Industry 4.

0 and Its Effect on Business Industries

1.0 Introduction

Industry 4.0's phenomenon was first stated in Germany in 2011 as a proposition to develop a 
fresh notion of German economic policy based on high-tech strategies (Mosconi, 2015).
The idea initiated the  fourth  technological 
revolution, which is based on ideas and technique that include cyber-
physical systems, the Internet of  Things  (IoT) and the  Internet of Services (IoS) (Ning &
Liu, 2015). Premised on perpetual internet communication, it enables continuous interaction
and information exchange not only between humans (C2C) and humans and machines (C2M)
but also between machines themselves (Cooper & James, 2009).

It is important to stress that in most cases, the exchange of information will be between
machines themselves. Machines stream information through wireless sensors and send these
information to the intelligent service / product suppliers’ centers, where big quantities of
information are analysed. The aim of such automation is to adapt customer-oriented products
and services to improve value added for organisations and clients (Kagermann, 2015; Yu,
Subramanian, Ning, & Edwards, 2015).

Full automation and digitization procedures and the use of electronics and information technology
(IT)  in manufacturing and utilities in a personal setting will mark the era of the 
Fourth Industrial Revolution. The effects of developing techniques such as 3D printing, developing
internet sales facilities such as vehicle services, home medical examinations, ordering food online and so

on will have a major effect on changes in small and medium-sized enterprises (Sommer, 2015).

2.0 Impact of Industry 4.0

The new industrial revolution will have a powerful effect on the relationship between
business process and e-commerce as it shifts production from a centralized paradigm to a
decentralized one (Hofmann & Rüsch, 2017). This will require widespread adoption of smart
machinery and systems interconnection, not only at the same production site, but throughout
the organizational ecosystem as a whole. In business processes and how society interacts at a
worldwide level, a huge potential opens up for innovation.

Unlike our current era, where automated processes already provide real-time operational
information, the new industrial cycle will be characterized by a greater:
• Autonomy in the value chain links management,
• Intelligence in the activities or devices responsible for decision making,
• Integration involving all the external agents that interact in the value chain,
• Integration with all the payment services and business transactions, and
 Transparency from traceability and monitoring in production and logistic systems (Nagy,
Oláh, Erdei, Máté, & Popp, 2018).

Let's see a situation, taken from Schönthaler et al. (Schoenthaler, Augenstein, & Karle, 2015),
which is already occurring in part. Consider a company based on a cooperative business
process and integrated with the Internet of Things (IoT); has intelligent cyber-physical
systems (CPS) equipment interconnected with each other and with traditional IT systems and
integrated with IoT facilities. It  also  has  incorporated  communication  with all
stakeholders, distributors,
company partners, public entities, employers,  and logistics  systems  for  distribution  and 
transport ;  and 
this elevated level of inclusion allows and requires autonomous supply chain management.

For instance,  documents  produced  through  selling  activities enable real-time inventory

evaluation to trigger suppliers ' restocking of  components  and  equipment. Purchase orders,
invoicing and payments processes can be automated with smart contracts and certificates that
use blockchain technology, which has gained notoriety by underlying Bitcoin but is quite
useful as a tamper-proof distributed ledger that is easily available (Tasatanattakool &
Techapanupreeda, 2018).

Supported by an increasing amount of new techniques, this idea appears to be more flexible
and less costly than traditional enterprise information systems, such as Enterprise Resource
Planning (ERP) and Manufacturing Execution System (MES). However, SMEs may find
themselves unfit to satisfy these fresh possibilities in terms of their production planning and
control tasks (Moeuf, Pellerin, Lamouri, Tamayo-Giraldo, & Barbaray, 2018).
Consequently, advances
in digital transformation and increasing interconnectivity will bring fresh difficulties to comp
anies as  Industry 
4.0 will considerably alter the design, procedures,activities and services of products and man
ufacturing systems. Additionally, Industry 40 is  anticipated  to  have  further  impact  on 
leadership  and future employment, enabling the development of  new 
business models that will have a major impact on industry and markets, efficiently 
influencing  the  entire  product  lifecycle, offering  a  fresh way of generating and
doing business, enabling process  improvement  and  enhancing  the  competitiveness of the
company.

Industry 4.0 will lead to potential deep changes in several domains that go beyond the
industrial sector. Its impacts and influence can be categorized into six main areas: (1)
Industry, (2) Products and services, (3) Business models and market, (4) Economy, (5) Work
environment and (6) Skills development.

Industry is the segment that will suffer the most from Industry 4.0 effects. This new
industrial paradigm will introduce a fresh manufacturing vision, defined by decentralized and
digital production, in which the production components can regulate themselves
autonomously, initiate actions and react to changes in their surroundings (Maresova et al.,
2018). Additionally, the  evolving  paradigm  recommends  full 
integration of goods and processes, moving the manufacturing vision from  mass 
manufacturing to mass customization, resultingin a greater  level of complexity (Maresova et
al., 2018). Therefore, technological  innovations 
and the establishment of intelligent factories will deeply  affect the  manufacturing 
processesand activities, enabling for higher flexibility in operations and a more effective distr
ibution of resources. Industry 4.0 will have an important influence on industrial processes,
manufacturing systems and supply chains. This new paradigm is transforming the current
industrial landscape through three main points: (1) digitization of production, (2) automation
and (3) linking the manufacturing site in a comprehensive supply chain. In that way, Industry
4.0 consists in full network integration and real-time information exchange (Roblek,
Meško, & Krapež, 2016).
The essence  of  any  industrial  revolution  is  increasing  productivity. 
The fourth industrial revolution, however,  goes further  and  will  impact  the  entire  supply 
chain  from product development  and  engineering  processes  to outbound  logistics  in 
addition  to  enhancing  productivity.

