • In a need for speed, market volatility, material costs, price reduction pressures, labor costs and logistics are the top 5 challenges impeding factories to meet business growth
  • Improving internal processes, strengthening customer relationships , finding the right skills as well as increasing labor productivity and demand responsiveness are the top 5 operational challenges manufacturing execs face when planning their strategy roadmaps
  • The following investments rank highest on the list: higher productivity, faster responsiveness to customer requests, enhanced collaboration and data-driven customer intelligence, enhanced customer satisfaction

The study will help you discover what other executives prioritise in terms and technologies and investments, so that you can generate your own 5-year market feel and take out what’s best for your factory.

Lessons learned. Be part of the revolution

We’ve noticed that Manufacturing is constantly evolving and the need to stay on top of the market generates a constant battle between old and new technologies. That Industry 4.0 is a revolutionary approach, in the sense that it makes factories push the boundaries of what they can do, showing them why they should become agile, how to become agile and deliver competitive advantages

There is no single approach to Industry 4.0 and there is no single strategy that works. There are guidelines you can follow, but in the end you have to do a thorough market analysis and determine what works best for your factory. From our many lessons learned, we’ve seen that Manufacturing is a resilient and responsive sector. It constantly adapts and chooses to stay on top of trends, however long it takes to do so. The Future of Manufacturing looks bright and a fully automated approach will ultimately revolutionize the workforce as we know it. We’d love to see how you decide to become part of that revolution:) For an Industry 4.0 consultation, reach us at Let’s innovate together!

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Ana Cretu

Ana joined Qwertee in 2020 and brings to the team a strong expertise in technical prospecting, account management and business development. She consults with C-level executives looking to overcome product challenges through digital transformation and innovation. She enjoys conducting her own research into new markets and is very active both online on LinkedIn and offline at Technology events. In her spare time, she enjoys biking, board games and sci-fi movies