The challenges of Industry 4.0 are also its opportunities, writes John Pollaers, Chair of the Australian Advanced Manufacturing Council.
The ideas behind the Internet of Things (or “Cyber-Physical Systems”, “Machine-to-Machine Interoperability”, “Industry 4.0”, or several other names), are not particularly new. What is new is the convergence of existing technologies and corporate strategies.
The term Industrie 4.0 was first used in 2011 at the Hannover Fair. It is both a prediction of the ways things are headed, and an actuality. It was coined to describe a number of trends and technological developments that are causing a quantum leap in the way things will be made, and how products are being transformed by technology. The “leap” is the key concept at play here, as industrial revolutions 1 through 3 were all driven by a technological leap that changed the manufacturing landscape, and society along with it. To summarise:
- The 1st industrial revolution was about mechanisation.
- The 2nd revolution was driven by electrification.
- The 3rd centered around automation and IT integration – this transformation is still going on in many countries.
- The 4th industrial revolution is about the merging of the cyber and the physical worlds.
How will Industry 4.0 transform manufacturing?
The basic principle is that by connecting machines, work pieces and systems, businesses are creating intelligent networks along the entire value chain. This means greater flexibility – with information gathered in real time, and factories able to adapt more easily to changing requirements.
It enables customisation and servitisation of products; and a customer-specific production operation.
As factories, supply chains and products become networked, the lines between the physical and digital world will be increasingly blurred. Virtualisation enables the so-called Smart Factory by linking sensor data (from monitoring physical processes) with virtual plant models and simulation models.
There are many challenges ahead – and perhaps the most significant among them is developing global industry standards. The world’s two industrial powerhouses, Germany and the United States, recently came together to work collaboratively on aligning global standards and technologies. Australia’s own Prime Minister’s Industry 4.0 Taskforce is closely supporting that effort – aiming to ensure Australia is connected globally.
The flexibility tipping point
The future for advanced manufacturing is high value, high margin products – but this will require constant innovation and flexibility. The good news is that technological developments are beginning to enable that flexibility on the factory floor and throughout the entire manufacturing system. Some examples of flexibility include:
- Production becoming increasingly distributed.
- A greater reliance on smaller-scale manufacturing plants and micro-factories.
- The market becomes the world.
This flexibility will deliver two key advantages for Australia and other countries looking to scale up their manufacturing sectors:
- The first is a greater ability to co-locate research, design and manufacturing – accelerating the innovation process.
- The second is a bigger market – we are no longer constrained by the size of our domestic market.
Four ways businesses can step up to Industry 4.0
If industry is going to lead the way into the world of Industry 4.0, there are four key shifts in thinking that need to take place in leading organisations:
- Where once your organisation may have needed to reinvent itself every few decades, today, an onslaught of shocks – technological, cultural, economic, and regulatory – will force you to transform every few years.
- Five to ten years ago, your CEO might have become a business icon through a single transformation. The minimum requirement now is being able to execute multiple transformations.
- Success today means fostering a culture of continuous reinvention—reinvention in your business models, customer interactions, employee engagement, and the markets you serve.
- We need to fully appreciate the power of analytical systems, be able to establish employee familiarity and ensure organisations have the right talent to leverage technology opportunities.
The Australian Advanced Manufacturing Council is a CEO-led private sector initiative pursuing Australian success in advanced manufacturing. The AAMC brings together industry leadership to drive innovation success and resilience in the Australian economy.
AAMC Chairman John Pollaers will deliver a keynote speech at PIVOT: The Faculty’s 10th Annual Asia Pacific CPO Forum.