Industry 4.0

Manufacturing

Industry 4.0 and the
Transformation of the
Supply Chain

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


The factory of the future will be unrecognizable from those of today; manufacturers must act now if they are to evolve in time

Lionel Albert

Lionel Albert, EMEA Manufacturing and Supply Chain Cloud Director at Oracle

This year’s World Economic Forum at Davos was centred on the theme of ‘Mastering the Fourth Industrial Revolution’. Also known as the Industry 4.0, the term refers to the way a range of new technologies, including cloud computing, robotics, the Internet of Things, automation, mobility and many, many more are changing the way companies manufacture and distribute new products. Under the influence of these technologies, the factories of the future will be almost unrecognizable from those of today; as well as, I am willing to wager, the products and services that result from the manufacturing process.

  In the near future, machines could be programmed to build bespoke products from scratch – products which meet exactly their specific needs.

We are quite often told that a product will be revolutionary, but in this case it is not mere hype: digitization is fundamentally changing the world around us and causing companies to look beyond just the products they make and explore the services and business models they can provide alongside them.

The factory of the future

Let’s take the concept of mass production as an example. In a world where everything is automated, and augmented by artificial intelligence, machine learning and real-time analytics, we are presented with an evolution of mass production; where goods are tailored to the individual at mass production prices. In the car industry for example, while some parts are common, a consumer can configure their vehicle outside and in; getting it delivered in exactly the same time as a standard model.

 Gone are the days when manufacturers simply made products; in the Fourth Industrial Revolution they must view themselves as product and service companies.

In the near future, machines could be programmed to build bespoke products from scratch – products which meet exactly their specific needs. Say a Manufacturing Director needs a very specific spare to repair his main production machine – he or she could simply click a button to instruct a machine to tailor the spare, which would be produced with greater precision than the original. This is not science fiction – the building blocks of this model all exist today.

As the above example shows, Industry 4.0 will completely change the nature of the manufacturing supply chain – from product design right through to customer delivery. We are only at the very beginning of the Fourth Industrial Revolution, and as it progresses we will see that, as in any revolution, there are winners and losers. For manufacturers wishing to be on the winner’s side of this equation, there are a number of steps they can take.

Manufacturers must become service providers

Firstly, manufacturers need to change the way they view themselves. Gone are the days when manufacturers simply made products; in the Fourth Industrial Revolution they must view themselves as product and service companies. This combination will enable businesses to offer more compelling propositions to their customers and open up new revenue streams. Such an approach is enabled through the technologies of Industry 4.0, such as the Internet of Things (IoT).

 Those companies that can create only products, but not the ecosystems around them, will be in trouble.

In IoT, products and other objects are connected to each other, to customers and to enterprises through communications chips. Meanwhile, sensors on the products gather data that can be used to improve later iterations of the product as well as form the basis of services. For example, in the past a phone manufacturer would simply make a phone and sell it. Now they make IoT-enabled phones and sell a range of services – movie, music and book subscriptions for example – which run on the device. All manufacturers in the future will need to create products that enable services. The more advanced these services are, the more willing will customers be to pay for them.

As a result, the focus of investment for manufacturers today needs to be on how they can digitize their products and business models, starting with the supply chain. This transformation encompasses a number of different elements; from enabling a single real-time view of product development and delivery right through to the integration of mechatronics and software into products, so that manufacturers can deliver services to their customers. After all, those companies that can create only products, but not the ecosystems around them, will be in trouble.


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