Industry 4.0: Exploring the fourth industrial revolution

‘Industry 4.0’: a revolutionary concept that is slowly becoming the new way of working for all industries globally.

Let’s take a step back in time and introduce Arnold Toynbee. An English economic historian who first introduced the term ‘the Industrial Revolution’. This term was popularised to explain a period of change within England’s economic production and development era from 1760 to 1840. You don’t need to have lived through it to understand how significant an impression the first Industrial Revolution left on the way we produce and manufacture goods today.

However, it is no longer 1840 and we have lived through many Industrial Revolutions, three in fact, with us now entering our fourth: introducing Industry 4.0.

In this blog, we will provide you with everything you need to know about Industry 4.0 and how to effectively survive the latest industrial revolution.

Industry 4.0: what it is and where did it come from?

With its roots stuck in the manufacturing industry, Industry 4.0 is set to affect all businesses regardless of industry or specialism. In simple terms, Industry 4.0 is a term used to describe the transition to a more digitally focused transformative age in business. It is also referred to as ‘smart manufacturing’ or ‘digital manufacturing’. If there is a business or industrial environment where technology or machines are bridging the gap between the physical and digital world, you’ve got yourself a company that’s involved in this new revolution. Think machines that can exchange information with each other and translate it into coherent information for humans.

It’s important to start by understanding where this all started and giving yourself a bit of a history lesson to properly understand Industry 4.0 and apply it correctly. As this is the fourth industrial revolution, we need to understand our growth as a society through the other three and how the way we work and our ability to deliver services or goods has changed.

The influence of Industry 4.0

Industry 4.0 is changing the way businesses manufacture, distribute and improve their products through the use of concepts such as cloud computing, machine learning, artificial intelligence (AI) and the Internet of Things (IoT).

In fact, this revolution has happened so quickly that it’s likely businesses don’t even realise they are already engrossed in Industry 4.0. If you step into a factory today and you see sophisticated technology around every corner providing insights and information that can help make operations smoother or more efficient - you’ve got an Industry 4.0 facility right there.

Embedded software, advanced sensors, robotics and artificial intelligence are all technological advancements that successful businesses are investing in to stay competitive. Naturally, this is leading them straight into this fourth industrial revolution. And why wouldn’t they? These digital developments are leading to better decision-making, predictive maintenance and self-optimisation of process or procedure improvements to name a few benefits.

Want to increase productivity? Want to improve quality? How about more time to strategies or better information and data to use for planning activities and projects? The use of high-tech IoT devices and AI-powered visual insights in these ‘smart factories’ can provide the information needed to do just that.

The tools and tech of Industry 4.0

Let’s take a closer look into the technologies and tools of Industry 4.0:

• The industrial version of the Internet of Things (IoT): is the tool that is allowing smart factories to collect, exchange and analyse large amounts of data. IoT refers to the thousands and billions of devices that are connected to wifi networks and filled with sensors to collect, share and gather important data. It enables faster decision-making while processing extremely detailed data in record time. Businesses can see how well production lines are operating, which ones may need maintenance and even where supply chain bottlenecks are occuring.
• Machine learning and artificial intelligence: machine learning algorithms are able to perform predictive maintenance based on extensive historical data and insights that previously were not available to businesses. The savings in costs, time and productivity are now immeasurable as a result of the AI-powered technology providing better visibility and predictability.
• Cloud computing: the one piece of technology connecting it all. The connectivity and integration of all industrial elements from supply chain, service, sales, production, engineering and distribution stems down into efficient cloud computing tech. Cloud computing can store large amounts of data, analyse it and allow it to be processed more cost-effectively and efficiently.
• Cybersecurity: a more digitally connected workplace, even in the manufacturing environment, opens up more opportunities for malware or cyberattacks. Businesses who wish to partake and survive in the Industry 4.0 era, must invest in and understand the importance of cybersecurity platforms to protect data, information and their equipment.

How can businesses capitalise on Industry 4.0

Another industrial revolution? Many traditional or ‘old-school’ businesses may get nervous at the idea of having to embrace another wave of change. Significant industry-level changes have not had the best reputation thanks to events such as the Great Recession or the more recent pandemic. However, if businesses think to prioritise adaptability and invest in processes, external support and mentalities that embrace change, survival can be guaranteed. In the end, change is inevitable and the best way to handle it is to change too.

Embrace opportunities and identify risks one at a time. Take a good look at your business and identify where Industry 4.0 will significantly affect operations. Could you even implement the tools associated with this revolution into certain aspects of your business? You don’t need to own and operate a factory in order to benefit, but could you apply Industry 4.0 technologies to better understand and become more relatable? Take time to become an expert in the possible impacts Industry 4.0 can have on your business and prepare plans that combat any negative impacts and capitalise on the positive ones.

