The fourth industrial revolution has already begun. Our research shows that Industry 4.0 – where the virtual and real worlds meet to completely change the way value is created in manufacturing – will allow a leap in productivity between 20 per cent and 50 per cent, generating substantial revenue for businesses.
Intelligent and digitally-enabled supply chains will boost competition, while data connectivity and visibility between processes, customers and suppliers will manage demand volatility, minimise lost sales, cut the production costs and enable mass customisation.
These cost savings will lead to flexibility for staff and self-regulating machines will optimise the use of bottleneck resources without human intervention. Real-time control of machine performance will allow unexpected events to be managed, and downtime periods to be reduced. Meanwhile, fully automated warehouses will mean greater accuracy in order picking, less lost and damaged stock, increased transparency in the inventory, and reduced work in progress.
The Engineering Employers Federation conference in London earlier this year debated how the UK can maximise the benefit of Industry 4.0 to become a world leader in manufacturing. Manufacturing is one of the main pillars of the country’s economy, employing 2.5 million people and responsible for half of all exports. The conference identified four essential areas of government action:
build a more productive and flexible workforce
improve physical and digital infrastructures with targeted investment and strategic decision-making
reduce the cost of doing business by cutting corporate taxes
boost support for growing and innovative businesses.
Government support will be essential in mobilising advancements in IT and production technologies. Many governments – including those in the European Union, China and the US – have already allocated significant funds for programmes exploring the transition to this smarter way of manufacturing.
Germany, in particular, has introduced successful initiatives to help small and medium-sized enterprises adapt to intra-company production logistics, human-machine interaction and the use of novel technologies such as robotics or 3D printing in industrial applications. Due to technological and industry advances, the 3D printing ‘desktop’ revolution has created product and business opportunities today that tap into the long-term potential of additive manufacturing.
But CEOs can't rely solely on government initiatives. To lead the way, they need to redesign their businesses to make the most of new technologies. The hurdles they face, however, include unclear business cases, insufficient in-house knowledge of emerging production and computing technologies, and the inability to radically rethink the future of their business. As a result, it's difficult to assess and allocate the necessary funds – especially when there are complex manufacturing processes with legacy infrastructure and expensive assets in place.
To escape this potential dead-end we advocate a step-by-step approach to Industry 4.0 based on a strict evaluation of business benefits and risks. This includes:
conducting a creative evaluation of radically new business models. mymuesli, for example, was the first global company to offer customised muesli. It produces 566 quadrillion variants of custom-mixed cereal that customers can order through their ‘Smart Shop’ online
taking into account legacy assets. A great illustration of this in action is BMW, which is using robots from Universal Robots for tiring and repetitive tasks at its assembly plant in Spartanburg to free up their workers
adapting to new technologies or market developments as they occur. For instance, Schunk, a multinational manufacturing company, enables flexibility in production by providing tools in just five days, following a quick online ordering process
ensuring advanced modelling. A good example of this is the integrated Siemens product life management simulation suite. It covers the entire product lifecycle process – from design and manufacturing process development to the management of after-sales activities and augmented-reality technologies
early delivery of a proof-of-concept. For example, Wittenstein Bastian, a German manufacturer, has launched a smart factory for gear wheels and racks in Fellbach. They are also investing €30 million into a new mechatronics centre focused on smart manufacturing.
We have worked with many organisations to help them reinvent key manufacturing platforms to deliver innovative products, explore new channels and go-to-market strategies, and significantly reduce costs. When we worked with our client, Better All Round, we challenged the norm and developed a revolutionary new kitchen towel – Ora. This has been designed to make using kitchen towels easier by layering single round sheets through an innovative stacking system from business design and concept to finished product in store within 12 months.