More than 250 years ago, a revolution was underway in Britain – not that anyone realized it at the time. For centuries, communities had been forced to painstakingly produce goods by hand but a new way of working was changing the game. Instead of relying solely on human and animal power, people were increasingly using water and steam power to build finished goods and enable mass production.
It was not until an English economic historian by the name of Arnold Toynbee (1852-83) popularized the term ‘Industrial Revolution’ that the period received an official title for the manner that it had transformed society. Although used earlier by French writers, it was Toynbee who cemented the perfect way to describe the process of change that had driven Britain’s economic development from 1760 to 1840.
How times have changed.
Where it took decades for the likes of Toynbee to identify and label the history-shaping events of the first industrial revolution, we now live in a world that wastes no time in not only recognizing that monumental change is unfolding before our eyes but studying the best ways for businesses to benefit from it.
We even have a modern-day vocabulary for naming it – hence the dawn of Industry 4.0.
There are no prizes for guessing that Industry 4.0 is the name given to the next major phase of the industrial revolution, which has its roots in manufacturing but is spreading quickly across all sectors and industries. While there is no single definition of Industry 4.0, the term describes a move towards digital transformation in business and is often used interchangeably with ‘smart manufacturing’ and ‘digital manufacturing’. It essentially refers to an industrial or business environment where machines can bridge digital and physical worlds, exchange information with each other and with people, and collect, analyze and act upon real-time information.
Before immersing ourselves in the characteristics and business principles of Industry 4.0, it is worth engaging in a brief history lesson to appreciate how we have arrived where we are. Each of the industrial revolutions has had an enormous impact on society, changing how people worked and the ability of businesses to deliver goods and services.
Given a revolution is defined as “a sudden or momentous change in a situation”, it is fair to say Industry 4.0 fits the bill. The latest industrial revolution to sweep the world is revolutionizing how companies manufacture, improve and distribute their products, with previously unheard-of concepts such as the Internet of Things (IoT), cloud computing, artificial intelligence (AI) and machine learning now considered vital aspects of any organization.
Step into the modern factory and you will be overwhelmed by the amount of sophisticated technology that is providing access and insights from previously unattainable information. Advanced sensors, embedded software and robotics can collect and analyze data that allows for better decision-making, while digital technologies are leading to increased automation, predictive maintenance and self-optimization of process improvements.
Increased productivity and improved quality are goals of any executive and that is within reach via the use of high-tech IoT devices and AI-powered visual insights in smart factories. An example is the ability of sensors on the factory floor to provide large amounts of data for analysis, enable real-time visibility of manufacturing assets and, ultimately, ensure minimization of equipment downtime. Meanwhile, smartphones connected to the cloud can allow staff to monitor productivity and performance from almost anywhere, while machine learning algorithms can save costly repairs by detecting errors immediately.
While Industry 4.0 technologies have existed individually for a while, they have recently begun to influence and impact each other courtesy of the internet and significant reductions in cost. At a base level, they add value by allowing better visibility into manufacturing lines, supply chains and resource usage.
It goes without saying that the thought of an industrial revolution can send a shiver down the spines of old-school executives. Such monumental industry-level changes can cause many to fear their sectors or organizations may become redundant but the reality is companies that adapt quickly can not only survive but thrive in the new world. Change is inevitable so the best approach is to consider the best way forward.
It is essential to embrace opportunities and tackle threats with a clear and precise plan. More importantly, one should not try to do it all at once. An important first step is to not only consider the areas of a business that should be changed but pinpoint the best time for doing so. Ask yourself how potential Industry 4.0 technologies can fit into your objectives and identify the best ones for helping you achieve your goals. Furthermore, predict what other industry-level changes may unfold in the coming years based on your expertise in the sector.
With many businesses having already started their Industry 4.0 transitions – and others accelerating their efforts in the wake of the COVID-19 pandemic – there is no time to waste. The technological solutions to improve productivity and increase efficiencies are well and truly available, with studies having shown that 39% of industry leaders having already implemented a nerve center or control tower approach to increase end-to-end supply-chain transparency and about 25% fast-tracking automation programs to stem worker shortages due to the pandemic.
A concept closely related to Industry 4.0 is the Smart Factory, which is based on cyber-physical systems and designed to ensure a high degree of product customization and enable manufacturing processes to take place with minimal human interaction. Key features include:
We have spoken a lot about the benefits of adopting Industry 4.0 technologies but any revolution can present challenges and risks for businesses. The good news is that such hurdles can be overcome with awareness and planning.
If we could offer just one piece of advice for adopting Industry 4.0 technologies, it would be to start small and keep things simple. That said, there are several other tips worth adhering to when undertaking a digital transformation.
Digital transformation is the way forward for any business but do not make the mistake of rushing to the start line. Take the time to assess your readiness for adopting Industry 4.0 technologies and how they will impact your operations by using digital readiness tools that provide insights about what areas of a business to initially focus on.
Digital transformation requires the dedicated focus of any major strategic plan. For that reason, organizations should invest the time and resources needed to map out their digital plans and truly understand how they will impact various areas across a business. Target technology, processes, skills and training, along with setting clear expectations for working hand-in-hand with suppliers, customers and partners.
Industry 4.0 technologies are good in theory but preparing for the practicalities of digital transformation is where the real success will come from. Recruit the people you need to deliver change or identify how to develop them from within the business. Enhance digital infrastructure, source investment capital and secure the resources needed to deliver the results you are after.
While it’s important for many organizations to start small and simple, they should never take their eyes off long-term opportunities for digital innovation. There is no such thing as an overnight revolution and that is why it is crucial to remember that true transformation takes time. Short-term wins are great but long-term thinking is where true revolution will be found.
Do not make the mistake of investing in technology for the sake of simply doing so. Industry 4.0 tools are the way of the future but not all of them will deliver the same returns for all companies. To realize the best impact for your business, clearly identify your transformation goals, research the best technologies to achieve them and always remain focused on aligning actions with your specific strategy.
The term ‘Industry 4.0’ had its genesis in Germany in 2011. First coined as a high-tech government initiative, it was shared for the first time with the wider world in the same year at the Hannover Fair and quickly caught the imagination of leaders in academia and government. Little more than a decade later and Industry 4.0 is now the talk of the industry as business leaders rush to ensure their organizations do not miss out on the obvious benefits of the revolution.
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 U.S. productivity in the second and third quarters of 2020 rose a collective 15.2% - the largest six-month improvement since 1965 – to know incredible gains are being made.
The COVID-19 pandemic is also playing a huge role, with companies stepping up the speed of their digital transformations 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.
While some revolutions should justifiably be feared, Industry 4.0 is not one of them. The fourth industrial revolution is a chance for organizations to improve business 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.
Just as Industry 4.0 has entered the business lexicon, ‘The Great Resignation’ is a concept that is attracting attention from executives and scholars alike. Discover the lessons organizations can take from the phenomenon to reimagine how their offices operate, reassess their values and culture and increase their candidate and employee ‘likeability’.
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