More on Industry 4.0 from The Boston Consulting Group

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The concept of Industry 4.0 is pretty new to me.  I haven’t heard the digital concepts of “the cloud” and “the internet of things” referred to as the next industrial revolution until recently. So I’ve been keeping an eye out for articles and references to it.

It seems like this latest industrial revolution won’t have the clarity of impact that the steam engine or electricity did.  But a lot of good thinkers about this kind of stuff, such as The Boston Consulting Group, are putting a lot of stock in this next big jump in industrial productivity.

BCG published a paper about this transformation in industrial production and has it available for free on their website. Here’s my summary of the paper.

The three biggest leaps in industrial production have come from the steam engine, electrification, and automation.   Right now, industrial production is in the midst of a fourth industrial revolution by using what BCG has identified as nine transformative technologies.

  1. Big Data and Analytics – a major buzzword today, “Big Data” is billed as the promise of using the data we collect to improve everything from city traffic to third world hunger problems. For manufacturing, Big Data can improve quality, reduce energy use, and optimize equipment service.
  2. Autonomous Robots – the end of humanity is often portrayed as the rise of robots who can think for themselves, so if those books and movies are right, then the end really is near! As robotic technology gets smarter and safer to implement alongside human workers, and as artificial intelligence let’s robots do and learn more, robots will help industrial production produce more faster and for less.
  3. Simulation – real world set-up and testing in manufacturing is costly and time-consuming. Using digital technology to simulate production processes will help reduce physical set ups and costly waste from testing.
  4. Horizontal and Vertical System Integration – this concept is really far from new. Business texts have emphasized the importance of “busting silos” for quite a while now. But, according to BCG, technology hasn’t yet allowed the likes of manufacturers to fully integrate departments or value chains. Recent advances in digital technology, however, will permit companies to integrate data from all sources and across all functions.
  5. Industrial Internet of Things – another popular buzzword, “The Internet of Things” has to do with, among thousands of other applications, things like internet connected thermostats in our homes. For manufacturers, this means machines, assembly parts, process flows, and more will be embedded with computing and connected with one another.
  6. Cybersecurity – and with all of this integration and connectivity, protecting data and systems will be more important every step of the way.  When our money was kept in bank vaults, all we had to worry about was a robber with a tommy gun and a quick get away car.  Now that our banking is done online with our computers, tablets, and smart phones, we have a world full of sophisticated hackers to worry about.  The same is  now true for industrial cybersecurity.
  7. The Cloud – the whopper of all buzzwords, “the cloud” is where digital data is now being stored. Rather than companies buying and setting up racks and racks of servers, computing and data storage can now be outsourced to service-providers who connect users with storage via the internet.  Google Docs and Google Drive are great examples. I store many personal pictures from vacations and family gatherings on Google Drive (the cloud) rather than on my computer’s hard drive. Manufacturers can use the cloud to outsource secondary company functions, integrate systems, and improve production systems.
  8. Additive Manufacturing – BCG’s brief explanation of this technology is less clear than the other nine. It seems additive manufacturing has to do with new technologies that allow a manufacturer to produce batches of small and complex components on site, rather than outsourcing the work. The example BCG uses is 3-d printing, which can allow a manufacturing to produce small batches of design they produced themselves, rather than outsourcing production of that piece.
  9. Augmented Reality – think 3-d goggles for training, or Google glasses displaying where to find a pick item in a warehouse. These “augmented realities” can integrate with real-time data systems to improve production efficiency and solve problems faster.

I think it will be hard to identify a defining moment in Industry 4.0 that marks the line between the old way things were done and the new.  Maybe the adoption of steam engine technology, electricity, and automation was less clear than they appear to have been today.  But this latest industrial revolution, as we can see from the broad list of nine major technologies above, doesn’t have a single driving force like the previous major changes in industrial productivity.

There certainly is an overarching theme of digital computing power and user-friendly systems. But we’ll need a better moniker for the history books than “Industry 4.0.”  Any suggestions?

“1831-View-Whitechapel-Road-steam-carriage-caricature”. Licensed under Public Domain via Wikimedia Commons –

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