Analytical Article

IFI8101 - Information Society Approaches and ICT Processes

Industry 4.0

Kadri-Liis Kusmin
School of Digital Technologies, Tallinn University, Estonia

[email protected]

Abstract. We are at the brink of Industry 4.0, the fourth industrial revolution. Although not a widespread
concept, it has great potential to improve many aspects of human life. Starting with changes in business
paradigms and manufacturing process models, it will affect all levels of production and supply-chains,
including business and production managers, factory workers, cyber-physical systems designers, customers,
end-users, etc. Industry 4.0 is a combination of several novel technological advancements, including
information and communication technology, cyber-physical systems, network communications, big data and
cloud computing, modelling, virtualization and simulation, and improved tools for human-computer
interaction and cooperation. The concept of Industry 4.0 promises many positive changes to today’s
manufacturing, including mass customization, flexible production, increased production speed, higher product
quality, decreased error rates, optimized efficiency, data-driven decision-making, better customer proximity,
new value creation methods and improved work life. On the other hand, there are many challenges ahead, such
as issues related to business paradigm changes, safety, security, legal issues, standardization and a plethora of
human resource planning challenges. However, the gravest mistake is unwillingness to take part in these
changes, because the future of Industry 4.0 is not yet certain – its success or failure lies in the hands of all its
stakeholders.

Keywords: Industry 4.0, manufacturing, information and communication technology, cyber-physical

systems

1 Introduction
Industry 4.0 has been referred to as the new buzzword of the manufacturing industry [1]. As
the suffix indicates, this is the 4th wave of distinct industrial advancements, and has thus been
titled “The Fourth Industrial Revolution”. Although the concept is not yet widespread, there is
great potential that it will penetrate and improve many aspects of human life and today’s
manufacturing. However, at the same time it will be accompanied by many challenges. The
objective of the present article is to give an overview of the underlying technologies, possible
benefits and predicted challenges of Industry 4.0, in the context of the Information Society.

2 Background
2.1 Industrial revolutions
The term Industry 4.0 (Industrie 4.0) was officially presented at the 2012 Hannover Fair in
Germany as one of ten “Future Projects” that form Germany’s High-Tech Strategy 2020 [1]–
[3]. Originally it was meant to describe technological changes in manufacturing and set out
priorities of a consistent policy framework to preserve the global competitiveness of German
industry. The title 4.0 indicates that Industry 4.0 is considered the fourth industrial revolution,
a logical successor of the previous three industrial revolutions.
For most people, the term “industrial revolution” refers to the changes that took place after the
introduction of steam and water-powered production methods. Indeed, the first industrial
revolution started when the first mechanical loom was invented in 1784. Hand production
methods were replaced by machinery and small workshops evolved into the factory system that
allowed production on a more massive scale. It was 100 years later when the second industrial
revolution started, between the late 19th and early 20th centuries. With the spread of electricity,
the second revolution introduced major industrial developments such as the assembly line and
mass production. The period between the second and the third revolution lasted for only a few
decades. Starting from the 70s, the rapid adoption of electronics and IT enabled further
automation of production in factories.

2.2 The Fourth Industrial Revolution

The current, 4th revolution, which started in the 2000s, takes automation even further and
revolves around cyber-physical production systems. It overlaps largely with the technological
advancements known as Smart Factories, the Industrial Internet of Things, Smart Industry,
and Advanced Manufacturing [1].

Figure 1. The Four Industrial Revolutions. Graphic source: DFKI, 2011.

Industry 4.0 is a combination of several novel technological advancements:
• information and communication technology,
• cyber-physical systems,
• network communications,
• big data and cloud computing,
• modelling, virtualization and simulation,
• improved tools for human-computer interaction and cooperation [1].

2.3 Information and communication technologies

Eighty percent (80%) of the innovations in manufacturing are based on ICT [4]. Digitization
and the widespread application of ICT allows the integration of all systems throughout the
length of the supply and value chains and enables data aggregation on all levels. All
information is digitized and the corresponding systems inside and across companies are
integrated at all stages of both product creation and use lifecycles [1]. A manufactured smart
product will take on roles additional to its primary purpose: an information container to store
information across the entirety of the supply chain and its life cycle; an agent – the product
actively affects its environment; an observer – the product monitors itself and its environment
[4]. For example, clothing items can monitor how long they have been worn or how often
they’ve been washed and report back to the manufacturing plant so that a replacement shall be
produced to satisfy future need [1]. The recent advancements in the ICT sector form the basis
of Industry 4.0, as industrial processes have begun to go beyond the simple automation of
production that started in the early 1970s [5].

