Industry 4.

0 And The Future Of

Supply Chains

Industrial Revolution in history class—how steam-powered machines

transformed manufacturing starting in the late 1700s. But the consensus
view is that there have been multiple industrial revolutions
since the Industrial Revolution. The second one (the late 1800s–early
1900s) saw the rise of mass production sparked by electrical power and
moving assembly lines. The third, which took off in the 1960s, has been
powered by computing and process automation.

Many analysts believe we’re now living through a fourth industrial

revolution, a.k.a. Industry 4.0. Some central themes are digitalization and
connectivity—capturing, sharing and applying data across the physical and
digital realms.

What technologies are driving Industry 4.0? Which will have the most
profound impact on organizations moving forward? According to
a survey conducted by Deloitte, here’s what business leaders think.

• Internet of Things: 72%

• Artificial intelligence: 68%

• Cloud infrastructure: 64%

• Big data/analytics: 54%

• Nano-technology: 44%

• Advanced robotics: / RPA 40%

• Sensors: 40%
• Blockchain: 17%

• 3-D printing: 10%

• Augmented reality: 9%

• Quantum computing: 7%

• Edge computing: 6%

The above rankings aside, these technologies aren’t in competition; they

work in concert. Things like IoT devices and sensors capture and share
data, which is stored and organized in the cloud, where analytics and AI can
be applied to improve business decisions. It’s all part of an interconnected,
self-optimizing ecosystem.

In manufacturing, everything begins with the supply chain, including the

pathway from Industry 3.0 to Industry 4.0. Getting started is a
collaborative effort. It requires supply chain partners to be committed to
capturing relevant data and sharing it with businesses. Not just month-end
reports but real-time data streams that can be integrated into your daily
workflows and systems.

A.I.-powered predictive and prescriptive analytics will play an increasingly

important role. The progression will go from “what is happening now” to
“what will happen next” and “what should happen next,” creating
autonomous reactions to rapidly adapt toward the desired future state.

What does “Industrial Supply 4.0” look like today? Here are some current
concepts and technologies.

Data Capture (IoT Connectivity)

• Mobile apps: Capturing and facing inventory-related data (product
details, locations, activities); providing data-guided replenishment
suggestions

• Automated supply: Using various technologies to monitor inventory,

control access and track how products are being used in the business

Data Analytics (Descriptive, Predictive and Prescriptive)

• Organizing captured data to visualize activities, patterns and the

current state

• Creating simulated scenarios to predict and prescribe future states

Systems Integration

• EDI integration: Automating the procure-to-pay (P2P) cycle; feeding

line-item details and usage data into the buyer enterprise resource planning
(ERP) system

• Integrating captured point-of-use data with supplier warehouse

systems and other upstream systems for a more proactive supply chain

• Integrating buyer-supplier demand forecasting systems to avoid

gaps and risks

The Next Step: Artificial Intelligence

In a world of spiraling complexity and risk—as big data grows ever bigger—
businesses are using AI to accelerate the path to insight and understanding.

In the context of supply chain, it means synthesizing vast datasets and

thousands of variables to predict demand, synchronize production, and
optimize decisions surrounding procurement and logistics. What’s the best
source of supply based on upstream visibility? What’s the fastest
transportation option based on available shipping lanes? The vision is that
AI can produce instant, accurate answers to questions like these and make
autonomous decisions that optimize supply chain performance.

Collaboration Is The Path Forward

Industry 4.0 is defined by technology, but the end goal is to improve human
activities (logistics, engineering, production, etc.) and ultimately to improve
the customer experience. It starts with relationships—a commitment from
all stakeholders to develop the programs, make sure they work together and
adapt to change.

A key step is moving beyond data segmentation (disconnected systems

among various suppliers and locations) to embrace data sharing across the
supply chain. In this environment, a competitive mindset with a vendor
base is a roadblock; collaboration is the path forward.

If you’re committed to Industry 4.0, you need to find a committed partner.

Look for organizations that are invested in technologies to capture and
share supply chain data with your business. Look for partners that are
adopting AI and establishing clean, comprehensive data streams needed to
make AI effective for the supply chain. Also, ensure that they are investing
in people to deploy, support and optimize these solutions to help your
business manage change and thrive in the fourth industrial revolution.
Industry 4.0 Technology: The key game
changer for Indian Manufacturing Sector
Industry 4.0 is gaining popularity due to rapid improvements made in the cyber-computing
capabilities in the last few decades. The gap between the virtual and the real world has
narrowed by advanced technologies like Artificial Intelligence (AI), Internet of Things (IoT)
and others so as to create an interoperable platform between Information Technology (IT)
and actual physical operations. The term Industry 4.0 refers to the leveraging of cyber
physical domains in association with latest technologies like AI, IoT, Cloud computing, AR,
3D printing etc. to enhance productivity. The Industry 4.0 is already influencing sectors like
manufacturing, supply chain management, construction, shipping etc. and shall impact all the
aspects of our day-to-day activities. It is truly considered to be a disruptive technology.

