Industry 4.0: “From Factory to Smactory”
It is August the 18th of 2014 when a German government official press ‘post’ on an update called: “Zukunftsprojekt Industrie 4.0”, not knowing that this Industry number will complete transform the way we traditionally did business. Where business transformation in prior times mostly affected individual entities of businesses, this transformation affects the whole business eco-system. The announcement, posted on the “Bundesministerium fur Bildung und Forschung” or, in English, the:”Federal ministry of education and Research” quoted the following key message:
“The future project Industry 4.0 aims to enable the German industry in a position to be ready for the future of production. Industrial production will be characterized by strong personalization of products under the conditions of high flexibilised (high-volume) production, the extensive integration of customers and business partners in business and value creation processes and the coupling of production and quality services.”
Industry 4.0, where disruption meets the manufacturing industry
According the Cambridge Online Dictionary is revolution something that is: ‘a very important change in the way that people do things’ or ‘one complete circular movement of something’. That Industry 4.0 is a industrial revolution is an understatement. Industry 4.0 is a big disruption in the economy & the way we (will) do business in the future. Before deep dive directly into Industry 4.0 let us have a closer look to the road towards it…
What are the Germans counting for? The number behind Industry is the amount of Industrial Revolutions. Let me first take you on the road towards Industry 4.0.
The first industrial revolution relates back to the end of the 18th century, back to 1784 where the first mechanical loom saw daylight. The first industrial revolution is known for mechanical production facilities powered by water and steam.
The second industrial revolution takes us back to the start of the 20th century. Don not confuse this with the fundamental principles of electricity generation who were discovered in the period between 1820 and 1830 by the British scientist Michael Faraday. The second revolution was all about mass production based on the division of labour, powered by electrical energy.
The third Industrial revolution takes us back to the early 70’s where electronics, IT and heavy-duty industrial robots where taken into process for a further automization of production.
Industry 4.0 is an initiative of the German government to make the paradigm shift from the traditional way of manufacturing to the future way of manufacturing. Where analog and mechanical where key words in the traditional way of manufacturing, the future way of doing business in this market segment will all be about digital. The fourth Industrial revolution takes us back to today where we see the first steps of the so called Industry 4.0, what is based on Cyber-Physical Production Systems.
Connecting the physical with the digital
Seen the revolutions we can see a pattern, mass production through automation. The fourth revolution is changing the game. To stay in the competitive game, companies have to digitally transform totally. Digital Transformation as key enabler to stay in the game. Connecting the physical and digital dots to create a whole new era for the manufacturing industry, is what needed. The German government and businesses realizes that is no other. Their economy is on the cusp of that fourth industrial revolution:
“The economy is on the cusp of the fourth industrial revolution. Through the Internet driven, grow real and virtual world continues along to an Internet of things. The hallmark of the future form of industrial production are the strong individualization of products under the conditions of high flexibilised (high-volume) production, the extensive integration of customers and business partners in business and value creation processes and the coupling of production and quality services, referred to in such opens hybrid products. The German industry now has the opportunity to actively participate in the fourth industrial revolution. The future project Industry 4.0 we want to support this process.”
Plug and play
“… in other words, standardization – is only one of the many attributes of what is known as Industry 4.0. This concept, which was coined as part of the Federal Government’s High Tech Strategy, describes a form of production in which all machines and products are digitally networked together. It was presented to a broader public for the first time in 2011 at the Hannover Messe, Germany’s most important industrial fair.”
Think about it, a connected manufacturer is only the beginning. What is next is a whole distribution chain connected and again, this is only the beginning. Whole business eco-systems will be connected. Every action taken by employees, all concrete machine action and duration, every part of transportation, the state of your products, employees and machines, available on every moment in time. In terms of cost calculation, we never knew what cost calculation was, until the arrival of the ‘smactory’. Managers and business leaders can now steer upon real time overall insights. No impediments, uncertainties and so on. Real time, valid, data to steer on. Remember the well known quote: “You cannot manage what you do not measure?”