2.4 Cyber-physical systems

Cyber-physical systems improve the capability of controlling and monitoring physical
processes, with the help of sensors, intelligent robots, drones, 3D printing devices, etc. In
cyber-physical systems, physical components, such as 3D printers, drones and robots, and
digital software components, such as data analytics and sensor technology, are aggregated into
a network of interacting elements. While the initial inputs and final outputs are customarily
physical, information often transitions between physical and digital states during the
manufacturing process. For example, it is possible to scan a physical component and model a
digital representation if this item is based off the scans. This digital data can then be turned
into physical information again by 3D printing this component.
 2.5 Network communications
All these devices, both within the manufacturing plant and across suppliers and distributors,
are connected through different wireless and Internet technologies [1]. Reliable high-quality
communication networks are a crucial requirement for Industry 4.0 and therefore it is important
that the Broadband Internet infrastructure be expanded where needed [6]. This high level of
networking of interconnected components allows for a decentralized and self-organized
operating of the cyber-physical systems.

2.6 Big Data and Cloud Computing

With the use of big data and cloud computing, the information retrieved through these networks
can be used to model, virtualize and simulate products and manufacturing processes. These
models are called digital twins, or device shadows. A digital twin is a computerized companion
of a physical asset that enables real time monitoring, diagnostics and prognostics of the asset.

2.7 Improved tools

To control these processes, human workforce is supplied with state-of-the-art ICT tools that
make use of advancements in augmented reality and intelligent robotics. The cyber-physical
systems of Industry 4.0 have the primary aim of assisting humans in their everyday jobs. They
include physical assistance exoskeletons, context-adaptive assistance systems for fault
diagnosis, location-based maintenance and planning assistance systems, and mobile,
personalized, situation-adaptive tutoring systems, etc. The key features of such systems are
non-intrusiveness, context-adaptiveness, mobility, and that they can be personalized and
location-based. To ensure optimal user experience and efficiency, these systems will have to
be skillfully designed, taking into account the possibilities of speech, gestures, eye tracking,
body language and facial expressions, physical actions and helpful graphics. [4]

The central aspect of Industry 4.0 is its interface with other smart infrastructures, e.g., smart
buildings, homes, logistics, mobility and grid, and connectivity to business and the social web
[5], [6]. It is crucial that these key areas are also considered when implementing Industry 4.0.
Thus, it can be said that the effect of Industry 4.0 is not limited to manufacturing, but rather
influences many aspects of human life.
Figure 2. The Industry 4.0 environment [5]

3 Benefits
These changes in manufacturing are said to result in a wide variety changes in manufacturing
processes, products and business [1]. Industry 4.0 has the potential to positively affect the
meeting of individual customer requirements, production flexibility, decision-making
optimization, resource productivity and efficiency, value creation opportunities through new
services, demographic changes in the workplace, human labor force work-life balance, and a
competitive economy with high wages [6].

3.1 Mass customization

Countering the currently widespread mass production, mass customization will allow
production on an extremely small scale – even down to a single unique product, and still be
profitable [6]. This will increase the cost-effectiveness of customizing and prototyping and thus
support innovation. Small last-minute changes to the products or prototypes will be possible,
thanks to high configurability of the automated production systems. This will allow companies
to adopt new business models for value creation and compete not only on price but, for
example, on the option of rapid prototyping.
 3.2 Flexible production
With the establishment of smart factories, the intelligent and highly configurable machinery
will allow for a more flexible production, enabling a greater variety of products to be produced
in a certain manufacturing facility, more agile manufacturing processes and responding to
changes and temporary shortages [6]. This allows companies to produce for a wider range of
customers and adapt fast to temporary increases or even decreases in market need; e.g., if the
need for a certain product is currently low, the production line can be easily reconfigured to
produce another product with additional capacity and deliver the ordered parts to the client
faster than expected. This will also increase the client’s confidence and trust.

3.3 Increased production speed

Thanks to digital product and production process modelling and data-driven supply chains,
production speed will increase [1]. Gathering, preprocessing and analyzing all available factory
shop-floor data will result in transparency across the whole production and allow the
identification of bottlenecks and potential improvement points. For example, in the automotive
industry, the design specifications are often predetermined by the client. If a design change
affects production speed, it is possible to detect this change and provide the evidence to the
client – thus contributing to the fast elimination of a faulty design specification.

