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How Industry 4.0 Is Set to Reshape Manufacturing

The manufacturing industry has experienced several seismic changes throughout its history: from the use of machines powered by water and steam during the 18th century to mass production lines powered by electric energy at the start of the 20th century, to the shift that took place from analog and mechanical production to electronic and digital technology from the 1970s to recent years. Now we’re entering what’s being coined as Industry 4.0 (or the Internet of Everything) in manufacturing with emerging changes that have the strong potential to revolutionize the way factories work. What is Industry 4.0 and how will these changes affect American manufacturers?

Industry 4.0 is defined as the next phase in the digitization of the manufacturing sector, which is driven by four disruptions. This includes the rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; the emergence of analytics and business-intelligence capabilities (what’s called Big Data); new forms of human-machine interaction such as touch interfaces and augmented-reality systems; and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing. In a nutshell, Industry 4.0 uses smart technology and real-time data to increase productivity and reduce costs.

In fact, Industry 4.0 is being embraced worldwide, including here at home. In the United States, a non-profit organization, Smart Manufacturing Leadership Coalition (SMLC), has been set up and is comprised of manufacturers, suppliers, technology firms, government agencies, universities and laboratories with the common goal of advancing the way of thinking behind Industry 4.0. The goal is to construct an open, smart manufacturing platform for industrial-networked information applications, with the hope that manufacturing firms of all sizes will have affordable access to modeling and analytical technologies that can be customized to meet their needs.

The opportunities Industry 4.0 offers are many including increased competitiveness, the ability for flexible customer integration, and a boost in quality and efficiency (for example, analyzing machine data to avoid defects in the production process and the capability to carry out predictive maintenance). Of course, there are risks, too.  The “Internet of Everything” – services, data and people – also opens up new avenues for cyber threats, including industrial espionage and attacks by hackers. These risks must be managed through tailored risk management and an appropriate security strategy.

Resources must also be contemplated for companies facing the digital transformation to Industry 4.0, including the appropriateness of a manufacturer’s existing IT infrastructure and the availability of the necessary talent and skilled employees. According to a study by Deloitte, “Industry 4.0 requires existing installations to be adapted and, in some cases, entirely new types of IT infrastructure. Diverse systems need to be networked and to learn to communicate with each other, and new communications networks need to be developed from scratch. A range of systems in differing business segments, such as research and development, procurement and purchasing, production, warehousing and logistics, marketing, sales and services, need to be taken into consideration with regard to networking. This will be a major challenge for manufacturing companies, although the priorities set by differing business segments in relation to the digital transformation to Industry 4.0 will vary.”

Moreover, digitization increases the importance of new technical skills, particularly in the case of operating activities and mechanical working processes in production, purchasing, warehousing and logistics.

Some of the Industry 4.0 technologies are not yet applicable to scale, but they will be in time, and companies and their industrial processes need to adapt to this rapid change if they are not to be left behind by developments in their sector and by their competitors. The key is for manufacturers to monitor these upcoming changes and develop strategies to take advantage of the new opportunities.
In upcoming articles, we will be taking a look at some key technologies transforming the future of manufacturing, including 3-D printing.  Precision Manufacturing Insurance Services (PMIS) is committed to helping the manufacturing sector continue to be a driving force in the American business landscape. We do this by providing industry-specific risk management and insurance solutions that positively affect your bottom line. We also are committed to keeping you updated on the emerging trends that directly affect your business. For more information about PMIS, contact us at 855.910.5788.

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