Industry 4.0

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How Industry 4.

0 technologies are changing manufacturing


Industry 4.0 is revolutionizing the way companies manufacture, improve and distribute their
products. Manufacturers are integrating new technologies, including Internet of Things (IoT), cloud
computing and analytics, and AI and machine learning into their production facilities and
throughout their operations.
These smart factories are equipped with advanced sensors, embedded software and robotics that
collect and analyze data and allow for better decision making. Even higher value is created when
data from production operations is combined with operational data from ERP, supply chain,
customer service and other enterprise systems to create whole new levels of visibility and insight
from previously siloed information.
This digital technologies lead to increased automation, predictive maintenance, self-optimization of
process improvements and, above all, a new level of efficiencies and responsiveness to customers
not previously possible.
Developing smart factories provides an incredible opportunity for the manufacturing industry to
enter the fourth industrial revolution. Analyzing the large amounts of big data collected from
sensors on the factory floor ensures real-time visibility of manufacturing assets and can provide
tools for performing predictive maintenance in order to minimize equipment downtime. 
Using high-tech IoT devices in smart factories leads to higher productivity and improved quality.
Replacing manual inspection business models with AI-powered visual insights reduces
manufacturing errors and saves money and time. With minimal investment, quality control
personnel can set up a smartphone connected to the cloud to monitor manufacturing processes from
virtually anywhere. By applying machine learning algorithms, manufacturers can detect errors
immediately, rather than at later stages when repair work is more expensive.  
Industry 4.0 concepts and technologies can be applied across all types of industrial companies,
including discrete and process manufacturing, as well as oil and gas, mining and other industrial
segments. 

From steam to sensor: historical context for Industry 4.0


First industrial revolution
Starting in the late 18th century in Britain, the first industrial revolution helped enable mass
production by using water and steam power instead of purely human and animal power. Finished
goods were built with machines rather than painstakingly produced by hand.
Second industrial revolution
A century later, the second industrial revolution introduced assembly lines and the use of oil, gas
and electric power. These new power sources, along with more advanced communications via
telephone and telegraph, brought mass production and some degree of automation to manufacturing
processes.
Third industrial revolution
The third industrial revolution, which began in the middle of the 20th century, added computers,
advanced telecommunications and data analysis to manufacturing processes. The digitization of
factories began by embedding programmable logic controllers (PLCs) into machinery to help
automate some processes and collect and share data.
Fourth industrial revolution
We are now in the fourth industrial revolution, also referred to as Industry 4.0. Characterized by
increasing automation and the employment of smart machines and smart factories, informed data
helps to produce goods more efficiently and productively across the value chain. Flexibility is
improved so that manufacturers can better meet customer demands using mass customization—
ultimately seeking to achieve efficiency with, in many cases, a lot size of one. By collecting more
data from the factory floor and combining that with other enterprise operational data, a smart
factory can achieve information transparency and better decisions.

What technologies are driving Industry 4.0?


Internet of Things (IoT)
The Internet of Things (IoT) is a key component of smart factories. Machines on the factory floor
are equipped with sensors that feature an IP address that allows the machines to connect with other
web-enabled devices. This mechanization and connectivity make it possible for large amounts of
valuable data to be collected, analyzed and exchanged.

Cloud computing
Cloud computing is a cornerstone of any Industry 4.0 strategy. Full realization of smart
manufacturing demands connectivity and integration of engineering, supply chain, production, sales
and distribution, and service. Cloud helps make that possible. In addition, the typically large amount
of data being stored and analyzed can be processed more efficiently and cost-effectively with cloud.
Cloud computing can also reduce startup costs for small- and medium-sized manufacturers who can
right-size their needs and scale as their business grows.

