As many as 89 percent of the Fortune 500 companies in 1955 are not in the Fortune 500 list of 2019! These enterprises have either gone bankrupt, merged with a larger entity, or have been outranked by more competitive enterprises.1 A staggering number of companies have failed to maintain their market share in the last 60 years. The inability to cope with evolving technology trends and customer needs is the key reason for their decline.
Over the years, every sector has been swept by the winds of change. The manufacturing sector is no exception. Its transformation, starting from steam engines and electrification to information technology and automation has seen the rise and fall of many enterprises. Today, once again, the winds of change are bringing the new framework of Industry 4.0 to the threshold of manufacturers. This new framework focuses on building a network of cyber-physical things to make factories smart, agile and competitive.
Currently, a few futuristic manufacturers have welcomed Industry 4.0 and are working to benefit from new technologies like augmented reality, Internet of Things, artificial intelligence, cloud, and robotics. However, many industries are yet to accept that they are on the threshold of change. For them, the need for Industry 4.0 is not clear.
How Industry 4.0 can transform manufacturing
By 2025, Industry 4.0 could create an approximate value of US$ 3.7 trillion to manufacturers and suppliers according to a recent McKinsey report.2 This value is derived through new capabilities in predictive maintenance, interconnected supply chains, autonomous machines, and processes and intelligent robots. Industry 4.0 is set to enhance the agility and performance of manufacturers by bringing in a new era of networks that orchestrates continuous connections among humans, systems, and machines. It differentiates itself from the previous three revolutions by catalyzing a new level of integration and harmonization amongst the physical, digital, and biological aspects of our existence.3
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, states that the Fourth Industrial Revolution is not only about smart and connected machines and systems, but also includes breakthroughs in areas ranging from gene sequencing to nanotechnology and from renewables to quantum computing.3
The three pillars of smart manufacturing
Enterprises looking to embrace technologies and disrupt markets with Industry 4.0 need to base their efforts on the three pillars of integration, visibility, and analytics.
Seamless integration: Industry 4.0 goes a step beyond traditional automation and requires workers, machines, and processes to be in constant communication. It mandates the comprehensive integration of information technology (IT) and operations technology (OT), such that machines are not only automated, but their functioning also intelligently adjusts to changing conditions. Called cyber-physical machines, they can talk to each other within the factory and can even connect with warehouses and delivery trucks in the supply chain.
Comprehensive visibility: By connecting every component of an enterprise, Industry 4.0 aims to provide comprehensive visibility into the functioning of an enterprise, right from the production site to the extended supply chain. Every piece of equipment is attached to sensors, communication technology, and the Internet. As a result, enterprises get near real-time information and visibility into the health and location of an equipment.
Data analytics: Every connected device generates valuable data. As a result, an entire smart factory offers valuable big data that can be processed to derive insights. With artificial intelligence and machine learning, this data becomes a gold mine for predictive maintenance. It also drives automatic decision-making capabilities of cyber-physical devices and steers more strategic business decisions for the enterprise.
Given that many enterprises have still not embraced the Third Industrial Revolution in its entirety, going solo to adopt Industry 4.0 might lead to chaos and failure. Partnering with a service provider who has end-to-end expertise and experience in smart manufacturing can prove valuable. As a first step, service providers must evaluate the readiness of an enterprise for Industry 4.0. They must bring order to operations, break down silos, and push prototypes into production. Recommendations, roadmaps, and policies must become integral to the scope of work. In addition to drastic improvements in performance and driving compliance, security and cost-effectiveness must be mandated as outcomes of the shift to smart manufacturing. Most importantly, the shift of an enterprise to Industry 4.0 must result in a tangible gain to its end consumers.
As customer preferences are rapidly changing, and new brands are created and embraced faster than ever before, speed and agility to embrace change should become the lodestars of every Industry 4.0 transformation.