The manufacturing industry has had several major stages throughout history, starting with the mechanization of production by harnessing water and steam (Industry 1.0), then using electric power to create mass production (Industry 2.0), and to the introduction of electronics and information technology to automate production (Industry 3.0). Now we find ourselves in the middle of a new stage, named Industry 4.0

“There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact.” (Klaus Schwab, The World Economic Forum)

“The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.” (Klaus Schwab, The World Economic Forum)

Industry 4.0 has four foundational technologies that are applied through the complete value chain (McKinsey, July 29, 2020):

  1. Connectivity, data, computational power (Sensors, IoT, Cloud Technology, Blockchain)
  2. Analytics and intelligence (Advanced analytics, Machine learning, Artificial Inteligence)
  3. Human-machine interaction (Virtual and augmented reality, Robotics and automation, RPA, chatbots)
  4. Advanced engineering (Additive manufacturing, Renewable energy, Nanoparticles)

But how does this new Industrial Revolution fit with the challenges presented in the New Normality?

COVID-19 has had a profound impact on the world, disrupting the global Supply Chain in multiple ways, from the closure of suppliers’ factory floors, the reduction of goods required by business as they are closed, to a huge increase in e-commerce as people are staying home. According to the IMF the global economy is projected to contract by 4.4% in 2020 (IMF World Economic Outlook, October 20020), but at the same time there has been a 30.1% increase of online shopping in the US between the first half of 2020 as compared to the same period in 2019 (Digital Commerce 360, Fareeha Ali).

These phenomena are creating an important challenge in the manufacturing industry as it becomes extremely difficult to forecast and react with sufficient agility to respond to all these changes.

The adoption of Industry 4.0 was “gaining momentum before COVID-19, helping companies transform their operations in everything from production efficiency to product customization, with improvements in speed to market, service effectiveness, and a new-business model creation” (McKinsey, July 29, 2020). As we experience this pandemic, some companies see that revenues are down and are be tempted to reduce spending in new technologies. However, this view will leave them behind peers that implement a digital solution based on the Industry 4.0 toolbox.

Those who implement digital technologies that allow them to more easily share and act on critical information through the value chain (for example digital work instructions for operator assistance, operator assistance through augmented reality, predictive analytics in demand planning, end-to-end visibility of the production process, order management with real-time track-and-trace, supply chain digital control tower, carrier analytics, and many more) will be able to react to new challenges while providing seamless access to their products.

By Luis Emilio Fernandez de Jauregui