Products and services are being highly influenced by this new industrial paradigm. In recent
years,  rapid  changes in  the economic landscape  and 
vibrant market conditions have led to enhanced demand for more complicated and smarter pr
oducts development (Roblek et al., 2016; Maresova et al., 2018). The products will become
more integrated and configurable, encouraging mass customisation to satisfy specific
customer needs (Hultink & Rijsdijk, 2009).
Industry 4.0 is  therefore  characterized  by  innovation 
and the introduction of new products and services as embedded systems capable of becoming 
responsive and interactive, managingand tracking their activity in real time, optimizing the en
tire value  chain and provide relevant data on their status throughout their lifecycle
(Kagermann, 2015).

Business models and market have altered quickly over the past few years and fresh creative
business models will emerge. The advent of new disruptive techniques in the framework of
Industry 4.0  has altered  the  manner  in  which  products 
and services are sold and supplied,affecting traditional companies and creating fresh business 
possibilities and models (Glova, Sabol, & Vajda, 2014).
As Industry 4.0 encourages integration between manufacturers and clients, enabling  closer 
communication  with  clients and adapting business models to market demands,
value chains are becoming more responsive (Nagy et al., 2018). Integration and complexity
of systems along with growing digitization of industrial manufacturing will  result  in  more 
complicated  and  digital  market  models  being   created,  improving 
competitiveness by removing obstacles between data and physical structures. Building good
digital infrastructure could help 80 per cent of SMEs move into the digital world. As an
example, Alibaba has more than 10 million SMEs, 600 million customers, and earned high
revenue in 2003 when it started the online shopping digital platform Taoboa, which initially
had no merchants and now has more than Walmart (Tsai, 2016).

Economy can be affected by the emergence of the new paradigm and the evolving
technological developments. The digitization made up of convergence between physical and
virtual worlds will have a prevalent effect in every economic sector (Kagermann, 2015).
Changes to the digital economy are helping SMEs buy and sell throughout the world. Many
of the SMEs that sell their products outside of China do not have physical locations, but, by
using big data, cloud computing and other new technologies, they can sell their products
globally.

Work environment is rapidly changing due to technological advances and Industry 4.0 is
transforming employment and abilities needed. The most important shift is the human-
machine interface  that  embraces  worker  interaction  and  a  set  of  fresh  ways 
of working 
together (Roblek et al., 2016). The amount of robots and intelligent machines is growing and
the physical and virtual worlds are merging, which means the present working environment is
undergoing a major transformation. The growing significance of human-machine interfaces
will foster interaction between both the manufacturing components and the necessary
communication between intelligent devices, smart products and employees, enhanced by the
vision of IoT and IoS that is enabled by cyber-physical systems. For this reason, ergonomic 
problems in the context of sector 4.0 should be taken into consideration and future systems
should concentrate on employees and their significance (Dombrowski & Wagner, 2014).
Integrating Industry 4.0  into  production  systems  and improving the application of new
techniques will affect job profiles as well as work management, organization and planning. In
this  context,  the  primary  challenge  is  to  prevent  what  is  known  as  technological 
unemployment,  redefine  existing  employment 
and take steps to adapt the workforce to the new employment that will be generated (Roblek
et al., 2016).

Skills development, which will lead to demographic and social modifications, is one of the

main factors for the effective adoption and execution of Industry 4.0 framework. The future
job vision will require different abilities  and  possibilities  need  to be created to acquire the
abilities needed by high-quality training (Maresova et al., 2018). This fresh industrial
paradigm
will have  a  huge  effect  on the labor  market  and  on 
professional positions, which will be essential to  ensuring  that 
more jobs are generated than those that will be lost. The fresh skills
needed must be included in education system, as interdisciplinary thinking will play a
significant part and outstanding social and technical abilities will be sought after (Magruk,
2016). Industry 4.0 will lead to enhanced task automation, meaning employees should be
ready for executing new duties. The same applies to engineering education, which has a great
capacity to train future experts  and  make  them  conscious of new technological trends and
possibilities, including the managers who should adopt their management strategy to meet
new
market demands (Erol, Jäger, Hold, Ott, & Sihn, 2016). Additionally, more and more skilled
employees in technological fields will be needed to meet the demands of Industry 4.0.

3.0 Conclusion

The Industry 4.0 transformation is defined by disruptive advances in technology that

eliminate
the limits between the virtual  and  physical  globe, 
uniting employees, intelligent machines, intelligent goods, machines, manufacturing systems 
and procedures. It is mainly influenced by two main drivers, however: Cyber-Physical
Systems and the Internet of Things and Services.
In order to attain greater process effectiveness and competitiveness, businesses moving
towards Industry 4.0 need to be conscious of every element that can be affected and what the
primary consequences are, but also what the innovation possibilities are. This new paradigm
holds an enormous potential for organizations and, besides industry transformation, it will
have impact in many other areas, such as, products and services, new business models and
market, economy, work environment and skills development.
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