For example, many accounting firms are embracing automation and digital transformation to meet the complex processes associated with regulatory compliance. The introduction of a practice management system that is cloud-based, full of integration capabilities and able to provide in-depth analytics and insights could help facilitate a more digitally aware accounting firm.

There really is no time to waste jumping on the band-wagon of the fourth industrial revolution. The earlier you realise and accept it is here and it isn’t slowing down, the better you can start planning your business to survive and thrive in this new era. Join the ranks of industry leaders who are already implementing control towers and nerve centres to increase end-to-end supply chain transparency (39%) or those fast-tracking automation programs to combat employee shortages off the back of COVID-19 (25%).

The Smart Factory: an Industry 4.0 concept

We’ve mentioned the Industry 4.0 ‘Smart Factory’ earlier but what really is it and why is it important to know? A Smart Factory is based on cyber-physical systems designed to ensure a higher degree of product customisation. It essentially enables manufacturing processes to be done with little to no human intervention.

They distinguishing features of a ‘Smart Factory’ include:

• Data analysis: think sensors and interconnected machinery that work together to produce large amounts of data that allows businesses to identify historical trends, patterns and ultimately make better-influenced decisions. This can extend to the data collected from other parts of the business, even its suppliers and distributors can provide information that can produce even deeper insights.
• IT-OT integration: the term you need to know here is operational technology (OT); tech used for connecting, securing and monitoring a business’s industrial operations. IT usually focuses on the front end of a businesses activities, think email, finance, and HR. OT focuses on the back end of a businesses activities, think industrial control systems (ICS), robots and programmably logic controllers (PLCs). A successful smart factory can integrate these two successfully together.
• Custom manufacturing: products can now be customised to suit individual consumer needs more cost-effectively and with fewer time constraints to the production of such products or services. This is thanks to technology such as advanced simulation software, more pliable materials and 3D printing.
• Supply chain: Industry 4.0 has businesses reinventing how they resource raw materials and deliver the finished products or services. Through the above tech, manufacturers and distributors can now share data with suppliers to ensure more efficient delivery schedules are established and in the process, happier customers.

Industry 4.0: challenges, risks and the strategies to thrive

It’s evident that adopting Industry 4.0 technologies can provide businesses with a multitude of benefits, but what about the challenges and risks they present? Like any hurdle, a good level of awareness, planning and the ability to adapt can help your business taken them on.

Common challenges of Industry 4.0 include:

• A lack of access to skilled personnel needed to adopt Industry 4.0 technology.
• The threat of data security and IT breaches that the adoption of new advanced technology brings with it.
• The need to ensure cultural alignment between your team the introduction of Industry 4.0 changes.
• Investing in the right technology bit by bit to ensure the transition to a Industry 4.0-environment is efficient, well-planned and financially feasible.

Common strategies to thrive despite these risks include:

• Assessing your readiness for adopting Industry 4.0 technologies and how they will impact your current operations.
• Developing a digital roadmap and truly set up the new processes, skills and training required for this digital transformation to be successful.
• Being practical by recruiting the right people who can help deliver these changes, enhancing your digital infrastructure and securing the resources needed to deliver the results you are after.
• Keep thinking long term. This isn’t an overnight revolution. Continuously seek out long-term opportunities for digital innovation to successfully adopt the mentality to survive Industry 4.0.
• Invest wisely by continuously referring back to the goals you set out to achieve at the start of your Industry 4.0 transition, whether you have the resources you need to achieve this and re-align with the actions of your individual strategy.

For a more in-depth understanding about the challenges of Industry 4.0 and how to overcome them, check out our tip sheet here.

So what does the future look like in the Industry 4.0-focused world?

While it will be many years until the true long-term impacts are known, there is no denying the signs are promising that Industry 4.0 will deliver similar boosts to previous industrial revolutions. One only need look at the fact that Australia’s economic productivity averaged 78.73 points from 1978 until 2021, reaching an all time high of 103.30 points in the second quarter of 2020 and a record low of 55.30 points in the second quarter of 1979. The COVID-19 pandemic is also playing a huge role, with companies stepping up the speed of their digital transformation to adapt to a new workplace landscape. Where once it might have taken years for executives to embrace new technologies, the likes of social distancing and remote work have forced them to not only accept change but embrace it. As one survey found, companies are three times more likely to conduct at least 80% of their customer interactions digitally than they were before the crisis.

Industry 4.0 is not to be feared. The fourth industrial revolution is a chance for businesses to improve procedures, streamline operations and foster an environment for happier staff and customers. Now is the right time for leaders, managers and business owners to discuss the adoption of Industry 4.0 technologies with their teams and independent experts and implement the perfect solutions for their situations.