WHITEPAPER INDUSTRY 4.0

By August 25, 2021

by Andre Tello, Junior Associate and Yannick Schilly, President & CEO both at Altix Consulting Inc.

History and I4.0

The industrialization has played a major role to the quality of life available today. Since the 1700s humankind and corporations have been evolving and revolutionizing manufacturing in ways that have led industries, Engineers, and manufacturers with huge visions and expectations for the future.

Industry 1.0 was the beginning stage of the industrial revolution and introduced mechanical production facilities using water and steam power. Some examples of this mechanization of power include: The spinning wheel, the water wheel, and the steam engine.

Industry 3.0 introduced computer power to manufacturers which resulted in partial automation using programmable controls. With industry 3.0, robots are now able to perform sequences and processes with minimal human interaction.

Industry 4.0 is where it gets interesting and where manufacturers are aiming to go today. It grabs all computer technology, production systems, logistics, people, and components in the value process and connects them through a network so that they all communicate with each other. By fusing production with communication and information technology, manufacturers are able to create factories that are Connected, Autonomous, Flexible, Transparent, and Agile.

Industry 4.0 (I4.0 for short) is a concept from the German industry and is the next step to revolutionize the way industries produce and improve. I4.0 allows companies to pull real-time information from their entire system to be able to analyze data and come up with smarter solutions to optimize and automate their process. When well-adapted, I4.0 will allow continuous improvement processes and product development to optimize and correct themselves.

Benefits and I4.0 Importance

I4.0 brings endless possibilities and solutions to the table and will help companies reach their full potential. Altix sees and acknowledges all the benefits of this new industrial era and excels in transforming companies to achieve operational excellence.

Increase:

• Productivity

Allows companies to produce faster and a lot more quantity with less resources. Increasing productivity goes hand in hand with increasing profits and optimizing production.

• Efficiency

Boost capacity, reduce downtime, increase production speeds, mass customize, trace processes, speed up changeovers, and much more by implementing I4.0.

• Quality

Detect defects more rapidly and even before they occur using data and predictive analytics. I4.0 will also help to get to the root cause of quality issues sooner which will result in fewer defects and a better-quality product.

• Safety

Reduce the possibility of human error, which could result in serious injury, by automating processes. Safety is Altix’s main priority, and it should be everyone else’s as well.

• Sustainability

Upgrading systems and processes using industry 4.0 will result in a huge environmental sustainability impact. This reduction in the footprint of the environment comes as a result of reducing waste. I4.0 helps reduce waste in multiple ways like maximizing energy efficiency which will lower CO2 footprint and minimize the usage of water.

• Internal / External Satisfaction

I4.0 benefits both customer and worker satisfaction. Customers are more likely to receive a high-quality product at a lower price, while workers take bigger responsibilities, become more engaged, and gain new skills.

Decrease:

• Costs

Though achieving I4.0 involves heavy investments, ROI can be expected quickly through better throughput, lower operating costs, and reducing lead time. Automation and data analytics work together to decrease overall costs.

• Waste

I4.0 will help companies become Leaner by eliminating non-value-added activities and wastes much easier and quicker.

• Turnover Rate

A huge issue companies come across is a large turnover rate which causes a huge loss in time and money. I4.0 fixes this issue by utilizing full worker potential and keeping employees involved and satisfied with their work. I4.0 is a topic that is very interesting and unique which will attract new and better talent to companies.

Embracing I4.0 will also allow companies to have a huge competitive advantage, drive their growth tremendously, and build a culture and company with a safer, more collaborative team. There is simply not enough room on this paper to state all of the benefits and possibilities I4.0 is capable of producing.

The industry will keep evolving every day, the sky is the limit when it comes to where the industry could go. I4.0 has the potential to make anything from small processes to the full supply chain, quicker and more flexible. In fact, industries have already begun thinking further along in the future and topics like Industry 5.0 have emerged. This soon to be future includes humans and machines working side by side in self-managed supply chains and highly automated factories. The time has come for industries to think of the future and position themselves to be fully prepared for what is to come.

