Industry 4.0 is more than just a flashy catchphrase. A closer look at what’s behind Industry 4.0 reveals some powerful emerging currents with strong potential to change the way factories work. It may be too much to say that it is another industrial revolution. But call it whatever you like; the fact is, Industry 4.0 is gathering force, and executives should carefully monitor the coming changes and develop strategies to take advantage of the new opportunities.
Industry 4.0 is defined as the next phase in the digitization of the manufacturing sector, driven by four disruptions: the astonishing rise in data volumes, computational power, and connectivity, the emergence of analytics and business-intelligence capabilities; 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.
Most of these digital technologies have been brewing for some time. Some are not yet ready for application at scale. But many are now at a point where their greater reliability and lower cost are starting to make sense for industrial applications.
These changes and many others like them are sure to be far reaching, affecting every corner of the factory and the supply chain. The pace of change, however, will likely be slower than what we’ve seen in the consumer sector, where equipment is changed frequently. Executives surveyed estimate that 40 to 50 percent of today’s machines will need upgrading or replacement.
Strategists should also take Industry 4.0 into account as they contemplate the company’s future directions. The traditional manufacturing business model is changing, and new models are emerging; incumbents must be quick to recognize and react to these new competitive challenges.To get the most out of Industry 4.0 technologies, and to get past square one with a digitalbusiness model, companies will have to prepare for a digital transformation. Manufacturers should begin today to join the hunt for the best digital talent, and think about how to structure their digital organization.