In the nautical disaster movie, “The Perfect Storm,” three weather fronts converge off the coast of New England to create one of the fiercest storms in U.S. history. A similar convergence is occurring in the manufacturing world today. It’s called Industry 4.0 and it promises to transform the way that engineers design and build products over the next two decades.

Industry 4.0, a term that refers to the fourth industrial revolution, represents a paradigm shift from centralized to decentralized manufacturing. And, it has the potential to change the traditional role of assembly lines.

Thanks to sensors, computers and the Internet, networked machines can now easily communicate with each other and their users in real time. Production 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.

Industry 4.0 relies on state-of-the-art production equipment and processes that incorporate smart devices and embedded intelligence. Key pieces of the puzzle include augmented reality glasses, automated guided vehicles, collaborative robots, exoskeletons, predictive maintenance software, 3D printers, tablet PCs and wearable devices.

The new era of smart manufacturing is the latest chapter in a 240-year-old saga. The first industrial revolution started in England with the deployment of the steam engine in 1776. It was followed by mass-electrification across the United States in the late 19th century.

The next phase began with the birth of the moving assembly line in 1908 and the spread of mass-production in the 1920s. Then, in the 1950s, American and European manufacturers built vast networks of export supply chains.

In the mid-1980s, when desktop computers revolutionized the workplace, the third industrial revolution began. By the late 1990s, the Internet allowed manufacturers to outsource production to low-cost nations and develop globally integrated supply chains.

Disruptive Force

“While Industry 3.0 focused on the automation of single machines and processes, Industry 4.0 focuses on the end-to-end digitization of all physical assets and integration into digital ecosystems with value chain partners,” says Kumar Krishnamurthy, principal at consulting firm PwC. “Generating, analyzing and communicating data seamlessly underpins the gains promised by Industry 4.0, which networks a wide range of new technologies to create value.

“The term Industry 4.0 is becoming increasingly familiar,” explains Krishnamurthy, who previously worked at Ford Motor Co. “It is driven by digitization and integration of vertical and horizontal value chains; digitization of product and service offerings; and digital business models and customer access.”

Krishnamurthy believes this trend will put customers at the center of key changes to value chains, products and services. “Products, systems and services will be increasingly customized to customer needs, with feedback from products throughout their life cycles,” he points out. “We envision companies implementing integrated SIOP (sales, inventory operations planning) processes built on successful industrial platforms leading to demand-driven engineering.”

According to Tom Kelly, executive director of Automation Alley, Industry 4.0 is the biggest thing to happen to manufacturers in decades. “And, it doesn’t just have the potential to transform the manufacturing landscape—it already is,” he explains.

Automation Alley, a technology business association that serves manufacturers in the Detroit area, is launching an initiative to help small- and medium-sized companies adopt digital manufacturing technologies.

“Industry 4.0 is just the term we’re using to describe the inevitable future—and at some companies the current reality—of manufacturing,” says Kelly. “It’s a step change in how the manufacturing world works, in the same way that Henry Ford’s introduction of the assembly line was a step change in the way the world worked at the time. There’s no going back from here.

“Industry 4.0 is the umbrella term for a number of technologies that are already transforming manufacturing,” adds Kelly. “These technologies marry the physical world with the digital world, resulting in more seamless interaction between the two.”

Companies that adopt these technologies will be able to deliver products to their customers faster, cheaper, and with more options for customization than ever before.

“With the help of sensor technology, manufacturers can track their products throughout their entire life cycle,” Kelly points out. “In some cases, they can upgrade products even after the customer has received them. It’s going to completely change the way we do business in every industry across the world.”

“Industry 4.0 is really a way to think about the convergence of three separate trends—cloud, big data and analytics—and the mainstreaming of the Industrial Internet of Things (IIoT),” says Stu Johnson, director of product marketing at Plex Systems Inc., a leading suppling of enterprise resource planning (ERP) software. “We are now in an era where everything from the shop floor to the extended supply chain can be connected in real time—materials, people, machines, systems, customers and suppliers.