3.4 Higher product quality and decreased error rates

Although higher production speed has previously been associated with lowered quality, in the
case of data-driven manufacturing product quality will increase and error rates reduce as
sampling methods for error detection are replaced with real-time data from sensors [1]. Another
important aspect of data-driven manufacturing is root-cause analysis. In traditional factory
environments, it often happens that in case of device malfunction, symptoms are treated instead
of the actual cause of the symptoms. This increases the maintenance price of machinery, as
unplanned maintenance cases are frequent and maintenance staff must be present on the factory
site at all times. Seeing all the data, not just the view of one single element in the system helps
detect root causes and fix them instead of just fixing the symptoms, making the maintenance
procedure more predictable and decreasing the need for 24/7 on-site maintenance staff.
 3.5 Optimized efficiency and data-driven decision-making
This data can simultaneously be used to enhance productivity and efficiency, and optimize
decision-making – advanced analytics, predictive maintenance and data-driven simulations
will help avoid machinery failures and plan shop-floor changes [1], [6]. Data analysis enables
real time monitoring, diagnostics and prognostics of assets. With the ability to collect massive
amounts of data from different systems, and combine and analyze them, the emerging patterns
can be used to predict future activities. For example, it is possible to model out different
scenarios that might happen with the asset and how these events affect the related elements in
the cyber-physical system.

3.6 Better customer proximity

These changes help to bring customers closer – both virtually and physically. Thanks to virtual
design processes and self-service portals, individual customers will be able to supply their own
designs and provide a stronger input for the general production process [1], [6]. Having largely
automated the physical production processes of their factories, companies may choose to bring
the factories closer to the customer to shorten the logistics chain and delivery time.

3.7 New value creation methods

Companies will be able to find new ways for value creation and adapt their business models
accordingly [6]. In addition to prices, companies will be able to compete on quality,
customization level and prototyping speed, which will in turn provoke changes in the business
paradigm [1]. Businesses are already preferring the selling of services instead of (virtual)
products, but this can advance even further and gain a foothold in the physical world as well.
For example, instead of selling car parts, an automotive manufacturing company could sell
kilometers instead.

3.8 Improved work life

In the face of these new business models, the working settings of factory labor force will be
prone to their own changes. As intelligent machinery becomes ever smarter, it will take over
the more repetitive tasks, enabling human workers to focus on the more challenging ones.
Employees will have greater autonomy in making decisions, they will be more engaged in
product and process development and will be free to regulate their own workload [6]. This
work can mostly be done over a network, thus permitting a more flexible work-life balance [6],
[7].

4 Challenges
The forecasted scenarios of Industry 4.0 developments differ greatly. On the one hand there
are those who view Industry 4.0 as a solution to current issues, and on the other, those who
think that Industry 4.0 will only deepen these issues. However, it is important to remember that
the course of Industry 4.0 has not yet been defined. Its success or failure greatly depends on
the course of actions taken today.

4.1 Changing business paradigms

The changes to the value chain require companies to embrace new business models and partner
with other companies, including suppliers, technology companies and infrastructure suppliers
[1]. It would not be surprising if companies had to partner with firms they once saw as
competitors, e.g., when helping to establish new regulatory frameworks, standards or training
methods. In addition, companies will have to invest large sums into new machinery, software,
business model development, employee competency models and training, etc. If the current
industrial leaders do not respond to those changes and adopt these new business paradigms,
they may soon find themselves in the interchangeable and easily replaceable role of mere
suppliers [7].

4.2 Safety and security

As data are collected throughout the supply chain, questions of data ownership will arise. It is
important for companies that their data will not end up in the hands of a competitor. Another
concern that will grow for manufacturers is cyber security: it is crucial to ensure that their data
systems cannot be infiltrated and that their factories cannot be taken over or cut off. On the
other hand, it must be ensured that the production facilities themselves do not pose a threat to
humans or the surrounding environment, and that the workers receive continuous safety
trainings [6].

