What Aussie manufacturers can look out for with Industry 4.0

Posted on February 2nd, 2017 in Uncategorized

Firstly, what is it? “Industry 4.0”, also known as the “fourth industrial revolution”, is where machines interact and respond intelligently to their surrounding physical environment. The first three industrial phases were mechanisation, electrical and computerisation. Industry 4.0 builds on those and brings together the Internet of Things (also called “IoT”), artificial intelligence and data science by digitising industry. (This blog on IoT and its role as a disruptive innovation ready to rock your supply chain also makes for interesting reading.)

While it could sound way off, Industry 4.0 is no longer the “radical next thing”: it’s here now. The early adopter was Germany, with the USA now getting on board.

Here are some of the most comment questions:

  • What about job losses — isn’t that an obvious drawback?
  • How does it make manufacturing more efficient?
  • What on earth is a “batch of one”?
  • How can Australian manufacturers tap into Industry 4.0’s potential?
  • Do manufacturers need any skills to implement Industry 4.0?
  • But what about Industry 5.0?
  1. What about the drawbacks to Industry 4.0, such as job losses?

First up, the icky one. Just like any industrial revolution before it, Industry 4.0 has sparked fears of job losses in supply-chain industries. A scan of history tells us yes, some jobs went, and in their place came new jobs, so there’s no reason to assume this will be any different in creating different jobs — jobs we may not even know of yet.

Industry 4.0 also comes with upfront cost challenges: it’s not cheap for to manufacturers to invest heavily in solutions that will digitalise the entire business. In a Boston Consulting Group survey of more than 600 German and US manufacturers, businesses estimated investment levels of between 7% to 9% of revenue.

  1. So how does Industry 4.0 makes manufacturing more efficient?

Efficiency is a much-talked-about advantage of this new manufacturing generation. One reason is Product Lifecycle Management (PLM), which can improve lead times and the manufacturing process. For example, in simulation, manufacturers can create a virtual image of the product (“digital twin”) and use this to insert and test different designs of individual components.

Because Industry 4.0 puts the real value in the design, engineering and process expertise, labour costs become a smaller part of the overall equation, to the point that as part of Industry 4.0, many traditional roles can be automated using more intelligent robots. That’s great news for companies who have struggled to compete against cheap labour overseas. It can even help manufacturers meet the ever-growing pressure of lower prices. (You’ll may find some further information on how next-generation robots are transforming manufacturing and the increasing uses of robotics on the factory floor good background reading.)

  1. What on earth is a “batch of one”?

Essentially, Industry 4.0 is about mass customisation rather than mass production. Rather than building the same thing over and over again, manufacturers can use data to customise products and make a batch of …. one product. (There’s a good explanation here for how the innovation of “distributed manufacturing” leads to customisation close to the consumer.)

In the food industry, a good example is Mix My Muesli — Australia’s first custom-mixed muesli. Customers order their favourite combination of muesli mix via the website, which creates a “mix ID”. This is printed onto a label on the packaging tube, and then tells the machines which ingredients to put into the packaging.

  1. How can Australian manufacturers tap into Industry 4.0’s potential?

Manufacturers of all sizes need to pay attention to competitors at home and abroad. What technologies are they using? What data should you capture and how? What can you do with it? Look for a technology partner who can help from the start because it’s important to realise that Industry 4.0 will transform your entire business — not just little pockets of manufacturing and technology. And this, obviously, needs significant investment; for example, German industry is set to invest EU40 billion annually (around A$58.8 billion) in Industry 4.0 applications from now until 2020. As a result, more than 80% of companies in Germany will have digitalised their value chains within five years.

  1. Do manufacturers need any skills to implement Industry 4.0?

Sure, Industry 4.0 offers many competitive advantages for manufacturers, but here’s the key: if they have the right skillset. While younger generations entering the workforce already have the required digitalisation skills, typically older workers need to up-skill and add digital skills to their existing toolset and industrial knowledge.

Another key aspect of Industry 4.0 is “big data”. By delving into data and using it to better understand customer needs, companies can create added value in the manufacturing process. Data insights can also be used to reduce unplanned downtime and enhance process efficiencies. Therefore, manufacturers need employees with skills in data science and analytics or invest in solutions such as Larry, the Digital Analyst.

  1. But what about Industry 5.0?

Because things happen so fast in today’s world, the next industrial revolution is already poking its head around the corner. It’s called “Industry 5.0” and it’s about combining robotics and automated machinery with the human touch — in other words, collaboration. This gets back to our mass customisation idea with the demand for one-off products. Robots are great at making standard products, but individualisation requires a “special something” that can only come from humans. What’s resulted from all this is a demand for collaborative robots (or “cobots”) that can work in side-by-side with humans on the factory floor. So these robots don’t replace the human workforce, they enhance it, and by taking on strenuous, dangerous tasks, robots give human employees the freedom to add value in other, more creative, ways. (Here’s a good blog on collaboration.)

Wrap up

No matter what trend we’re talking about, Australian manufacturers just can’t afford to sit still. To remain competitive means you need to be flexible around new technology and processes, you need a culture of continuous improvement. The world is changing rapidly and you need to be ready to embrace the potential. (Could that even be Industry 6.0 …?)

Like to talk more about integrating production processes on your lines? Come and see us at Auspack on stand 56!

Want to read more? Matthews has a whole resource library of whitepapers, articles from our thought leaders, presentations, infographics, our YouTube channel and so on. And all material from our resource library is free to download!


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