“Not only does that drive real-time efficiency, it provides access to unprecedented data that is already changing the way we make things, the way we manage quality, the way we service customers and even how we define what a product is,” Johnson points out. “Manufacturers are becoming more efficient, but also doing a better job of delivering products that customers need in a changing environment.”

Some experts believe the path to digital manufacturing is going to be different than previous operational changes. While there are no hard and fast rules to Industry 4.0, there is great promise in this coming wave of change.

“For the last 20 years, technologists have looked at manufacturing as a bunch of disparate-but-connected pieces, as individual challenges that needed solving,” says Srivats Ramaswami, chief technology officer at 42Q, a leading provider of cloud-based manufacturing execution systems. “Some have looked at specific manufacturing processes, how to schedule production runs for maximum efficiency, or how to identify and mitigate risk in the supply chain.

“Industry 4.0, however, is about the application of advanced technologies to manufacturing as a whole,” claims Ramaswami. “[Manufacturers must move] beyond the application of robotics and automation to cyber-physical systems where mechanisms are controlled or monitored by computer algorithms, and these physical systems and algorithms are tightly integrated with the Internet. In other words, physical and software components are deeply intertwined.

“The idea is to transform manufacturing from a one-way, step-by-step process to a closed-loop process, with complete visibility and seamless flow of data from every point in the loop to every other point enabling monitoring and control,” explains Ramaswami.

More Than a Fad

Most observers claim that all the hype and hoopla surrounding Industry 4.0 today is justified.

“[All of the discussion] has inspired people to create future-state visions of manufacturing that are substantially more productive, efficient and agile than today,” says David Brousell, co-founder of the Frost & Sullivan Manufacturing Leadership Council. “Some also believe that information-driven factories of the future will enable manufacturers to devise new business models, products and services that will change the rules of competition. Think Amazon or Uber.

“The hype we are witnessing at this early stage is actually quite natural and may even be a good thing to move the concept along,” argues Brousell. “It is really important for people to stretch their imaginations about what could be possible. Combined with a driving passion for change and advancement, that’s how progress is achieved.

“[Industry 4.0] signifies a new era in manufacturing characterized by pervasive connectivity, deep information analysis and high levels of automation that, combined, will alter how companies are organized and led,” adds Brousell. However, he says the manufacturing community is split on the issue of whether Industry 4.0 will be truly transformative.

A recent poll conducted by Brousell’s organization found that 48 percent of senior executives feel that it could be a “game changer” and could represent a “new era” in manufacturing. At the same time, 44 percent believe it would be significant, “but not a game changer.”

“Traditionally, things have moved slowly on factory floors, so expectations about the pace of change under [Industry 4.0] are conditioned by history to some extent,” explains Brousell. “Many manufacturing executives also come from engineering backgrounds, meaning they [want] to see hard, measurable evidence about change.

“On the innovation front, engineers will have a lot more inputs from customers and other sources as connectivity increases and the ability to manage data improves,” Brousell points out. “The digitization of the design and production process will also enable engineers to visualize and simulate product creation more extensively, accurately and faster.”

The term Industry 4.0 originated in Europe several years ago. It was coined by the German government as a way to promote advanced technology.

“Germany has a very robust manufacturing industry, despite having some of the highest labor costs in the world,” says Fernando Assens, CEO of Argo Inc., a global operations consulting company. “Their approach has always been to combat high labor costs with automation.

“The challenge of being highly automated is to be cost-effective in an economy that demands differentiated and customized products,” adds Assens. “Hence, the role of Industry 4.0 is to bring a series of industry recommendations to take advantage of technology to deliver highly customized products in a mass-manufacturing environment.”

The technology promises to help manufacturers achieve incredible efficiencies. According to a recent study by Accenture, Cisco Systems and General Electric, connecting industrial operations to the Internet could lead to significant gains in productivity, potentially worth $10 trillion to $15 trillion globally.

