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Why Industry 4.0 Is The Next Revolution In Business
By investing in technology that better connects people, systems and machines, manufacturers can become more efficient, agile and collaborative than ever before. That’s the power I see in Industry 4.0. Through the combination of technologies like AI, IoT and robotics, manufacturers can craft new, more productive, and less wasteful business models.
My team and I are excited about Industry 4.0 because it represents the next great step forward for businesses. Industry 4.0 is about harnessing cutting-edge technologies and bringing them to the production line and factory floor of old-school manufacturers.
As an entrepreneur and the co-founder of an AI and robotic solutions company focused on Industry 4.0, the aspect of Industry 4.0 that most appeals to me is the fact that it could allow leaders to create a new ecosystem of industry partnerships.
For example, enterprise resource planning (ERP) companies like SAP or Oracle NetSuite may be called upon to provide the operating systems for Industry 4.0. Automation companies will step in to serve as the brains for the smart factory. And the manufacturers themselves will, of necessity, offer up their production lines as a test bed for this emerging set of technologies.
I expect Industry 4.0 to be accountable for the rapid evolution of a new ecosystem in which partners, including software vendors, robotics suppliers and end customers, will all come together to create amazing use cases and definitive standards. For example, companies could use sensor technology to monitor the robots and machines on the production line, which could increase production while reducing errors. Also, in the case of connected devices, technology can enable real-time communication for better management of processes, such as the ability to see the overall health of the process from one dashboard, which enables workers to better manage priorities and reduce unnecessary line stoppages. Then through data analytics, leaders can find areas for improvement in quality and performance.
Of course, there is one large unanswered question when it comes to Industry 4.0: Will it destroy existing jobs, or will it create new ones? And if Industry 4.0 dramatically improves quality assurance via technology, what will happen to those employees?
To arrive at an answer, we can run a historical review of the industrial landscape to see what happened when major disruptions occurred in the past. Here’s an example. Recall that, when the internet emerged and everyone started to use email, some people were concerned that most paper companies would go out of business and bring unemployment to communities around the world.
But that didn’t happen. A 2016 study published in the Journal of Forestry showed that internet adoption impacted the worldwide market for printing and writing paper in a much different way. The study found that the internet did marginally reduce paper use in the U.S., but that it actually increased the consumption of paper products in Africa and Latin America.
The reality I've seen is that, historically, industrial revolutions and technological transformations often bring a demand for more, not fewer, workers. From the steam engine to electricity in the early 20th century and automation in the 1970s and ’80s, industrial advancements have usually caused a demand for new skills and the creation of new jobs.
So then it’s no surprise that a BCG study of the German manufacturing market found manufacturers that adopt Industry 4.0 will actually expand their industrial workforces because they’ll be more competitive in the market and will experience increased productivity. It found that greater use of robotics and computerization will indeed reduce the number of assembly jobs, but that these losses will be offset by an increase in demand for skilled workers in IT, analytics and other growth areas.
There are some challenges and downsides to Industry 4.0 that business development leaders specifically will have to face. These include concerns about IoT security, onboarding and education of workers new to Industry 4.0, and the need for reliability and stability required for M2M communication.
To begin with, it’s critical to plan ahead. Oftentimes, this means that you'll need to conduct the research necessary to gain management support by showcasing the benefits -- such as greater efficiency and competitive advantage -- that can offset and outweigh the concerns and challenges associated with Industry 4.0 adoption. It’s also key to plan ahead with your IT department to determine how business operations and IT will integrate once Industry 4.0 capabilities are put in place.
Of course, a little advanced planning can lead to big benefits. As Industry 4.0 continues to become a reality, business development leaders and entrepreneurs should take heed. Advancements in AI and robotics are creating many opportunities in this space, and it would be wise to seek out partnerships with companies in this arena that align with your business objectives. By aligning with the brightest technological minds in AI, robotics, mathematics and engineering, young business owners can capitalize on the burgeoning Industry 4.0 component markets. According to KPMG, they could reach $4.4 trillion in value by 2020.
So, how can you get started? My advice is that it’s OK to start small on a project basis. Find a particular use case that can benefit your business, whether it’s implementing an automated forklift or incorporating a smart robot parts checker, and use this opportunity to hone your process. Take the lessons you learn from your first Industry 4.0 implementation, and scale up from that point with your broader end-game strategy in mind. The good news is the majority of Industry 4.0 technology is built to be both smart and flexible in order to help you scale it to your operational needs.
I expect that companies that embrace Industry 4.0 will not only enjoy the rewards of greater productivity, rapid innovation and reduced costs, but that they’ll also benefit from more engaged and empowered employees. At the same time, Industry 4.0 could bring societal advantages, including employment gains, waste reduction and perhaps even environmental sustainability. And that’s an industrial revolution we can all look forward to.