The first industrial revolution (popularly called Industry 1.0) commenced in the 18th century
with the use of steam generated power and mechanization of production. This was an
important transition from manual labour based industry to the use of steam powered engines
to increase human productivity. Textile industry was one of the early beneficiaries of this
mechanization, with the steam engine powered weaving looms replacing the traditional
handmade textile products for mass production.

A century later, the Second Industrial Revolution (Industry 2.0) began with advent of
electricity and the assembly line production using the conveyor belts. The tipping point for
the industry was when Henry Ford utilized the assembly line concept for mass production in
automobile manufacturing. Further, Industry 3.0 was marked with innovation in the
electronics world, when the memory-programmable controls and computers came into
existence in the later part of 20th Century. The digital process automation enabled working of
machines in a production process without human intervention. Use of robotics seen in
manufacturing is one pertinent example here.

The fourth industrial revolution, Industry 4.0 was triggered by the hi-tech innovations which
brought the cyber physical systems together i.e. smart machines capable of exchanging real
time information over the industrial internet of things (IIOT) for decision making process.
Industry 4.0 is the ambit of various modern technologies like Cloud Computing, IoT,
Artificial Intelligence, Big Data science, 3D printing, 5G, Drones, Communications etc., all
leveraged for the ability to enhance the productivity in the manufacturing processes. Today,
machine-machine real time communication is possible over and above the previous human-
machine interactions. The visualization and simulation techniques have seen a leap with
increase of processing power of the chips. Various complex, customizable and modular
products can be designed and directly communicated to the machines to follow. Thus, the
embedded systems, factories and workers connect over the IoT to work together in a cyber-
physical environment. As part of Industry 4.0, the robots when backed with AI and IoT are
more flexible, and can make decisions in a factory environment. We have Cobots i.e.
Collaborative Robots participating intrinsically with human activities, and their role is now
more than being stand-alone machines doing repetitive tasks.

AR (Augmented Reality) technology is a step ahead of the popular Virtual Reality (VR)
technique. It is a combination of both, the real world and the digital world brought together to
enhance its virtual world applicability. With tools like Google Glass, the information is
overlaid on the user’s field of view to allow him to gain more insight about an object they are
looking at (like technical parameters, tolerance limits etc.).

In the Industry 4.0 scheme, various cyber-physical systems operate together and make
corrective decisions on their own so as to enhance productivity. A timely alert for human
intervention is generated informing the predicted cause and likely maintenance required so as
to ensure an uninterrupted machine availability. The logic of distributed processing for
regular tasks with a centralized decision making using an analytics framework is extensively
utilized here. The smart sensor information emanating from the cyber-physical systems is
processed on the cloud servers. In the cloud servers, the AI analytics comprising
mathematical models run predictive algorithms to improve productivity and assists in guiding
the process of manufacturing. The implementation of Industry 4.0 requires not only a
horizontal factory-to-factory integration but a vertical Integration to connect the hierarchies
of a production line. Overall, the intelligence of the smart factory is achieved with the
convergence of technologies of information processing as part of a digital ecosystem.

Indian Perspective

In 2018, the World Economic Forum setup its Centre for the Fourth Industrial Revolution in
India to work in collaboration with the GoI. The National Institute for Transforming India
(NITI) Aayog is the designated nodal agency to interact with the World Economic Forum for
elaborating the new policy frameworks for emerging technologies. The GoI has already made
the enabling policy framework and set up incentives for infrastructure development on a PPP
(Public Private Partnership) model. Samarth Udyog Bharat 4.0 (Smart Advanced
Manufacturing and Rapid Transformation Hubs) under the Department of Heavy Industries
(Ministry of Heavy Industries & Public Enterprises) is the India’s initiative to push for
Industry 4.0 implementation with an aim to propagate technological solutions to Indian
manufacturing units by 2025 through steps like awareness programme, training, demo centers
etc. The industry, academia and international cooperation in the field of technologies related
to Industry 4.0 is the policy formulated by the government. India’s National Manufacturing
Policy (NMP) has been promulgated which aims at enhancing the share of manufacturing in
GDP to 25% and Industry 4.0 is the only way ahead to achieve this task.
The global impact of Industry 4.0 and
what it means to you

Industry 4.0 has been a major trend in the global manufacturing industry since
the early 2000s. The coronavirus crisis has also had a similar level of impact on
manufacturers across the world.

Considering how these two factors will influence the future of production lines worldwide is
just as important for design engineers and procurement managers as it is for business owners
and directors.

So, what are the current Industry 4.0 trends in global manufacturing and what impact has
coronavirus had on the progress of the fourth industrial revolution?

What are the current Industry 4.0 global trends?