“Industry 4.0 is about connecting what was previously unconnected or hard to access,” says Doug Bellin, global senior manager for manufacturing and energy at Cisco. “While a lot of machinery has been ‘smart’ and has a lot of data on it, the data has been isolated and has not added value to operations.

“Once we are able to access that data, we [will be able to use it] to help change business for the better,” explains Bellin. “This will allow us to move away from a manual-analog process into digital-real time processes.” 

Already, some 25 billion “things” are connected to the Internet—not computers, but things like manufacturing equipment and production tools. By 2020, that number will double. Forward-thinking manufacturers could potentially use all that data to their advantage.

That’s why many senior executives view Industry 4.0 as more than just a fad. They see it as a way to increase productivity, reduce costs and boost revenues.

“Through these initiatives, companies can expect to reduce operational costs by 3.6 percent annually, while increasing efficiency by 4.1 percent annually,” claims PwC’s Krishnamurthy. “[That] explains the increasing C-level interest in deploying Industry 4.0.”

Myths and Misperceptions

Despite all the potential benefits of Industry 4.0, several myths and misperceptions persist in the manufacturing community. For instance, some gung-ho advocates are portraying this trend as a totally new phenomenon. But, it’s actually just a logical evolution now that advanced sensors, inexpensive computers and the Internet are widely available.

“One of the biggest myths surrounding Industry 4.0 is the idea that existing equipment is not capable of communicating with newly deployed technology,” says Colin Geis, director of product management for IIoT at Red Lion Controls Inc., a supplier of industrial meters, sensors and switches. “Another is the idea that existing legacy or older equipment must be replaced.

“The reality is that enabling communication or collecting process data from existing equipment is easier and faster than ever before and is more cost-effective than replacing equipment,” claims Geis. “Industry 4.0 is helping to drive the concept of interoperability. As such, engineers will need to design and build products that leverage newer, open technologies to make this happen.”

“The biggest myth around Industry 4.0 is that many companies believe a large quantity of data is directly proportional to better results, ultimately leading to better decision making through analytics and reporting,” notes Krishnamurthy. “However, with many analytical tools readily available in the market, this false notion of better decision-making can lead to flawed hypotheses and inaccurate results.

“It is important to understand the science behind the data before setting up analytical models,” says Krishnamurthy. “Having the right business acumen on different processes and assets is crucial in developing the right models to drive meaningful insights from the data created.”

Some manufacturers are so eager to implement Industry 4.0 technology that they’re trying to run before they learn how to walk.

“You can’t implement advanced technologies without laying the necessary infrastructure foundation and putting the business intelligence systems in place to make proactive decisions,” warns Rick Schreiber, partner and national manufacturing and distribution practice leader at BDO USA LLC. “If your IT infrastructure doesn’t have the capacity to handle massive volumes of data and meaningfully report on it, or if you lack the controls to ensure data quality, you risk wasting your investment.”

Schreiber says another common myth is that Industry 4.0 is just for large corporations. “Manufacturers of all sizes can benefit,” he points out. “Of course, the path is easier for large manufacturers with existing internal resources. But, midsize and small manufacturers will need to embrace Industry 4.0 to remain relevant.

“The most important question for manufacturers regardless of size is not which new technology they should adopt, but which advantages they need to gain to stay competitive and the steps they need to take to get there,” claims Schreiber. “That means setting and adhering to a strategic roadmap with incremental milestones and checkpoints.”

“Any company of any size can take advantage of this trend,” adds Argo’s Assens. “The various sensors and information platforms needed to implement it are easily customizable and scalable. In fact, small companies are more flexible and better positioned to take advantage of Industry 4.0.”

In the past, ERP and MES offerings were intended mostly for large manufacturers and required substantial upfront investment for the software, the infrastructure to run it and the IT resources to maintain it.

“However, for today’s small manufacturer, cloud computing options are far simpler to implement and require less time and fewer resources to go live with no huge capital investment,” notes Kathie Poindexter, senior manager of product marketing at Epicor Software Corp., a leading ERP supplier.

