'Digital' Leading The Way For Industry 4.0 & Beyond

Ramya Kannan, Vice President  Delivery, UST Global Holding an MBA Finance & Marketing from the University of Madras, Ramya is also a Research Scholar at IIT Madras and specializes in niche Banking & Finance areas such as Commercial Mortgage, Residential Mortgage, Equity Research, F&A, Document Management, and many others.

From the introduction of machines in the First Industrial Revolution to assembly line manufacturing in the Second Industrial Revolution introduction of Computers and technology in the Third Industrial Revolution, we have come a long way in manufacturing and technology, and are now in the midst of a massive shift in the form of the Fourth Industrial Revolution or Industry 4.0. When we look around, we see our lives filled with smartphones, smart cars smart fridges and even smart homes. The age of Industry 4.0 has dawned and we need to be ready to run with it.

A PwC 2016 Global Industry 4.0 survey of over 2000 respondents across 26 countries and nine industries revealed that 72 percent of operations will be digitized by 2020 compared to the 33 percent today. The world’s leading industrial and manufacturing companies are focused on building a strong digital enterprise by developing a digital product and service portfolio. Digital technologies enable shorter operational lead times higher asset and resource utilization and advanced product quality.

I believe the turning point for this evolution was the Information Age which has accelerated advancements and innovation in all sectors. The increasing need for cost-effective high quality products and services has catalyzed Industry 4.0. Here is a view of how we see a shift in priorities of manufacturing companies based on evolving imperatives in the ecosystem.

Every industry, including manufacturing, is moving towards a subscription based economy, shifting from a services approach to a product and platform based approach. Manufacturing as a Service, Innovation as a Service, and Infrastructure as a Service are some examples. Manufacturing companies are investing significantly in Industry 4.0 capabilities to help them be more competitive and gain speed to market. This requires a fast pace of change in the core areas of the business. This is a real case of first mover advantage, which may be sustainable as long as the first mover keeps innovating by design. Big data, robotics, augmented reality, virtual reality, 3D printing, Internet of Things, mobility, sensors and automation are the most prevalent and vital levers of change for convergence of connected workers, connected machines, smart factories and so on.

A key component of Industry 4.0 is Data. The ability to get meaningful
insights into production planning, scheduling, identification of defects and prevention of failures in machinery and processes is dependent on our ability to analyze the data collected by intelligent & connected machines and draw timely, accurate and proactive inputs. Processes will evolve as machines become capable of analyzing data, communicating with each other and with humans seamlessly. Engineering has to evolve to allow such interactions between man and machine enable autonomous as well as assisted manufacturing, and build self monitoring systems to bring efficiencies into monitoring and maintenance.

With increase in human-machine and machine-to-machine communication, data captured & analyzed, IT security and governance also need to get more creative, vigilant and flexible to meet the changing needs of business

Industrial IoT(IIoT)and mobility deserve center stage in the Industry 4.0 world. We are surrounded by consumer IoT devices like smartwatches that track our vitals and monitor activity, smart TVs that record our favorite programs, smart ovens that know when dinner needs to be cooked and smart refrigerators that tell us we are out of eggs. Industrial IoT is quite different. If our fridge doesn’t tell us we don’t have eggs, it will not bring our life to a standstill. But devices like wind turbines, propellers components at power plants need to work relentlessly else the impact will be far reaching. If preventive maintenance or safety monitoring devices on machinery fail, the impact to people and businesses is tremendous. With mobile communication at the center of IIoT, the advent of 5G is positive news. Access to higher speed capacity and low latency will power connected workers & connected devices and provide an accelerated impetus to Industry 4.0.

Where do we really apply all these technologies? Amazon and Alibaba have deployed robots in their warehouses to automate material movement, stocking and shipping. Supply chain optimization is an area that has huge potential for application of these technologies to get greater visibility, control and enable organizations to improve speed and quality of delivery. RFID IIoT and communications can be effectively used in preventive and predictive maintenance to ensure problems in machinery and equipment are detected and resolved before they occur. The potential to reduce cost of routine maintenance and increase asset life by performing replacements and maintenance just-in-time can result in huge direct and opportunity savings for the business.Asset management, tracking and optimization can be digitized and can impact inventory management costs & practices significantly, and prevent losses & theft, especially in after-market sales scenarios.

The competitive nature of business across sectors, need for digitization to manage speed, accuracy and quality of delivery, need for visibility across product & service value chains, demands on customer experience & satisfaction and desire for consistency & flexibility in business models necessitates transformation along the lines of Industry 4.0. In today’s disruptive world, as financial services and healthcare companies compete against Amazon and Google, differentiation in business lines are also getting cloudy. Digital shift is needed to stay competitive. Other benefits of change include seamless functioning between departments and functions, the opportunity to address issues before they occur and the ability to boost growth at the right costs and scale.

Industry 4.0 will not only impact manufacturing, but will have cascading effects on productivity business models, IT security & governance, sales & marketing, and on people and related people practices such as hiring, training, skill development and managing productivity. As human machine interaction increases and delineation between what human workers do vs. what machines are expected to deliver gets fuzzy, human resources practices need a shift in perspective, policies and practices in future. With increase in human machine and machine to machine communication, data captured & analyzed IT security and governance also need to get more creative, vigilant and flexible to meet the changing needs of business.