A recent McKinsey & Company study on manufacturing and Industry 4.0 has examined the
impacts of coronavirus on the progress of digital transformation and smart manufacturing. As
well as noting that early adopters of Industry 4.0 are better placed to face the challenges of
coronavirus, the study gives four key areas they predict will be a focus for manufacturing
businesses in the years to come.

Increased digitisation

Specific challenges brought by coronavirus, such as worker shortages and the transparency of
the supply chain, have led to rapid digitisation by industry leaders. The study notes that 39%
of these businesses have built a control centre to increase their end-to-end supply chain
visibility. It also reports that around 25% are now focusing on increased automation on the
production line to help fill the gaps left by absent workers.

The ability of digital manufacturing technologies to shore up the production line and supply
chain has led most businesses to recognise their value. 93% are now planning to bring
Internet of Things (IoT) technologies into their supply chain and 90% are looking to invest in
digital talent.

Accelerating transformation

Many global businesses had started to introduce some Industry 4.0 technologies into their
production lines and processes prior to coronavirus. Yet the McKinsey study says that
‘acceleration’ will be the new buzzword within the global manufacturing market in the years
to come.

Prior to the outbreak, it was estimated that engineering 4.0 technologies would create up to
$3.7 trillion in value by 2025. Now, as 62% of manufacturers look to invest in making their
operations more efficient and secure, this figure has the potential to grow.

Creating a resilient supply chain

A report by the MPI Group said that half of the manufacturers surveyed are seeing the most
financial value in supply chain activities. Increasing the level of analytics and intelligence
within operations will enable manufacturers to improve their business planning and
scheduling capabilities.

Better data management and the availability of real-time data will give end-to-end visibility
of the supply chain to businesses and their customers, as well as enabling robust scenario
planning. This means that a manufacturing company can make data-based decisions and
enjoy continuous improvement.

Quick wins over big investments

Although coronavirus has made the need to invest in digital technologies clear, a reduction in
cashflow means they need to focus on making quick wins over big investments.

The study also reported a drop in the adoption of Industry 4.0 technologies, with robot sales
falling by 20% in China compared with last year. Now, rather than focusing on big capital
investments in technologies such as blockchain or advanced automation, manufacturers will
be looking to make quick improvements to their critical operations, such as data
infrastructures.

What does this mean for design engineers?

Industry 4.0 technologies have already had an impact on design engineers within leading
manufacturing businesses. For example, the introduction of additive manufacturing has
enabled them to increase the efficiency of the prototyping process.

However, the increase in digital data collection and advanced analytics will not just increase
efficiency, but enable design engineers to make informed decisions about product
development too.

As well as enabling better test and quality capabilities in the lab with advanced analytics,
increased visibility in the supply chain will enable manufacturers to predict their customers’
demand more accurately. This means that engineers will be able to start the development
process earlier, informed by the data that’s collected from customers at the other end of the
supply chain.

To some design engineers, these changes to processes will mean a shift in their job role to be
more data-focused. As such, manufacturers will have to invest in greater training for design
engineers so they can make the most of these new technologies and capabilities.
What does this mean for procurement managers?

The main benefit of these advancements for procurement managers is the increase in end-to-
end visibility of the supply chain. As manufacturers integrate ‘control towers’ to monitor
their processes and improve their cyber security, procurement managers will be able to have
almost complete transparency over how their products are created.

This means that manufacturers can share their product quality data with procurement
managers, so they can be assured that the items they’re buying are accurate. Plus,
procurement managers can share their own production schedules with original equipment
manufacturers so they can plan and schedule demand.

For procurement managers, this means not having to worry about ordering in advance, as
manufacturers will be able to produce and deliver products according to the shared schedule.
In addition, smart warehouses and logistics systems will provide live data at every stage of
the process. From the moment a product arrives in the warehouse, to when it’s delivered to
the customer, both procurement managers and manufacturers will be able to keep track of its
progress.

Introducing greater technologies and analytics into logistics systems will also help to
strengthen the supply chain so procurement managers can be reassured that their products
will always be delivered on time.

Staying on top of Industry 4.0 at Essentra Components

Prior to the arrival of coronavirus, Essentra Components had built a long-term Industry 4.0
strategy that aimed to make our operations fully-equipped and resilient.

As well as harnessing additive manufacturing within our design and prototyping process,
we’ve developed a legacy machine replacement strategy that is gradually introducing
Industry 4.0 ready equipment into the production line. We’re also working to increase our
analytics and information technologies so we can link up the supply chain between our
manufacturing and distribution processes seamlessly.

By collecting, analysing and using this information, we’re not only increasing the efficiency
of our production and distribution, but are able to make continuous improvements. Focusing
on the data and the insights we can gain, we can address specific challenges and adapt our
business planning to meet market demands.

By developing our Industry 4.0 strategy, we aim to future-proof our business and continue to
deliver a hassle-free service to our customers.