Challenges

Transitioning to I4.0 will not be easy; it is going to be full of obstacles and challenges. To lead a successful transition, industries must be prepared to face these challenges and be ready for any obstacle that may come in the way. Industries that try to transition without acknowledging these challenges will just be setting themselves up for failure. Below are areas that need to be addressed prior to beginning the I4.0 journey:

• Consciousness

The first challenge industries must overcome is for manufacturers to be aware of the endless possibilities made feasible by I4.0. Awareness is critical because the risks of not embracing I4.0 or possibly starting the journey too late are huge and potentially catastrophic. Though it is a lot to take in, companies like Altix who specialize in I4.0 can educate and raise awareness of potential industrialized improvements.

• Lean Six Sigma

An important steppingstone to I4.0 is a Lean factory. If lean principles are not present, companies will trip and not be successful in their transformation process. Step one would be applying Lean and Six Sigma tools to obtain a productive and waste-free mindset. Once achieved, the challenge is to mold Lean, Six Sigma, and I4.0 together into one to achieve operational perfection.

• People and Culture

I4.0’s main purpose is to connect everything and everyone. This could cause communication problems amongst processes or people. To overcome this challenge, companies must be able to incorporate I4.0 into their culture and make sure all employees have a good vision of what is to come. Management, stakeholders, and workers must all be excited and ready to adapt to this change to guarantee a smooth transition. They must also be ready to train people, not just in the change of culture, but also in new technology or positions that may evolve the implementation of I4.0. In general, it is critical that people adapt to digitalization and learn to work closely with more advanced technology.

• Every Company is Different

All industries, supply chain networks, companies, factories, processes, machines, and products are different and there is not just a single I4.0 solution. Companies must do their research or find the right partner to identify how I4.0 could be customized to meet their own unique needs.

• Digital Skills and Modernization

Transitioning over to I4.0 will require a good amount of modernization in IT and in machinery. This will require a great amount of investment in hardware, software, and training since all workers will have to be proficient in the new technology. Companies might also be faces with finding new talent with the right skills.

• Data

Data is one of the most valuable assets of a modernized company. Capturing tons of data will be critical in a successful I4.0 implementation, which could be challenging. Also, some I4.0 implementation projects might require companies to share data with third parties, which could result in resistance and challenges for companies.

• Cyber Security

One of the main challenges that companies are facing is a concern with cyber security since security threats have the capability of shutting down production for indefinite amounts of time. This concern is so large that it is keeping companies from embracing the future. It is well known that a plant shutdown could potentially leave businesses with millions of dollars in losses, so this concern is quite serious. IT will have to evolve and all IIoT systems must be well secured and ready for any potential breach.

Though I4.0 implementation comes with a few challenges, companies that fail to transition will result in them falling behind their competitors. If they do not want to be left behind and potentially eliminated, companies must adapt to innovation and transition to this new digital world as soon as possible.

Success

In the manufacturing business, failure is not an option. Yet pursuing I4.0 is not an easy task, so let’s narrow implementation down to 7 key success points that will help industries reach their full I4.0 potential.

1.Clear Vision

Establishing a clear vision is a major key to making sure everyone is onboard with what is to come. Applying I4.0 is quite complex, making sure managers, employees, and stakeholders have full transparency of the future changes and goals is critical and will help for a smooth transition.

2.Lean is Vital

Lean should no longer be an option for optimizing processes and removing waste. It is a critical aspect of I4.0 and hence should be treated as a requirement. Think of I4.0 as the coffee for Lean manufacturing, the possibilities of success, quality, efficiency, and profitability obtained from combining Lean and I4.0 are endless.

