The Fourth Industrial Revolution (Industry 4.0): Transform or Fail
If you don’t get there first, your competition will.
The confluence of six powerful technologies has launched a new Industrial Age.
1 – Cloud Computing
Instantly scalable data storage on demand from third party (AWS, Google, Microsoft, IBM) can store an unlimited amount of data, which can be retrieved in real time from anyplace on the globe.
2 – Big Data
The ability to gather, store and analyze an unlimited amount of data about all aspects of a company’s business: customer interactions, preferences, choices; failure rates of machines, etc.
A key difference is that instead of analyzing a finite set of data because of limitations on storage and computation, businesses can now analyze the entire data set, which makes the inferences and conclusions much more powerful and useful rather than approximating/guessing from a much smaller sample size.
3 – Artificial Intelligence
Provides the ability to analyze Big Data, to discover patterns that a human could not see alone and to implement revolutionary processes with greater accuracy, more rapid response times and lower costs. The value of AI and machine learning to data analytics can be distilled into three separate value propositions: speed, scale, and convenience. There is simply far too much valuable customer data to be collected, processed and turned into insights for any company to remain competitive without making full use of modern analytics tools.
4 – Internet of Things
Lets the knowledge derived from the previous three technologies interact with people and equipment to provide alerts, adjustments to systems, and information in real time. In addition to bringing us all faster broadband speeds and more reliable mobile networks, the proliferation of 5G will also accelerate advancements in smart city, smart vehicle, smart manufacturing, and scores of IoT-intensive technologies.
5 – WiFi
WiFi 6 download speeds are up to 3x faster than were achievable with WiFi 5, with faster data speeds to far more devices than WiFi 5. The number of connected devices on the average WiFi network is expected to grow from roughly 10 now to 50 in a few years. The quality and volume of data consumed through WiFi networks are also both increasing. Faster WiFi for a faster world.
6 – Blockchain Moves Beyond Crypto
Amazon Web Services is democratizing blockchain technology with their subscription-based blockchain-as-a-service platform. Examples beyond Crypto: food safety, intellectual property and royalties, and real estate/asset management.
How Will You Fare in This Race?
Adoption of Industry 4.0 by Sector
Respondents were asked: “How would you classify the current level of digitization and integration [in operations, supply chain, and related activities] in your company? What levels are you expecting in the next five years?”
Why is the Fourth Industrial Revolution So Important?
Companies that transition to Industry 4.0 have many significant advantages.
For an industry that has relied heavily on low-wage regions for manufacturing cost reduction, investments in digital technology enable higher-wage countries to compete with offshore manufacturing hubs. This will let manufacturers to select production locations according to technical capabilities and proximity to consumer demand, rather than decisions-driven primarily by wages.
With the increased use of AI in systems that can make autonomous decisions, output is projected to increase greatly.
Increased Revenue and Profitability
The implementation of Industry 4.0 will require heavy investment by manufacturers in the seamless integration of pre-production (i.e., engineering and design), production, and post-production (i.e., field performance and service). However, this transformation will offer new revenue opportunities. The closed-loop feedback created by Industry 4.0 data integration increases quality and reduces waste.
Optimized Manufacturing Processes
Machine-to-machine communications and integrated systems drive greater collaboration among producers, suppliers, and other stakeholders along the value chain.
Seamless Record-Keeping and Traceability
The automated closed-feedback loop is an inherent component of Industry 4.0. The seamless record-keeping enabled by digital systems will speed traceability, while limiting liabilities, warranty costs and recalls.
The 6 Key Design Principles of Industry 4.0
1 – Interoperability
The ability of cyber-physical systems, humans and digital factories to connect and communicate via the Internet.
2 – Virtualization
Monitoring actual processes that take place in the physical factory to create virtual models or simulations.
3 – Decentralization
The ability of systems within digital factories to make decisions on their own, with no human intervention.
