Industry 4.0

Industry 4.0
Accelerating Toward Industry 4.0

Lionel Albert,
Senior Director EMEA, Manufacturing and Supply Chain Planning at Oracle, @lionelalbert1


Automakers in the fast lane.

Lionel Albert

Lionel Albert, Senior Director EMEA, Manufacturing and Supply Chain Planning at Oracle

Having explained what Industry 4.0 means for the supply chain in a previous article Lionel Albert (Senior Director EMEA, Manufacturing and Supply Chain Planning) takes a look at some of the futuristic manufacturing techniques being adopted by some industries today and explains how they can be applied to other fields…

One of the most advanced industries is the automotive sector. Today’s vehicles almost bear a closer resemblance to computers than to their largely mechanical ancestors, and major manufacturers are highlighting their connected car credentials instead of 0-60 times and horsepower. As McKinsey & Co notes: “Today’s car has the computing power of 20 personal computers, features about 100 million lines of programming code, and processes up to 25 gigabytes of data an hour,” so it’s no surprise that some of the best examples of Industry 4.0 in action are found on the road.

 While the auto industry gives us some great examples today, I’m sure readers will be able to see how the practices and processes can be applied to their own companies and industries in the not too distant future.

As a highly automated and technology driven industry, it’s no surprise that automakers are early adopters of Industry 4.0 practices. The auto industry has a history of leading the way when it comes to implementing new technologies, and supply chain professionals from various sectors may remember following the auto industry’s adoption of Product Lifecycle Management technology with great interest before implementing it themselves.

While the auto industry gives us some great examples today, I’m sure readers will be able to see how the practices and processes can be applied to their own companies and industries in the not too distant future.

Start your engines…

Automakers already provide a personalized, ongoing service to their customers before a vehicle has even been purchased. Cars are now built to order, with buyers able to specify the interior, colour, engine size, features and technology they want before the car is put into production. That’s a far cry from Ford’s original Model T, which until 1927 was only available in one colour and with one type of engine.

Mass customization like this is a well-established part of the modern automotive supply chain, but even this can be improved by embracing certain Industry 4.0 approaches. 3D printing, for example, can be used to offer customers even more options as it allows specific parts to be produced quickly, easily and at low cost. Similarly, advanced analytics can help car makers determine the most popular combinations to inform future production runs.

By drawing information from online configuration tools and purchasing data, automakers can identify the most popular combinations, as well as the specific options customers are willing to pay a premium for. This level of insight allows a manufacturer to limit its option count and reduce both production costs and time-to-market.

The customer relationship changes gear

IoT wise, built-in sensors not only improve the overall driving experience through features like in-car Wi-Fi and GPS, they also perform a crucial role in the repair and maintenance of vehicles.

They can regularly transmit information on the status of components back to manufacturers, which means any issues can be pre-empted and addressed before they come to a head. To add to this, combining sensors with process automation makes it possible for spare parts to be ordered, manufactured (even 3D printed) and delivered seamlessly, quickly, and with little human intervention.

It’s not hard to imagine this application of IoT and automation extending into consumer goods, household appliances, and even manufacturing machinery itself, as well as to large scale construction and engineering projects.

 It should be clear by now that Industry 4.0 isn’t just a concept.

This brings us back to one of the fundamental characteristics of Industry 4.0 – a collective evolution from product-based to service-based organisations. The relationship with the customer no-longer stops at the point of sale and, crucially for supply chain managers, delivery to the buyer is no-longer the final step in the supply chain. It simply marks the beginning of a new service-based relationship.

What can we learn from this?

It should be clear by now that Industry 4.0 isn’t just a concept. In some industries, and in the auto industry in particular, the concepts of Industry 4.0 are being used to create value by both simplifying and reducing the costs of manufacturing, prototyping and developing products. They are also creating more long-term, high touch relationships with customers.

It’s important to recognize that the entire dynamic of the customer relationship is changing as companies move towards a service-based model. The modern customer relationship is built on the intelligent use of information and an ongoing commitment to ensuring the user has the best experience possible. Equally, while this ongoing exchange of information constantly optimizes the way companies interact with consumers, it also applies to business relationships. It’s easy to see how this infinite feedback loop can benefit the healthcare or engineering industries, for instance.

Perhaps most crucially, each of the different aspects that fit under the Industry 4.0 umbrella rely on a single asset that all businesses already have (albeit to varying degrees) – their data. Supply chain professionals will already be familiar with their bill of materials, but they must now understand their ‘bill of information’, which will be made up of data from smart sensors at every point along the supply chain.

Those supply chain professionals that give data the same attention as they’ve traditionally afforded to materials will not only unlock improved methods of production, but also identify new ways of working allowing them to deliver innovative services and take advantage of untapped distribution channels.

Those that do not give their data due reverence risk getting stuck in the slow lane, forced to watch the competition zoom by.