What Is Industry 4.0 And Is It More Than Just A Connected Company?

Over the past couple of decades there has been one wave of industrial digitization after another. The computerization of the nineties introduced email and business productivity tools, such as the Microsoft Office suite now known as 365. The early part of this millennium saw the arrival of social media and this changed our ideas of connectivity – between both companies and their customers.

Connectivity is now accepted as normal. All modern companies use computer systems and connectivity to deliver services, but there is a wave of new technology changing how companies operate.

This can be summarized as Industry 4.0.

Industry 4.0 is a wave of technological change that is driven by four underlying principles:

• What is happening to the business?
• Why is it happening? How can we understand it?
• Predictive Capability. What will happen in future?
• How can we create an autonomous response to change?

This is a major industrial change, not just the introduction of cheaper or faster technology. We can draw parallels with earlier technological revolutions. When electricity was only provided by watermills then factories had to be located near to running water, with a large wheel connecting through to tools that can use this hydropower. The introduction of a power grid enabled factories to be located anywhere. We can now see the modern equivalent.

At present, companies are using technology to improve productivity and to stay connected, but as the four principles describe, there is a wave of change taking place and it applies to how information is created and analyzed.

To understand this more easily, think of a well-known manufactured product today – the automobile. A car company used to design, build, and sell cars. Once the car was sold there would be no further contact with the customer, except for maintenance. Even maintenance was not guaranteed if the customer used an independent garage to service their vehicle.

But a modern car today is fitted with sensors. It can perform constant checks and it will diagnose problems, report back to the manufacturer, and self-correct where possible. Even modern cars fail occasionally, but the level of sensors in modern car engines is now so detailed that the car can predict when something is about to go wrong and can create a strategy to mitigate the problem.

Not every car engine problem can be corrected with software – a catastrophic gearbox failure will leave you at the side of the road waiting for a recovery truck – but a failing spark plug can be managed by adjusting the timing on the other plugs. Many performance problems can be addressed through the insights that sensors create.

This is what Industry 4.0 really describes. Companies need the ability to know what is happening to their business and products – sensors are essential. This data then allows real-time analysis to take place to determine what is happening and why.

Building a reserve of performance or behavioral data over time creates the option to predict what will happen next. This applies to a car engine, but equally to how retail customers might behave on Black Friday. Your predictions can be improved only if you have detailed data on what already happened.

With this real-time insight and predictive capability in place then there is the option to create an autonomous reaction – so your service can be self-improving and can respond to change without the need to wait for a manager to decide that something needs to happen.

Examples might be a customer service process handling interactions during a busy period, such as the end of year sales. With total oversight of what has happened in the past, what is happening now, and the available resources then the system should be able to make autonomous decisions – such as requesting more customer service agents come online as quickly as possible.

The self-diagnosing car is another good example. If your car can check all the engine sensors and cross-check sensor status with the manufacturer when parked in your garage then that is a major benefit. The driver can feel more secure that each time they leave home, the car is in perfect condition and has been checked.

Industry 4.0 is all about monitoring, creating insight, and creating the opportunity to autonomously make business decisions based on data. It’s the next step for businesses that have already embraced global connectivity.

IBA Group has deployed many digital models that follow Industry 4.0 principles. For more information please click here.