What you need to know about Industry 4.0

Industry 4.0

The idea of Industry 4.0 has been hovering over the Australian manufacturing industry for a few years now, but what does it mean for manufacturers and why should you take notice? Here, we answer some common questions about Industry 4.0.  

It’s a term that makes some manufacturers shudder with fear and others with anticipation. But there’s no denying that “Industry 4.0” is a concept that today’s Australian manufacturers can’t afford to ignore. Industry 4.0, also known as the “fourth industrial revolution”, refers to a world in which machines interact and respond intelligently to their surrounding physical environment. Moving forward from the first three industrial phases of mechanisation, electrical and computerisation, Industry 4.0 brings together the Internet of Things (IoT), artificial intelligence and data science in a digitalisation of industry. (I’ve talked before about the IoT and its role as a disruptive innovation ready to rock your supply chain.)

Initially dismissed as a trend, Industry 4.0 is something that’s happening now. Germany, especially, is on the front foot as an early adopter, along with the USA. Now it’s time for Australia to catch up. But there are still Australian manufacturers who are in the dark about what Industry 4.0 means for them, let alone are ready to take action.

But before we look at what Industry 4.0 means for Australian manufacturers, here’s another thought about automation… 

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How does Industry 4.0 makes manufacturing more efficient?

Efficiency is often cited as the key advantage of this new generation of manufacturing. One reason for this is Product Lifecycle Management (PLM), which can improve lead times and the manufacturing process. For example, in simulation, manufacturers can create a virtual image of the product (“digital twin”) and use this to insert and test different designs of individual components.

Because Industry 4.0 puts the real value in the design, engineering and process expertise, the cost of labour becomes a smaller part of the equation. In fact, as part of Industry 4.0, many traditional roles can be automated using more intelligent robots. Good news for companies who have struggled to compete against cheap labour overseas. It can even help manufacturers meet the ever-growing pressure of lower prices. (We’ve also previously talked about how next-generation robots are transforming manufacturing and the increasing uses of robotics on the factory floor.)

What about the drawbacks to Industry 4.0, such as job losses?

As with previous industrial revolutions, Industry 4.0 has ignited a fear of job losses in many supply-chain industries. Some experts go deeper and point to a risk of inequality developing in society — those providing purely labour will become dispensable, while those who provide intellectual and physical capital (i.e. investors and innovators) are the biggest beneficiaries.

At a practical level, Industry 4.0 also presents a cost challenge to manufacturers. It’s not cheap to invest heavily in solutions that will digitalise your entire business. According to Boston Consulting Group in a survey of over 600 German and American manufacturing firms, investment levels were estimated at between 7% to 9% of revenue.

What are “batches of one”?

Industry 4.0 is about mass customisation rather than mass production. Rather than building the same thing over and over again, manufacturers can use data to customise products and make batches of one. See how the innovation of “distributed manufacturing” leads to customisation close to the consumer.)

One example is Mix My Muesli, Australia’s first custom-mixed muesli. Customers order their favourite combination of muesli mix via the website, which creates a “mix ID”. This is printed onto a label on the packaging tube, and then tells the machines which ingredients to put into the packaging.

How can Australian manufacturers tap into the potential of Industry 4.0?

Australia cannot afford to rest on its laurels. However, it’s important to realise that Industry 4.0 is something that will transform your entire business — not just pockets of manufacturing and technology. Obviously, this requires significant investment; for example, German industry is set to invest EU40 billion annually (around A$58.8 billion) in Industry 4.0 applications from now until 2020. As a result, more than 80% of companies in Germany will have digitalised their value chains within five years.

Manufacturers of all sizes need to be paying attention to competitors at home and abroad. What technologies are they using? What data should you capture and how? What can you do with it? Look for a technology partner who can help from the start.

What skills do manufacturers need to implement Industry 4.0?

Industry 4.0 offers many competitive advantages for manufacturers if they have the right skillset. The good news is that younger generations entering the workforce already have the required digitalisation skills; it’s typically older workers who need to up-skill and add digital skills to their existing toolset and industrial knowledge.

Another key aspect of Industry 4.0 is “big data”. By delving into data and using it to better understand customer needs, companies can create added value in the manufacturing process. Data insights can also be used to reduce unplanned downtime and enhance process efficiencies. Therefore, manufacturers need employees with skills in data science and analytics or invest in solutions such as Larry, the Digital Analyst.

But wait, what about Industry 5.0?

Just as Australian manufacturers are grappling with Industry 4.0, the next industrial revolution is already poking its head around the corner. Dubbed “Industry 5.0”, the latest movement is about combining robotics and automated machinery with the human touch — in other words, collaboration.

This has evolved naturally from the demand for “one-off” products. Robots are excellent at manufacturing standard products with unparalleled efficiency, but individualisation requires a “special something” that can only be provided by humans. The result is a demand for collaborative robots (or “cobots”) that can work in side-by-side with humans on the factory floor. In this way, robots don’t replace the human workforce, but enhance it. By taking on strenuous and even dangerous tasks, robots give human employees the freedom to add value in other, more creative, ways. (We’ve previously discussed such collaboration here.)

Final thoughts

The bottom line is that, whether we’re talking about Industry 4.0 or Industry 5.0, Australian manufacturers cannot afford to sit still. Staying competitive requires ongoing flexibility around new technology and processes, and a culture of continuous improvement. The world is changing rapidly and you need to be ready to embrace the potential. Let’s face it, Industry 6.0 could be just around the corner…

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Image credit / kgtoh

Trent Munro

Trent Munro

Manager – Strategy & Business Development at Matthews Australasia
Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

by Trent Munro

Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

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