What is Industry 4.0?

Industrial revolutions have impacted the economic and political fortunes of businesses, governments, and human society throughout history. The first industrial revolution started in late eighteenth-century Britain, when power from steam engines enabled the textile industry to move from hand production methods to machine-based production. It took nearly a century for the next industrial revolution to arrive, with the availability of railroad transportation, telegraph communications, and electricity. Only after World War II, with the invention of the transistor in the United States in 1947, did the third industrial revolution arrive, with digital computers leading to more advancements in transportation and communication technologies.

Industry 4.0 defined

Today we are living in the fourth industrial revolution, or Industry 4.0. The term originated from a high-tech strategy program of the German government in 2011, but did not become widespread until the World Economic Forum adopted it in 2016. Compared to its predecessors, this revolution is evolving at an exponential pace. Because of the speed, scope, and impact of Industry 4.0 there are implications, opportunities, and risks to businesses and the population that are brought about by this massive change.

Industry 4.0 relevance

Industry 4.0 has a significant impact for businesses due to the technology that is required to be operationally efficient and competitive, adapt to new customer consumption patterns, and the increased skill level requirements for workers.

According to McKinsey and the World Economic Forum, the technologies of Industry 4.0 will potentially deliver up to USD $3.7 trillion in value for the global economy by 2025, through new products and services. These technologies will enable the design, customization, manufacture, and delivery to consumers of goods and services at their desired time and preferred mode of consumption. Increased automation will require higher-level skills which will result in higher pay. However, lower-skilled workers may be displaced by machines, which will lead to labor problems and increased social tensions.

These technologies also increase the risk for bad actors to disrupt business. For example, in 2021 high-profile ransomware attacks on Colonial Pipeline Company and JBS Foods created supply shocks for gasoline and food supplies that impacted sectors of the United States population. So it’s no wonder that data security is a now a key concern to ensure safe and efficient commerce.

For government, mobile platforms and internet technology have already granted increased transparency, visibility, and instant communication with the general population. But traditional forms of government control can also be bypassed by these technologies as groups can self-organize and communicate outside of regular communication channels. Events and scenarios now develop at a speed that can elicit instant reactions from the population, requiring government leaders to be more agile in their decision- and policy-making processes.

Industry 4.0 technologies

New technologies are available to realize the fourth industrial revolution, and they can logically be grouped into the following: (a) the Internet of Things (b) on-demand computing (c) cognitive computing (d) cyber-physical systems and (e) data analytics.

The Internet of Things

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The Internet of Things or IoT, describes the physical objects that are embedded with sensors, software, and even processing units, and then connected to networks through wired or wireless communication technologies. By communicating and exchanging data with other objects or systems over the internet, new technologies are enabled. Smart home technology benefits consumers by continuously monitoring and controlling household devices and appliances. A digital twin, the digital representation of a physical object that is always updated with data from its physical counterpart, enables faster design prototyping and continuous monitoring of equipment performance for businesses.

On-demand computing

On-demand computing is required to reduce data latency between systems that need to interact and create a single digital thread to orchestrate business processes efficiently. Cloud computing is the most common example but a distributed form of computing, called edge computing, is vital for mission-critical systems to have enough computational power near the work being performed to achieve near-zero latency.

Cognitive computing

Cognitive computing includes artificial intelligence (AI), machine learning, and computer vision applications. It is computing that mimics human brain functions and helps improve decision-making. Fully autonomous vehicles have existed for years as prototypes, but we are starting to see increasing levels of autonomy available in our daily commuter vehicles, such as automated parallel parking systems. Equipment maintenance platforms with AI/machine learning capabilities apply data science algorithms and historical data to generate recommendations that optimize preventive maintenance intervals, thereby reducing costs.


Cyber-physical systems

Cyber-physical systems are mechanical systems that are controlled by computer-based algorithms. Robotics are now prevalent in modern manufacturing and logistics operations. Additive manufacturing, commonly known as 3D printing, allows for customization, rapid prototyping, and high-volume production of intricately shaped parts.

Data analytics

Data analytics is the transformation of raw data into actionable insights and trends. Large amounts of real-time data are generated by embedded sensors and connected equipment. These are best stored in a data lake, a storage architecture designed to store raw and structured data. Another data storage architecture called a data warehouse combines data from multiple sources, including the data lake, that enables data visualizations and analysis for better decision-making.

Industry 4.0 and manufacturing

The manufacturing sector has arguably been the arena most impacted by industrial revolutions. Now, new terminology has emerged, such as smart manufacturing and the smart factory. To avoid confusion, it helps to recognize that smart manufacturing is the umbrella term, referring to the efforts to modernize industrial practices through smarter equipment, facilities, products, data, and processes. The term includes the parallel concepts of Industry 4.0 and the smart factory. In smart factories, the production environment is run with minimal human intervention using new industrial manufacturing technologies, such as IoT, robotics, and additive manufacturing.

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Another source of confusion in implementing Industry 4.0 is the presence of too many technology choices. With the accelerated rate of change today, it is difficult for manufacturers to understand and recognize the business opportunities that are enabled by these technologies. It is important to invest in new technologies to disrupt a market, not just to protect one’s business from disruption. Unfortunately, we are trending in the opposite direction: 72% of manufacturing respondents in a study stated that they invest in new technologies to protect their business from disruption, compared with 28% that invest in new technologies to disrupt the market. (Source: Punit Renjen, “Success personified in the Fourth Industrial Revolution,” Deloitte Insights, January 19, 2019).

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Industry 4.0 and Oracle

One thing is clear: Industry 4.0 requires new software. From the local programs used to run sensors to manufacturing execution systems that monitor and coordinate resources across multiple production lines, all of these new technologies need a new kind of IT architecture. Integration with enterprise resource planning and other supply chain management software ensures product designs are manufactured methodically, using the right materials and resources across multiple factories, resulting in high-quality products and improved profit margins.

Oracle has the largest footprint of technology solutions that improve product innovation, enhance customer and field service, enable the smart factory, and provide visibility to the entire value chain. A connected digital thread feeds customer usage and feedback into the product lifecycle management (PLM) application to improve product quality and shorten product development cycles. Built-in sensors and blockchain technology enable visibility and control of goods and services beyond the four walls of the factory to the entire value chain. IoT production monitoring cloud software helps manufacturers predict maintenance requirements, reduce downtime, analyze quality issues, and manage operations at both the factory and enterprise level. These integrated, ready-to-deploy solutions provide a single source of truth, enable rapid implementations, and accelerate time to value.

Businesses and governments need to be aware and prepared for the massive changes being brought about by Industry 4.0. It’s important to embrace Industry 4.0 not only to mitigate risks, but for all the opportunities that this new revolution offers. Businesses that adopt Industry 4.0 can look forward to increased productivity, reduced waste, and the ability to create more sustainable production processes.