What We Mean By Industry 4.0
In this article, the term ‘Industry 4.0’ stands for the fourth industrial revolution. Other related terms include the ‘Industrial Internet’ or the ‘Digital Factory’,although neither takes as complete a view. While Industry 3.0 focused on the automation of single machines and processes, Industry 4.0 focuses on the end-to-end digitisation of all physical assets and integration into digital ecosystems with value chain partners. Generating, analysing and communicating data seamlessly underpins the gains promised by Industry 4.0, which networks a wide range of new technologies to create value. While the term Industry 4.0 is becoming increasingly familiar, we use it in a specific way in this report. In our view, Industry 4.0 is driven by:
1) Digitisation and integration of vertical and horizontal value chains
Industry 4.0 digitises and integrates processes vertically across the entire organisation, from product development and purchasing, through manufacturing, logistics and service. All data about operations processes, process efficiency and quality management, as well as operations planning are available real-time, supported by augmented reality and optimised in an integrated network. Horizontal integration stretches beyond the internal operations from suppliers to customers and all key value chain partners. It includes technologies from track and trace devices to real-time integrated planning with execution.
As Industry 4.0 develops, the traditional model of products pushed out to the market will fade and ‘customer pull’, with customers intimately involved in a more collaborative relationship with manufacturers, will be much more the norm.
2) Digitisation of product and service offerings
Digitisation of products includes the expansion of existing products, e.g. by adding smart sensors or communication devices that can be used with data analytics tools, as well as the creation of new digitised products which focus on completely integrated solutions. By integrating new methods of data collection and analysis, companies are able to generate data on product use and refine products to meet the increasing needs of end-customers.
3) Digital business models and customer access
Leading industrial companies also expand their offering by providing disruptive digital solutions such as complete, data-driven services and integrated platform solutions. Disruptive digital business models are often focused on generating additional digital revenues and optimising customer interaction and access. Digital products and services frequently look to serve customers with complete solutions in a distinct digital ecosystem.