That the German government takes the Internet of Things serious can be seen on the tremendous amount of money the Germans reserving for Industry 4.0 namely, 200 million euro’s. But, not only the German government is taking the Industry 4.0 seriously. Also industry leaders as Siemens, Bosch and other German companies are working very concrete on Industrial Internet of Things strategies.
Industrial Internet of Things strategies
When we look to two German companies which are heavily involved in the Industry 4.0, we see Siemens and Bosch.
Siemens AG, known for their electronic devices/ machines with presence in sectors such as industry, utilities, healthcare, etc is one of the German companies who is actively developing a strategy for the Industry 4.0. Siemens sees and does the following things:
- Fundamental change in manufacturing industry leads to increasing digitization and networking to leverage productivity
- With 7,500 software engineers, the Industry Sector is trendsetter for linking product development and production through the use of IT
- Integrated Siemens portfolio comprising hardware, software and services underpins technological leadership
A great example of the first steps of a ‘smactory’. Leveraging the network and linking product development and manufacturing/ production through digital. Industry 4.0 is more than just linking machines and production lines. It is also pioneering how all this data can support product development to better determine customer/ business need and produce, what they want, and deliver, when they need it. The role of supplier will significant change with the entrance of Industry 4.0. When your supplier have full sight on your stock and the way and speed of how you produce they can take over the role of stock management. In this way you do not have to worry about your stock of raw materials and companies can focus on their reason of existence.
Creating competitive advantage through simulation software
In their report on: “Self-organizing factories” Siemens wrote:
“To be competitive, companies must reduce the time and cost associated with developing and manu- facturing ever more complex products. Customer requirements are also becoming more demanding and nuanced. Production experts believe the solution is the merger of virtual planning and physical production processes. This is the idea behind the concepts of cyber-physical systems (CPS) and Industry 4.0. Customized software is a must here — but generally not the horizontal IT systems which, like office programs and databases, can be used in many different applications. Even more important is vertical IT — i.e. solutions developed for particular industrial sectors and their special needs.”
Do you still think Bosch is the companies of the green cordless drill machines, think again. With Bosch Software Innovation, Bosch is one of the Industry 4.0 accelerators of the German landscape.
How all the Internets of ‘X’s’ fit together
When talking about connecting the physical to the digital, there is a lot of rumour around different definitions. Industrial leaders trying to coin to their own definition to grab a piece from the connectivity pie. A thought sharing on the war of definition when we speak about connecting the unconnected would result in:
The overall coined term Internet of Everything (as a baseline) for connecting the unconnected/ physical to the digital. The term everything explains that we talk not only about ‘things’, but about everything. Not only things but also people, processes and data. The original term Internet of Things, coined by Kevin Ashton in his days as a product manager at Procter & Gamble is a part of IoE because her the focus is on things and not on people, processes, etc. When we talk about the Web of Things it is in my point of view focussing on the connectivity of things again. Bosch build on this thought, by talking about the Internet of Things & Services. The industrial Internet is also a part of IoE but focussing mainly on the big industries. Industry 4.0 is a part of the Industrial Internet because Industry 4.0. mainly will be focussing on the manufacturing industry. M2M, Machine 2 Machine is a very important part for the Industrial Internet. Machines which produces data and communicates to other machines or general systems to say something about what they sense where line/ production managers can steer on. Connectivity is key for ‘smactories’, that is what the Internet of ‘X’ is all about. Real time decision making on valid data.
From Factory to Smactory
Where a factory is defined as a building or set of buildings where large amounts of goods are made using machines, a Smactory is an almost self-steering industrial data leader in the digital era. A factory that has a full focus on ‘Smact’. Smact, known for technology such as Social, Mobile, Analytics, Cloud & (Internet of) Things are the key pillars for innovation in the Industry sector.
LNS research predict that there will be three main focus areas on Industry 4.0 in the early 2015’s.
- The Emergence of the Industrial IoT Platform
“In today’s marketplace, no Industrial IoT Platform vendor can claim a one-stop shop in the industrial space, nor is it even agreed upon what would need to be delivered by a one-stop shop.”
