Making Sense of Industry 4.0

As we implement smart technologies in our factories and workplaces, connected machines will interact, visualize the entire value chain and make decisions autonomously. This revolution is expected to impact all disciplines, industries, and economies.

But perhaps it's necessary to refresh our minds of the 4 industry revolutions we've had so far.

The 1st revolution in the late 1700s related to the creation of steam power which led to the mechanisation of industry. The 2nd revolution was related to the advent of electrical energy and mass production. The 3rd revolution related to the birth of computer power and the digital industry.  

The 4th revolution relates to cognitive power and reshaping the way we do business moving forward. What is very different between the 4th revolution and the other three is that the 4th will have an impact beyond industry and will ultimately influence the way we live and create wealth.   

Klaus Schwab, the 'father' of Industry 4.0 argues that the 4th IR will change not only what we do but also who we are. It will affect our identities and all the issues associated with it. Our sense of privacy, our notions of ownership, our consumption patterns, the time we devote to work and leisure, and how we develop our careers, cultivate our skills, meet people, and nurture relationships. 

Industry 4.0 is driven by 9 core technologies that have reached varying levels of maturity over a period of some 30 years now. The costs of these technologies have also come down considerably over time.  Furthermore, various forms of data can now be accessed and managed by these technologies to inform better ways of doing things in the future. 

If properly understood and deployed under the right conditions. Industry 4.0 will offer up more opportunities than not. The 9 core technologies that make-up Industry 4.0 each offer the potential to reduce costs and improve efficiencies and revenues within one's businesses. Not all technologies would necessarily have the same impact in different businesses. Hence, the key is to develop a strategy to understand what technology/ies will work best for you and when or where to deploy. There is always a cost to implement technologies, and this needs to be evaluated against financial, social and environmental returns.  

Profit = sales less costs. Industry 4.0 can increase revenue streams by promoting the creation of new innovative products and services offerings but can also reduce costs and improve efficiencies.  This results in significant shifts in profitability. 

There is a belief that Industry 4.0 is reserved for sophisticated industries and markets, but this is simply not true. These technologies could be used to uplift impoverished regions via the application of smart technologies to mitigate failure, for example in farming and agro-processing. 

As the profile of customers and markets are evolving to that of a personalised and custom nature, so too do the industry 4.0 technologies assist in this process. 

The 2nd industrial revolution predominantly benefited large scale industry, by virtue of its scaling proposition. The 3rd revolution provided more opportunity for the medium and smaller industry sectors, also leading to growth in the services and knowledge fields. The 4th revolution will offer up far greater advantages and opportunities to the smaller and micro-business sectors due to the fundamental democratisation of industry, underpinned by these technologies.  

As organizations seek digital transformation, they should consider multiple questions to help narrow their choices: 

- What, precisely, they hope to transform? 

- Where to invest their resources? 

- Which advanced technologies can best serve their strategic needs?

We will further explore each technology over the next few weeks and then look at a strategy that could assist your organisation in developing a roadmap and implementation plan, as related to industry 4.0. 

Kindly note that Propella has a detailed methodology to assist your organisation in developing an Industry 4.0 strategy. Contact Grant@propellaincubator.co.za for more information.