In the latter part of the 18th century, the advent of water and steam power enabled manufacturers to transition from manual production to mechanized production. Historians know it as the Industrial Revolution, but let’s think of it as “Industry 1.0.” Mechanization could be adopted locally and in stages. One machine could make a big impact without having to mechanize the entire factory.

A hundred years later, manufacturing changed again. Mass production and the division of labor brought about huge gains in productivity. Let’s call that Industry 2.0. Unlike Industry 1.0, mass production was a philosophical shift. The concept had to be adopted in its entirety.

Another hundred years later, the introduction of microprocessors and automation revolutionized manufacturing yet again. Let’s call that Industry 3.0. Like Industry 1.0, automation can be adopted locally and in stages. Manufacturers can automate one process or an entire factory.

Today, we are entering the era of Industry 4.0. Thanks to sensors, computers and the Internet, networked machines can communicate with each other and their users in real time. Factory processes can become more visible and controllable. Web browsers can be used as dashboards to control equipment, identify snags, and make quick decisions that would have previously taken entire teams of people to handle. Supply chains can automatically adjust based on changes in demand or production capacity. Products can instruct machines how they should be processed.

The technology promises to help manufacturers achieve terrific efficiencies. According to a study released last fall by General Electric and Accenture, connecting industrial operations to the Internet could lead to significant gains in productivity, potentially worth $10 trillion to $15 trillion globally. Already, some 25 billion “things” are connected to the Internet—not computers, but things like manufacturing machinery and hospital equipment. By 2020, that number will double. That’s a lot of data that forward-thinking manufacturers could potentially use to their advantage.

Like Industry 2.0, Industry 4.0 will require a philosophical shift and systemic adoption. So far, however, manufacturers aren’t taking advantage of this technology. (Indeed, some have barely embraced Industry 3.0.) According to a study released last October by Ubisense and the Society of Manufacturing Engineers:

• 40 percent of manufacturers have no visibility into the real-time status of their processes.

• More than 80 percent rely on human observation to support process improvement initiatives.

• 85 percent of quality issues are caused by worker errors.

• Nearly 10 percent of manufacturing personnel spend half their day looking for equipment and products.

• More than half of manufacturers report that up to 10 percent of cycle time per product is time in which value is not being added.

 Are you ready for Industry 4.0? Download the Ubisense report here: http://tinyurl.com/oqjlv76. Dowload the Accenture report here: http://tinyurl.com/khl568d.