- Smart Connected Assets
- Smart Connected Operations
As a conclusion I would like to quote a part of Siegfried Dais, deputy chairman of the board of management at Robert Bosch GmbH, his findings in an interview he had with McKinsey & Company:
“With all this new information available—about interdependencies, the flow of materials, the cycle time, and so on—manufacturers can lower their inventory costs and reduce the amount of capital required. But don’t forget: this involves huge amounts of data, and the fundamental prerequisite for such a system is that it is stable and reproducible. Common sense won’t help here; this involves rigorous mathematics. And what’s interesting is that the algorithms for this already exist. Mathematics has already solved numerous problems that we won’t encounter in the real world for another 50 years. But analytical talent is becoming increasingly rare in the labor market, so there will be fierce competition for mathematicians and analysts. The opportunities presented by the Internet of Things are clear—but so are the challenges.” 
Do you want to know more about the Internet of Things? Join the LinkedIn group about: “Industry 4.0 & the Industrial Internet” now!
Bundesministerium fur Bildung und Forschung, “Zukunftsprojekt Industrie 4.0
” 18th of August 2014
Deutschland.de, “Industry 4.0 at Hannover Messe” the 7th of April, 2014
Wikipedia “Elektric Energy”
Wahlster, Wolfgang, “Industry 4.0: From the Internet of Things to Smart Factories”, Digile, 31rd of May, 2012
Siemens, “Siemens prepares the way for Industry 4.0”, Siemens Press release, 8th of April, 2013
Nikolaus, Katrin, “Building the Nuts and Bolts of Self-Organizing Factories” Siemens, spring”, 2013
Industry 4.0 – Impetum
Logo Bundesministerium fur Bildung und Forschung – Bundesministerium fur Bildung und Forschung
From Industry 1.0 to Industry 4.0 – The Engineer
Acknowledgement for contribution by Capgemini Consulting research institute for Digital Transformation on report called:
Connect – Talk – Think – Act: Developing Internet of Things & Industrial Internet Opportunities
Industry 4.0. – Sharpening the picture beyond the hype
Securing the internet of things opportunity putting cybersecurity at the heart of the Internet of Things (IoT)
“How Smart, Connected Products Are Transforming Competition”
Information technology is revolutionizing products, from appliances to cars to mining equipment. Products once composed solely of mechanical and electrical parts have become complex systems combining hardware, sensors, electronics, and software that connect through the internet in myriad ways. These “smart, connected products” offer exponentially expanding opportunities for new functionality, far greater reliability, and capabilities that cut across and transcend traditional product boundaries. The changing nature of products is disrupting value chains, argue Michael Porter and PTC CEO James Heppelmann, and forcing companies to rethink nearly everything they do, from how they conceive, design, and source their products; to how they manufacture, operate, and service them; to how they build and secure the necessary IT infrastructure. Smart, connected products raise a broad set of new strategic choices for companies about how value is created and captured, how to work with traditional partners and what new partnerships will be required, and how to secure competitive advantage as the new capabilities reshape industry boundaries. For many firms, smart, connected products will force the fundamental question: “What business am I in?” This article provides a framework for developing strategy and achieving competitive advantage in a smart, connected world.
ViNT (Vision Inspiration Navigating & Trends), the trendlab on new technology from Sogeti investigated the Internet of Things and came up with 4 reports you can download them on the ViNT website, here!
Report 1: THINGS – Internet of Business Opportunities
Report 2: EMPATHIC THINGS – Intimate Technology : from wearables to biohacking
Report 3: THE FOURTH INDUSTRIAL REVOLUTION: Things to Tighten the Link between IT and OT
Report 4: SMACT AND THE CITY: New Technologies in Urban Environments
Industry 4.0: from Factory to Smactory
Implications of Industry 4.0 for CIOs
Industry 4.0 the capgemini consulting view – sharpening the picture beyond the hype – capgemini consulting
Machine Intelligence: An executive introduction (ENG)
The gold rush of the Internet of Things