Evolution of Industry 4.0: Smart Industry Insights

Industry 4.0: The advent of the Smart industry

What is the so-called Industry 4.0: Industry 4.0 factories have machines augmented with wireless connectivity and sensors, connected to a system that can visualize the entire production line and make decisions without human involvement. Industry 4.0 seeks to use these capabilities to add value to the customer in the form of customization and product/service bundles while increasing competitive advantage for the company.

4 technological disruptions are responsible for Industry 4.0:

  1. A rise in Data volumes
  2. Computational power and connectivity
  3. Emergence of analytics and business intelligence capabilities
  4. Improvements in transferring digital instructions to the physical world such as advanced robotics and 3D printing. Connecting the digital and physical worlds.

What the customer needs:

  • Shorter life cycles: customer preferences are changing with increasing speed
  • Increasingly customized products
  • Servitized products

It requires: Supply chains capable of adapting to changing products

How traditional factories try to meet condition:

  • Shorter production runs – expensive
  • Technology that has configuration variability capabilities – expensive
  • Increase product variety that increases stock levels and general complexity

When the customer needs it:

  • Shorter life cycles
  • Increased demand variability
  • Support services (maintenance, repair, and other) after the product is not being manufactured

It requires:

  • Need for shorter production runs
  • Shorter lead times (order to delivery)

How traditional factories try to meet condition:

  • Train people to handle different product configurations – difficult, raises salaries
  • Technology that has volume variability capabilities – expensive
  • Excess capacity – expensive

Where the customer needs it:

  • Globalized markets
  • Globalized supply chains

It Requires: Ability to deliver globally without delay

How traditional factories try to meet condition:

  • Local warehouses – expensive, subject to obsolescence
  • Air-freight – expensive, subject to disruptions

How did Industry 4.0 evolve?

The (original) Industrial Revolution began in the 18th century when agricultural societies became more industrialized and urban, changing cultures and societies.

How is data useful? We need to be able to obtain data, market, machine, process, product data and act on it with the insight that can be derived from such data.

Three conditions have to be met:

  1. That we are able to obtain the right data in the appropriate time-frames
  2. That we are able to interpret it and derive insights from it

Industry 4.0-market drivers:

  • Customization: Wider product variety
  • Globalization: More geographies
  • Ageing workforce: Difficulty in hiring skilled labor
  • Sustainability concerns: Need to reduce carbon footprint
  • Growing population and middle class: Growing demand
  • Information society: More flexible supply chains. Connecting capabilities.

7 types of Waste for Lean Manufacturing:

  1. Over-production: Granularity allows making decisions on a segment of one
  2. Transport: Reduce transport costs
  3. Movement: Human-robot cooperation
  4. Overprocessing: Customized products through additive manufacturing
  5. Waiting: Reduce customer waiting
  6. Inventory: Over time it leads to better inventory management
  7. Defects: Additionally, packing and shipping systems avoid sending the wrong order

Challenges to implement Industry 4.0To decide to move:

  • Incumbency and legacy systems
  • Talent (or lack thereof)
  • Culture……..

Once they have decided to move:

  • Perceived required upfront investment
  • Unclear monetary returns
  • Not clear where to start

Incumbency and legacy systems:

  • Competitive that deliver performance are difficult to imitate and provide advantages over competitors, but also create rigidities that inhibit change
  • Cost-effective products with predictable life-cycles to customized products with short-life cycles
  • Performance metrics may embed the same rigidities and prevent change
  • Short term Vs Long term
  • Output Vs Customer revenue

Beyond the factory and into servitization:

  • While Industry 4.0 is frequently related to adding value to the manufacturing process (technology-push)
  • Servitization is mainly focused on adding value to the customer (demand-pull)
  • They are, in that sense, complementary

What is servitization?: Servitization involves firms (often manufacturing firms) developing the capabilities they need to provide services and solutions that supplement their traditional product offerings.


  • Services have higher margins than products
  • Services are perceived as higher value-adding than services
  • Services are provided through collaborative relationships with customers that have more stickiness

Poka Yoke: A Japanese term that means “fail-safing”. Poka-yokes are procedures that block a mistake from becoming a service defect.

Categories of Poka-Yoke:

  • Prevention
  • Detection…….

A prevention device prevents mistakes…….A detection device signals the user when a mistake has been made. The user needs to correct the problem himself.

An effective Poka-yoke: Simple, Inexpensive, Easy to implement, Immediate feedback, Corrective action