Industry 4.0 - Key drivers and challenges

Recently, a representative of a multi-national company called me to get advice on Industry 4.0. This leader was very concerned and yes, he should be.

Industry 4.0 will drive a major change across the industries. The concept of Industry 4.0 is fairly easy understood, however the implications are vast and complexities unprecedented:

• Industry 4.0 will offer consistent digitization and linking all productive units across the industry.
• IT systems will be built around machines, storage systems and supplies and linked up as cyber-physical systems (CPS). They will be connected to all processes, subsystems, internal and external objects, supplier and customer networks using defined standards.
• Machines and production processes can be flexibly changed at short notice and downtime
• Smart robots are increasingly replacing humans. Robots and people will increasingly jointly work on tasks. There will be a significant cut on current human work force; requiring massive changes in roles, job descriptions and continuous learning.
• Machines, products and materials will communicate with each other through internet of things.
• Big data and analytics will manage the vast complexity. It will drive efficiency and cost minimizations increasingly automatically and in real-time.
• Virtualization of plants, production lines and processes allows for design, simulation, verification and fast implementation
• Cyber security will become a key challenge for companies.
• 3D printing will disrupt current supply chain models and supplier relationships.
• Smart materials will enable new product developments, sourcing and recycling streams.
• Supply chains will become four dimensional, meaning the arrangement of players, kind and depths of engagement will change constantly throughout short intervals. First, by day, later by hour or minute.
• Autonomous vehicle will achieve increased security, flow optimization, lower costs and predictability.
• Industries will become fluid and intertwined. The definition of industries may cease over time. Instead people and organizations will rather refer to value streams.
• Collaborations and Outsourcing will become the rails of business. Companies will become orchestrators. Success will depend on ultimate orchestration skills.
• Insight, Innovation, knowledge and relationships will become the currency of the digital age.

Companies need to get ready. Industry 4.0 brings many advantages and opportunities – for the own company and its competition. New companies and groups will merge and become leaders in the industry, while other well established organization may fade, be bought or die.

Adopting Industry 4.0 thinking and implementing its concepts will require changes in company culture, strategy, business modeling, processes, technology management, innovation… Skillful leveraging existing strengths and decisively overhauling/ improving other parts call for solid transformation and change management.

Industry 4.0 requires lateral thinkers. Only thinking end-to-end across value and supply chains companies can really identify and profit from improvement potentials. Industry 4.0 calls for orchestrators that put together the puzzles pieces of the big picture that few people see.

If you have a challenge related to Industry 4.0 in your company or client, share those with me. Together we can brainstorm on solutions.

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