The manufacturing industry is awash in talk of Industry 4.0, also known as the Fourth Industrial Revolution or the industrial internet of things (IIoT). While the terms may mean different things to different people, they generally refer to automation via “smart” technology: human-machine interfaces, machine-to-machine communication, artificial intelligence capable of self-analysis and optimization, and a host of other forward-facing innovations poised to transform the manufacturing landscape. Generally, these wonders are presented alongside banner phrases such as “This isn’t the future. This isn’t science fiction. This is happening now.”
But is it?
The answer is…yes and no. A quick web search reveals no shortage of impressive-sounding, albeit contradictory, statistics: The market for Industry 4.0 products and services is expected to grow to $310 billion by 2023. Or perhaps it is expected to reach $156.6 billion by 2024, which still sounds impressive — yet it is only a little more than half the value of the first estimate. Still another source offers a figure of $922.6 billion by 2925. And if instead of market value, one looks at “value-creation potential,” an estimate of $3.7 trillion in 2025 appears. This blows the other three figures completely out of the water — but not before it leaves one wondering, what do any of these numbers actually mean?
Trends gleaned from actual examples of IIoT deployment present what is perhaps a more reliable view. Market insight provider IoT Analytics recently offered a list of top IoT application areas, based on a review of over 1,400 actual projects. The report identified manufacturing/industrial as leading the pack and trending upward. Typical applications were seen both inside and outside of factories, from wearables leveraging augmented reality on the shop floor to remote control of connected machinery or even of entire operations such as oil rigs.
Leading professional services network Deloitte also recently identified multiple IIoT use cases for B2B industrial companies, based on demonstrated outcomes. These include data-driven design, predictive maintenance and inventory planning built around demand sensing. Yet in the same breath, Deloitte also noted that moving toward effective utilization of Industry 4.0 techniques represents a fundamental shift — one that is “easier to execute in theory than in practice.”
Another recent Deloitte report, based on a survey of more than 2,000 senior executives in 19 countries, examined the transition to Industry 4.0 and noted a continuing trend of what it calls “short-termism”: a full two-thirds of those surveyed are taking only ad-hoc approaches to leverage new technologies, or are lacking formal strategies altogether. Moreover, only 20% of the executives identified their organizational workforce as possessing the skills needed to succeed in an Industry 4.0 environment; part of the challenge, based on survey results, is that they do not fully understand what skills will be needed themselves.
The sheer scope of system integration may have a lot to do with this. Many of the enabling technologies of the IIoT, such as robotics, smart sensors and cloud computing, have already had successful histories operating in disparate silos. Indeed, such individual technologies can be seen more as outgrowths of what is sometimes called the Third Industrial Revolution — the shift from analog to digital technology — than as evidence of having turned a corner into a new age. Getting them to function together in an intelligent landscape driven by data, by contrast, is a revolution that has only just begun: one that will require dedicated visionaries to lead it.
2020’s silver lining
Alongside the observations above, it should be noted that a fair amount of the trends and projections one finds online about “smart factories” were published before the COVID-19 crisis, which unquestionably has made a tremendous impact on all levels of industry and society. Perhaps surprisingly, the impact of the pandemic in this context has largely been a positive one. The need for limiting face-to-face interaction to mitigate the spread of the virus has brought to the forefront some of what the IIoT does best, lending renewed importance to the engagement of new technologies.
Cloud computing, for example, became a critical tool for enterprise information technology infrastructure over the past year. The expanded possibilities of a remote workforce, including the ability to employ skilled talent regardless of geographic location, presented proof of concept. Making business connections got easier, as industry trade shows went virtual.
Moreover, companies already outfitted with some measure of IIoT technology were among those best prepared to handle the crisis. The ability to automate took on new importance to reduce human contact on the shop floor and to strategize around worker shortages caused by illness. A new approach for supply chain planning, in the face of unpredictably sudden shortages and drastic drops in demand, also emerged for consumer-facing organizations that were prepared to pivot: the “control tower,” as described in this article by management consulting firm McKinsey & Company. The concept is a significant step toward the future potential for “autonomous planning,” which leverages data and analytics toward supply chain decision-making with minimal human intervention.
Whether or not such momentum will continue post-pandemic, of course, remains to be seen. But if 2020 taught us anything, it is that being prepared is the key to survival.
The road ahead
The delay in the realization of Industry 4.0 is not in the availability of technology or its perceived market value; it is in the willingness to shepherd the kind of transformational change necessary for implementation. For manufacturers seeking to gauge their level of progress toward the smart factory goal, business magazine Forbes has outlined a five-stage road map. It notes that “the average manufacturer is only at stage one,” which is remote monitoring without automation of data-gathering systems; the ultimate goal is systems capable of real-time automated decisioning. Smart factory strategist SmarterChains has also created a three-stage approach designed for “embracing the possibilities of Industry 4.0 in the COVID-19 era.”
All things considered, Industry 4.0 may not be a reality yet. But a look at the current industrial landscape — particularly looking past the grip of the pandemic — offers indicators that Industry 4.0 is coming.