Despite that, many small firms will likely stand on the sideline and watch big companies with deep budgets, long-range strategies and early-adopter mentalities deploy Industry 4.0 initiatives.

“Manufacturing is a very pragmatic industry not generally prone to jumping at every new trend,” notes Plex Systems’ Johnson. “The rest of the market will generally fall in line once the return on investment is clear. Smaller companies generally do not have the resources to risk on low rate of return projects.”

Another myth involves “ownership” issues. For instance, should Industry 4.0 be the realm of the IT department or engineering?

Assens believes that manufacturing engineering owns it. “IT enables it and supports it, but the IT departments are not the ones developing production systems in a factory,” he points out. “That’s the role of manufacturing engineering.”

However, not all observers share that same sentiment. “No one function within the manufacturing organization can own something with such far-reaching implications,” argues Poindexter.

“Traditionally, automation engineers owned the deployment and maintenance of manufacturing equipment,” adds Red Lions’s Geis. “As equipment has become more integrated with Ethernet-based networks, and more production data is collected and stored in servers, IT personnel have taken a more significant role. There is no longer a clean delineation between industrial Ethernet networks and enterprise networks; as such, IT is now interacting more with factory environments.”

“Industry 4.0 is a blend of IT and OT (operations technology),” says Ed Potoczak, director of industry relations at IQMS, a leading supplier of ERP and MES software. “As such, it should be owned by both IT and engineering. This is true for legacy equipment and controls that will continue to be used to produce, as well as new assembly lines that can be designed and deployed with the latest connectivity schemes in mind.

“This is the realm of engineering, with IT support,” explains Potoczak. “Analytics and visualization of the data for real-time metrics and alerts is more the [domain] of IT, with specification from engineering and operations leadership.

“There can be conflicts when it comes to the prioritization of needs to be addressed, preferred technologies and solution providers,” warns Potoczak. “So, having needs, goals and success metrics set by operations management before engineering and IT begin Industry 4.0 projects is the key to minimizing these issues.”

“We are seeing convergence of both IT and OT, and we have seen this struggle firsthand,” adds Cisco’s Bellin. “[That’s why] we’ve designed multiple training courses to help customers understand these differences and what can be done to help bridge the gaps between both sides of the business.”

“[Manufacturers need to] use the best of both to drive success,” says Bellin. “The best of IT could include security, cloud and compute areas, and overall connectivity knowledge. OT brings different wants and needs [to the table], and needs to educate IT on these.”

State-of-the-Art Applications

Innovative companies such as Bosch Rexroth Corp., Festo Group and Siemens AG are behind some of the best-known Industry 4.0 initiatives. One reason why German firms are at the forefront is because that country has done a better job of forging industry-government partnerships focused on the future role of manufacturing.

“The German manufacturing [sector] is the most automated in the world, due to its high hourly labor costs,” says Assens. “Industry 4.0 is a technology- and information-driven approach that can only be built in an environment that is already highly automated.”

“In Europe, Industry 4.0 started in the public sector and was later adopted and implemented by the private sector,” notes PwC’s Krishnamurthy. “The opposite is true in the United States, where the IIoT movement is being primarily driven by private enterprise.

“Governments across Europe are actively promoting the concept of Industry 4.0 by holding large-scale conferences to drive collaboration between companies to develop common practices,” adds Krishnamurthy. “This creates an environment that is much more conducive to industrial innovation than regions that are either less developed or more consumer-driven.”

According to a recent study conducted by the Boston Consulting Group Inc., more German manufacturers have implemented Industry 4.0 initiatives than their counterparts in the United States.

German companies also appear to be better prepared to adopt Industry 4.0. Almost one-half (47 percent) of German manufacturers have developed their first full concepts, while only 18 percent of respondents say that their company is not yet prepared to introduce Industry 4.0 technologies. In sharp contrast, just 29 percent of U.S. manufacturers have developed their first initiatives, and 41 percent claim that their company is not yet prepared.