4 – Real-Time Capability
The gathering of data in each step of the process, including feedback and monitoring, in real time. This is in contrast to legacy systems that tend to “batch process” data, and produce reports that are hours or days old, so that they are frequently stale, irrelevant and can accordingly lead to poor or mistimed decisions.
5 – Service Orientation
Offering cyber-physical systems services via an Internet of Services.
6 – Modularity
Adapting to changing circumstances and requirements.
Digital Transformation: Key Statistics
67% of global CEOs will start focusing on digital strategies to improve customer experience by the end of 2019. *Seagate
34% of companies have already undergone a digital transformation. *Smart Insights
56% of CEOs said digital improvements have led to revenue growth. *Gartner
57% of people won’t recommend a business if its website isn’t designed well for mobile use. *Sweor
72% of customers expect companies to know their purchase history regardless of what method of communication they used, such as chat, phone or email. *NICE
33% of consumers who ended their relationship with a company last year did so because the experience wasn’t personalized enough. *Accenture
90% of consumers expect companies to have an online portal for customer service. *Microsoft
60+% of Americans prefer solving basic customer service issues through a self-service website or app. *American Express
65% of consumers research products online before stepping foot inside a store. *Retail Dive
53% of people will abandon a mobile site if it takes longer than three seconds to load. *Google Marketing Platform
31% of companies have invested in AI in an effort to get ahead of the competition. *Accenture
Achieving Successful Digital Transformation
Strategy is far more important than the individual technologies.
Technologies are only tools to get your company to its goal.
A cautionary note… These are only tools to be used with wisdom and care.
“If you already know how to solve a problem, AI can fundamentally transform the economics of your solution. But if you think our current algorithms can discover solutions you cannot, we have a serious problem.“
“Without the insight of human problem solvers driving our questions, “better numbers” mean nothing and our algorithms will never do more than reflect our own biases.
Neuroscientist Vivienne Ming in the “Financial Times”
Relax all of your existing assumptions.
A few of the critical questions to answer are:
- What are the major “pain points” for the customer in the existing ecosystem?
- How will the roles of the current actors change in the new ecosystem?
What role does your firm want to play?
Successful digital transformation requires thoughtfully addressing a wide range of such inquiries in the proper order.
My role is to guide you through this process and to oversee the execution.
+ Increased revenues
+ Increased margins and profits
+ Increased customer retention
+ Increased employee satisfaction
A new digital business model will improve your:
- Firm’s competitive position
- Capital efficiency, thereby reducing your need for capital
- Return on investment
- Terms to access capital: both financial and human
- Company’s valuation
Digital Transformation: Examples
Similar to what is happening with Smart Factories, Smart Farms pursue the interconnection of machines and systems with the premises, namely agricultural parcels and first-processing facilities. Efficiency of production systems—by means of optimization in the use of water, fertilizers and phytosanitary products—are originating what is denominated as Precision Agriculture. Two hundred (2%) British farmers use robots to milk cattle. The result is improved production and better hours.
The Semi-Automated Mason is a robot that is so good at building walls it could take over the construction industry. It works six times faster than humans—and it never gets tired or makes mistakes.
Manufacturing Productivity II
Polaris started with product lifecycle management and extending through IoT to augmented reality. Gaining visibility throughout the product lifecycle – from concept to product design to manufacturing to real-world use—was a critical part of the digital transformation journey.
Weight Watchers launched Wellow, an application that enables users to find recipes and calorie information and manage weight loss goals via voice commands on Amazon Alexa and the Google Assistant platforms. WW will will add capabilities to Wellow to help walk customers through preparing a recipe.
USAF installed sensors on airplane engines to gather data and warn of potential malfunctions improving readiness and utilization. Similar sensors are being installed on trucks, ships and machinery.
The pilot on a plane in flight learns that it needs a replacement part. Instead of being grounded for several days while waiting for that part to arrive, the part’s manufacturer sends the program to 3-D print that part to a 3-D print vendor over the internet who is at the plane’s destination. The part is printed and delivered to the airport before the plane lands. This strategy is used in other industries, as well.