Industry 4.0 – the major disruption. A European view

The new industrial revolution, hold on to your seat it will be bumpy and disruptive!

I have read a very interesting paper by Roland Berger Strategy Consultants and I have summarized the key points below. Download this white paper, it is very much worthwhile.

Industry is a core element of the value chain. From the beginning of time, Western civilizations have already witnessed three industrial revolutions. They were all very disruptive from one another.
1) The first one improved efficiency through the use of hydropower, the increasing use of steam power and the development of machine tools.
2) The second brought electricity and mass production (assembly lines)
3) The third and most recent – the one we are moving away from, accelerated automation using electronics and IT
4) The fourth one is on its way. Some areas will see fast and disruptive changes, others will change slowly but steadily in a more evolutionary pace. We are seeing objects integrated seamlessly into the information network. The internet and intelligent machines combine systems production and processes to form a sophisticated network. The real, physical world is becoming a huge information system.

Industry 4.0 is much bigger than the IoT concept or factory 4.0 one. It needs to emphasize the idea of consistent digitization and linking of all productive units in an economy.
The key points are:
1) all IT systems need to be more connected than ever. They need deeper connectivity to sub systems, processes, internal and external objects, the supplier and customer experience and networks. Complexity will be much higher and will require sophisticated marketplace offerings. IT systems will be built around machines, storage systems and supplies following a specific standard and linked to CPS (Cyber Physical Systems). They will be controlled in real time, you will be able to replace machines flexibly, it will enable highly efficient manufacturing in which production processes can be changed at short notice and downtime at suppliers will be offset.
2) The number of multipurpose industrial robots developed by players in the industry 4.0 supplier segment and used in Europe has almost doubled since 2004. Robots were already used in the third revolution but here there use has almost doubled. And this is the first step, the growth in AI (Artificial Intelligence) will allow them adapt, communicate and interact. This will change the cost structures, skills landscape and production sites. Plants will operate 24/7/365. No more night shifts and productivity skyrockets for workers.
3) Leveraging information thanks to big data. being able to predict and optimize resources is where data will become the raw material of the 21st century. The amount of data will more than double every 1.2 years.
4). New quality of connectivity. Digital and real worlds are connected. Machines, workpieces, systems and human beings will constantly exchange digital information via IP. Plants are now interconnected to adjust more efficiently production schedules and optimize capacity.
5) Energy efficiency and decentralization. Climate change and scarcity of resources are trends affecting all players in Industry 4.0.Energy decentralization, use of carbon neutral technologies, use of renewable energies, decentralized nuclear power (small size plants) will supply big electro intensive plants, providing double digit energy savings.
6) Virtual industrialization will be used by Industry 4.0 players in order to plan the physical production (adaptations, trials, pre-series testing, cost over runs, all this will be virtually done and will allow a totally different cost structure and a more optimized one. The growth of 3D technologies will allow better designed and easily visualized plants.

So what is changing for companies?
It will be both a threat and an opportunity. Industry 4.0 will bring new functionalities that will change the rules of the game for the industry players. There will be great cross industry implications such as:
Personalized, local production and mass customization for output.
Networked manufacturing and cluster dynamics for all processes
Fragmentation of the value chain for the business models
Converging frontiers for competition
Interdisciplinary thinking is key for skills (IT, electronics, robotics, biotech and nanotech)
Light footprint on globalization

The last section talks about the level of investment that Europe needs to engage to take on the Industry 4.0 opportunity.  Finally, the report talks about Europe readiness and best practices.

To conclude, the good news is that Europe is in better shape to embrace the new industrial world than many people think. Politicians and companies need to embrace this to contribute to its development and success. All activities at various levels that we see today such as IoT, disruption around new starts ups that promote new ways of working, new ways of thinking, new ways of investing, will help the Industry 4.0 to  succeed. Let’s look at the global picture while building stronger all concepts. There are the building blocks that will create the foundations of this Industry 4.0