4.3 Legal issues and IP

Having many entities use, modify and produce new data, will result in potential legal issues. It
is important that the new manufacturing processes and business models comply with the
existing laws. However, it is equally important to adapt the existing regulations so that they do
not cripple innovation while protecting all of stakeholders [6]. For example, if a customer
orders a product and supplies customizations for its design, who owns the intellectual property
rights to the design [1]? What portion of this data is considered corporate data and how much
of it is personal data?

4.4 Standardization
In order to fully implement Industry 4.0, standards have to be developed and established to
ensure the correct data exchange between machinery, systems and software. Proprietary data
and communication protocols will hinder the full potential of Industry 4.0 by limiting
compatibility of products from other companies or regions [1] and thus increasing integration
costs or suppressing competition and promoting potential monopolies. Jointly-developed and
agreed standards for communication protocols, data formats and interfaces facilitate
interoperability across different companies, sectors and regions, and promote the adoption and
sustainability of Industry 4.0 technologies [1].

4.5 Work organization and design

One aspect of Industry 4.0 is the way it will change the workplace. Intelligent machines are
becoming smarter and cheaper, enabling the human workforce to focus on less repetitive, more
challenging tasks. However, this shift will bring along certain risks and demands. According
to the European Parliament, employee roles will change across content, processes and
environment [6]. Flexibility, work time, demographics as well as health and private life will all
be impacted by Industry 4.0. Such developments will also affect the essence of certain jobs and
skills profiles. New organizational structures will require a socio-technical approach for
decision making, coordination, control, and support across both virtual and physical machinery
and factories. These new responsibilities are accompanied by significantly higher demands
towards the workforce [6]. Employees will be required to show more initiative, be self-
organizing, and have highly developed communication skills [6]. For this, it is important to
implement participative work design and lifelong learning measures [6].

4.6 Training and continuing professional skills development

The actual educational profile of a typical Industry 4.0 worker has not yet been developed.
These workers would most possibly be graduates from a STEM (Science, Technology,
Engineering, Mathematics) background, but in addition to strong domain-specific
competencies they will also be required to excel in general competencies, such as managerial
skills, understanding of the specific industries and the interrelatedness of different industries
across value chains, supply chains, and processes. There will also be a higher demand for
excellent communication skills to promote team work and customer relations. All these new
competency requirements advocate the development of entirely new qualifications that comply
with the interdisciplinary nature of the work. This means that new learning content and didactic
methods need to be established and included into professional education and lifelong learning.
To support the continuous education of workers, the development of new standards for
assessing formal and informal learning is critical. [6]
Although the current developments are inducing job growth, if the concurrent high skills
instability is not dealt with in time, industries will be faced with massive recruitment challenges
and talent shortage; such us already happening and will increase rapidly over the next five years
[9].

4.7 Unwillingness to accept and contribute to change

In the author’s opinion, the greatest threat to the success of Industry 4.0 is inactivity. Although
it is a fairly young concept, many countries, such as Germany, Switzerland and China have
begun preparations for the next industrial revolution. It is crucial that the stakeholders
collaborate and search for solutions together, to avoid the threat of whole sectors falling behind.
For example, some academics argue that the potential skilled workforce crisis will resolve itself
in time [10]. According to the 2016 World Economic Forum (WEF), however, it is crucial that
businesses take an active role in promoting the re-training and up-skilling of the workforce,
that workers contribute to their own future through lifelong learning, and that governments
create an enabling environment to facilitate these processes [9].

5 Conclusion
Although the concept of Industry 4.0 is not yet widespread, it has the potential to affect and
improve many aspects of human life. Starting with changes in business paradigms and
manufacturing process models, it will affect all levels of production and supply-chains,
including business and production managers, factory workers, cyber-physical systems
designers, customers, end-users, etc. Industry 4.0 is a combination of several novel
technological advancements: information and communication technology, cyber-physical
systems, network communications, big data and cloud computing, modelling, virtualization
and simulation and improved tools for human-computer interaction and cooperation. The
concept of Industry 4.0 promises many positive changes to today’s manufacturing, including
mass customization, flexible production, increased production speed, higher product quality,
decreased error rates, optimized efficiency, data-driven decision-making, better customer
proximity, new value creation methods and improved work life. On the other hand, there are
many challenges ahead, such as issues regarding business paradigm changes, safety, security,
legal issues, standardization and a plethora of human resource planning challenges. However,
the gravest mistake is unwillingness to take part in these changes, because the future of Industry
4.0 is not yet certain – its success or failure lies in the hands of all its stakeholders.

6 References

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