3.Data is Key

Data is a very important portion of smart manufacturing. Without the right collection of data, there would not be anything to analyze, hence making AI, machine learning, or networks impossible. Companies are currently obtaining data every day, but a lot of that data is not being utilized. I4.0 helps use all that data (more from new IIoT devices) to optimize production. The goal for I4.0 is to collect and utilize data from every process along the entire supply chain to connect everything and using it for predictive maintenance, energy management, production optimization, smart manufacturing, etc.

4.Company Maturity

A company cannot expect to transform into an I4.0 industry overnight. It is quite an extensive process and a major factor in being able to do that successfully is making sure the company is ready for it. Know where the company stands to be able to identify where improvements need to be made before transitioning. Does the company not have enough data? Do they not have enough technology? Is everyone ready for change? Do they have a solid and adaptive IT and engineering department? Is the company currently utilizing Lean and Six Sigma tools, and are they performing with excellence?

5.Motivated People

Perhaps the most important part of implementing I4.0 are the people involved. Management, Employees, and stakeholders must be excited about the opportunities I4.0 can offer and must be ready for all the changes that it brings.

6.Industry Benchmarking

Stay engaged in the industry community with other companies and/or consulting firms to stay up to date on the latest I4.0 trends. Teaming up with subject matter experts like Altix can help implement Industry 4.0 and any changes that may come with it.

7.Strategic Patience

Implementing I4.0 is a must, but companies must really take a good look at where they are, where they want to be, and how they want to get there. This will be an extensive process and there is no way around that. Taking the time to go through planning and implementation slowly while making sure to do it correctly the first time will guarantee a successful implementation project. This complex ideology is one that should not be rushed.

I4.0 in Practice

Just like every industrial revolution era before, I4.0 will transform how every industry sees and practices manufacturing. Today, companies from every field are implementing I4.0 in various creative ways. From warehouses tracking inventory and handling all supplies automatically to production lines using minimal human interaction to create consumer goods, technologies are being developed and utilized every day.

These technologies are growing and being implemented quickly which is causing the I4.0 market to skyrocket. Predictions indicate that by 2024, the I4.0 market will be valued at US$156.6 billion, that is over a 50% increase since 2019.

Industrial companies from all around the world are seeing the benefits and investing in digitally connected, smart factories. This investment is driving their productivity through the roof and putting them ahead of the competition.

Conclusion

Industry 4.0 is here to boost engineering and manufacturing to new levels. Though it comes with a good number of challenges, it is clear that the benefits far outweigh them. Lean targets like achieving True North, are more feasible now than ever.

Hop onboard to perfect processes, predict the future, empower workforce, and increase efficiency and profits. With a connected system the possibilities I4.0 offers are endless and companies cannot afford to not take advantage of this. Industries that take advantage of the I4.0 potential are on path for success, sustainable outcomes, and a significant competitive advantage.

It’s the future and it’s here, so embrace it and join the new digital world and get positioned for the new era of future industry advancements.

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ABOUT ANDRE TELLO: Andre is a Junior Associate Industrial and Systems Engineer for Altix Consulting who is passionate about Industry 4.0 and what the future of automation entails. With his B.S. in Systems Engineering and Green Belt in Lean Six Sigma, his interest lies in process improvement and smart manufacturing.

ABOUT YANNICK SCHILLY: For the past 25 years, Yannick has successfully developed and executed complex global expansion strategies throughout Germany, China and the U.S. for a German based global Mittelstand company renowned for its advanced manufacturing operations. He possesses a profound and unique knowledge of global and international business, industrial best practices and excellence in advanced manufacturing, industrial engineering, logistics and multi-national supply chain management. In his most recent role as Chief Operating Officer, Yannick established and managed regional production and logistic centers in China and North America for a leading German based, international industrial technology company.

ABOUT ALTIX: Altix is the middle-market international industrial champions’ management consulting partner, providing business strategy, technology and innovation, and operational excellence support, in the world of advanced manufacturing and international supply chain. www.altixconsulting.com