One textbook example of Industry 4.0 in action is Bosch Rexroth’s hydraulic valve plant in Homborg, Germany. By harnessing the power of “flexible mass production,” the facility can economically assemble a wide variety of customized products down to batch sizes of one. Cutting-edge technology reduces throughput time and enables optimum use of resources.

The flexible factory uses intelligent tool carriers equipped with RFID tags to detect the required product variant and communicate the necessary materials and processes to the line. Each workstation reads the tags and displays relevant information to operators on flat-panel screens.

The nine intelligent stations on the assembly line recognize how the finished product has to be assembled and, accordingly, which operational steps are necessary. Displays show operators  the corresponding work instructions for the version that is to be processed.

Automation component supplier Festo Group and a coalition of German tech firms are working together to develop new technologies that will enable manufacturing equipment to network with one another in an intelligent way, configure themselves with minimal effort, and independently meet the varying requirements of production.

The first fruits of that project, dubbed the Open Engineering Platform for Autonomous Mechatronic Automation Components, were introduced earlier this year at the Hannover manufacturing show in Germany. Festo displayed a prototype stopper module for an assembly conveyor.

The module incorporates all the functionality required for stopping workpiece carriers on a conveyor—functionality that resides today in individual components and systems, including a PLC, sensors, actuators, RFID technology and communication functions within an ERP or MES application.

Festo also operates a state-of-the-art valve assembly plant in Scharnhausen, Germany. Employees interact in close proximity to flexible robots that handle assembly tasks that are ergonomically disadvantageous.

Another factory that’s a showcase for Industry 4.0 is Siemens’ electronics plant in Amberg, Germany, which produces programmable logic controllers and other devices. Products communicate with machines and all processes are optimized for IT control, resulting in a minimal failure rate.

Although the facility is highly automated, its outward appearance has changed little since it opened in 1989. The plant has increased production eightfold without expanding the production area, and with hardly any change in the number of employees.

Machines and computers handle 75 percent of the value chain autonomously. People are responsible for the remaining quarter of the work. The only time a human hand touches the basic component—an unpopulated printed circuit board—is at the start of production when an employee places it on the assembly line. From that moment, everything is machine controlled.

In the United States, General Electric is waving the Industry 4.0 flag with its “brilliant factory” initiative. Earlier this year, GE Grid Solutions opened a plant in Clearwater, FL, that produces capacitors. The assembly line is connected to the IIOT and covered with sensors that constantly transmit information about dust levels, humidity, temperature and other factors onto the cloud for analysis.

Faurecia, a Tier One auto parts supplier, recently opened a new emission control systems plant in Columbus, IN, that will serve as an Industry 4.0 benchmark for the company’s other facilities around the world. The $64 million factory will constantly capture and analyze data on the plant floor to predict and prevent equipment failures, correct inefficiencies and increase productivity. Automated tracking of components via RFID tags will simplify logistics and enable real-time management of inventory flows and quality.

Boeing is deploying smart glass technology to assemble wiring harnesses for its commercial aircraft. Until recently, engineers relied on paper printouts to track the production process, which involves more than 130 miles of electrical wiring per aircraft.

Using Skylight software from APX Labs Inc., Boeing connects workers with the company’s information repositories to access critical information, reference images and instructional videos without stopping their flow of work. If an error occurs, assemblers are able to instantly call in an expert from wherever they are on the floor, or from another site globally, to provide live video functionality.

“This enables fast, efficient support and guidance while they are completing repairs,” says Aaron Tate, vice president of customer solutions at APX Labs. “The implementation of Skylight into Boeing’s complex assembly has driven 25 percent improvement in worker productivity, and more importantly, reduced errors to zero. 

“Boeing can actively reallocate engineers to address bottlenecks, increasing total throughput time,” adds Tate. “And, from a quality perspective, the company is also now able to deliver a more precise execution of tasks.”