AI and machine learning


AI and machine learning allow manufacturing companies to take full advantage of the volume of
information generated not just on the factory floor, but across their business units, and even from
partners and third-party sources. AI and machine learning can create insights providing visibility,
predictability and automation of operations and business processes. For instance: Industrial
machines are prone to breaking down during the production process. Using data collected from
these assets can help businesses perform predictive maintenance based on machine learning
algorithms, resulting in more uptime and higher efficiency.

Edge computing
The demands of real-time production operations mean that some data analysis must be done at the
“edge”—that is, where the data is created. This minimizes latency time from when data is produced
to when a response is required. For instance, the detection of a safety or quality issue may require
near-real-time action with the equipment. The time needed to send data to the enterprise cloud and
then back to the factory floor may be too lengthy and depends on the reliability of the network.
Using edge computing also means that data stays near its source, reducing security risks.

Cybersecurity
Manufacturing companies have not always considered the importance of cybersecurity or cyber-
physical systems. However, the same connectivity of operational equipment in the factory or field
(OT) that enables more efficient manufacturing processes also exposes new entry paths for
malicious attacks and malware. When undergoing a digital transformation to Industry 4.0, it is
essential to consider a cybersecurity approach that encompasses IT and OT equipment.
Digital twin
The digital transformation offered by Industry 4.0 has allowed manufacturers to create digital twins
that are virtual replicas of processes, production lines, factories and supply chains. A digital twin is
created by pulling data from IoT sensors, devices, PLCs and other objects connected to the internet.
Manufacturers can use digital twins to help increase productivity, improve workflows and design
new products. By simulating a production process, for example, manufacturers can test changes to
the process to find ways to minimize downtime or improve capacity.

Characteristics of a smart factory


Data analysis for optimal decision making
Embedded sensors and interconnected machinery produce a significant amount of big data for
manufacturing companies. Data analytics can help manufacturers investigate historical trends,
identify patterns and make better decisions. Smart factories can also use data from other parts of the
organization and their extended ecosystem of suppliers and distributors to create deeper insights. By
looking at data from human resources, sales or warehousing, manufacturers can make production
decisions based on sales margins and personnel. A complete digital representation of operations can
be created as a "digital twin."
IT-OT integration
The smart factory’s network architecture depends on interconnectivity. Real-time data collected
from sensors, devices and machines on the factory floor can be consumed and used immediately by
other factory assets, as well as shared across other components in the enterprise software stack,
including enterprise resource planning (ERP) and other business management software.
Custom manufacturing
Smart factories can produce customized goods that meet individual customers’ needs more cost-
effectively. In fact, in many industry segments, manufacturers aspire to achieve a "lot size of one" in
an economical way. By using advanced simulation software applications, new materials and
technologies such as 3-D printing, manufacturers can easily create small batches of specialized
items for particular customers. Whereas the first industrial revolution was about mass production,
Industry 4.0 is about mass customization.
Supply chain
Industrial operations are dependent on a transparent, efficient supply chain, which must be
integrated with production operations as part of a robust Industry 4.0 strategy. This transforms the
way manufacturers resource their raw materials and deliver their finished products. By sharing
some production data with suppliers, manufacturers can better schedule deliveries. If, for example,
an assembly line is experiencing a disruption, deliveries can be rerouted or delayed in order to
reduce wasted time or cost. Additionally, by studying weather, transportation partner and retailer
data, companies can use predictive shipping to send finished goods at just the right time to meet
consumer demand. Blockchain is emerging as a key technology to enable transparency in supply
chains.
Industry 4.0 and hybrid multicloud IT architecture
Building a hybrid multicloud IT infrastructure is a key component in digital transformation for
manufacturers seeking to take advantage of Industry 4.0. Hybrid multicloud is when a company has
two or more public and private clouds to manage their computing workloads. This gives them the
ability to optimize their workloads across all their clouds, as some environments are better suited to
or more cost-effective for certain workloads. Manufacturers looking for digital transformation and a
secure, open environment can move their existing workloads from their on-premises location to the
best possible cloud environment. 

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