Industrial production: 30 percent faster and 25 percent more efficient

Industry 4.0 set to raise industrial production to new levels. Relations and interactions between objects, machinery and people will enable production systems to act faster, work more efficiently and deliver higher quality.

By: Supply chain writer Poul Breil-Hansen

Great things are in store for industrial manufacturing companies in the coming years. Industry 4.0 is the next generation of production systems and technologies. The new wave of transformation is being driven by a series of technological innovations that together connect objects, machines and people in new and closer relationships that create new advantages and that will enable greater production rates and productivity leaps. This is revealed by the report “Industry 4.0 - The Future and Growth in Manufacturing Industries” of April 2015 issued by the Boston Consulting Group (BCG). Industry 4.0 is to start in 2015 and will unfold over the next 10-20 years.

The nine technologies are:

  • Big data and analytics.
  • Autonomous robots.
  • Simulation.
  • Horizontal and vertical integration.
  • Industrial Internet of Things.
  • Cybersecurity.
  • The cloud.
  • 3D printing or additive manufacturing (AM).
  • Augmented reality.

Manufacturing pictureBig growth opportunities in sight

“Industrial production will be transformed from individual automation cells to fully integrated and automated facilities that communicate with each other, significantly boosting flexibility, speed, productivity and quality. The advanced German manufacturing sector, for example, wants to achieve a productivity jump of five to eight percent of the total production costs over ten years, corresponding to a total amount of EUR 90 to 150 billion,” says the BCG in the report.

The steam engine drove Industry 1.0 in the 1800's, electrification in the early 1900's drove Industry 2.0 and automation in the 1970's powered Industry 3.0. Now we are on the threshold of Industry 4.0, consisting of a massive digital wave driven by the nine technologies listed above. Many of the technologies are already in use, but Industry 4.0 will see them developed further, and not least connect individual production cells together to create larger networks that will open up entirely new opportunities. 

New grippers, microprocessor technology, optical technology, cameras, nanotechnology, thin batteries, sensors, chips, machinery and IT systems will connect and be linked crisscross in companies in the value chain. These interconnected systems will be able to communicate with each another using standard internet-based protocols and to analyse data so they can predict failures, errors, reconfigure themselves and adapt to change. Industry 4.0 will make it possible to collect and analyse data across machines that will create the foundation for faster, more flexible and more efficient processes that will be able to deliver higher quality products at lower cost. “Industry 4.0 will increase the productivity, significantly boost national economies, generating industrial growth and changing job profiles - it will eventually change the competitiveness of companies and whole regions,” claims the report. Let's look at the new technologies in more detail:

Big data and analytics

Analytics based on large amounts of data is a relatively new technology in the production environment. Industry 4.0 aims to collect and comprehensively analyse data from many different sources such as production equipment, production systems, customer systems, social media etc. to become the standard for supporting real-time decision work.

Manufacturing pictureAutonomous robots

Manufacturing companies have long made use of robots to perform complex tasks, but we are now seeing a rapid development of robots that expands their possibilities considerably. They will become more autonomous, flexible and interoperable. The trend is towards robots that will be able to interact and cooperate with each other and work safely alongside people while also learning from them. Robots will be significantly cheaper and have broader and have more flexible skill sets than the robots in use today.


3D simulations of products, materials and processes are already being used in the design phase. In the future we will see more extensive use of simulations on the factory floor. These simulations will use real-time data to mirror the physical world in a virtual model that may include machines , products and people. Operators will thus be able to test and optimize the machine settings for the next product in the virtual world before implementing them in the physical world. The bottom line will be less downtime and higher quality.

Horizontal and vertical integration

Most current IT systems are only integrable to a limited extent. There is a lack of integration in the value chains between suppliers, manufacturing companies and customers, and there is a lack of integration between departments such as product development, production and customer service. Industry 4.0 will offer a quantum leap in coordination between enterprises, systems and functions. The results will be an efficient network and automated value chains.

Industrial Internet of Things (IIoT)

It's already started. There are already things and products that speak together today. But with IIoT many more devices, materials, products and machinery will be internet-connected, equipped with embedded computing and able to communicate with other industrial objects via standard technologies. This opens up a whole new world of possibilities that we can only just glimpse at yet.

Manufacturing pictureCybersecurity

Many businesses operate IT systems in administration and production, which are not integrated with each other. This will end with Industry 4.0, the coherence and integration becomes all-encompassing. This will create a greater need to protect data and systems from cyber security threats. This applies both to the exchange of data and access to data in the form of identity and access control.

The cloud

Many companies already use cloud-based software solutions, and with Industry 4.0 there will be many more exchanges of data across devices and company boundaries, and far more use of cloud-based technologies. The response time of cloud technologies will be improved significantly, and a large proportion of future IT systems will be run from the cloud, including, for example, also manufacturing execution systems.

3D printing or additive manufacturing (AM)

Additive manufacturing or 3D printing is slowly taking off for use in prototypes and individual components. Industry 4.0 will include the widespread use of 3D printing for small batches of customized products. This will reduce travel times as well as costs and inventory levels.

Augmented reality

Augmented reality-based systems will support a series of services such as order picking or sending repair instructions via mobile devices. The systems are still in their infancy, but there are great opportunities just around the corner, for example, to provide real-time information to enhance decision making and working procedures. Another application is virtual training.

Germany as example

The authors of the BCG report cite Germany as an example of how Industry 4.0 could affect an advanced industrial nation. They estimate productivity gains of 15 to 25 percent before material costs and 5 to 8 percent after material costs, revenue growth of one percent of Germany's gross domestic product and employment growth of six percent within a time horizon of 10 years. But these benefits will of course not come by themselves. ”Industry 4.0 offers huge opportunities for innovative manufacturers, suppliers, system developers and entire regions. But as always with great transformations it also constitutes a major threat to the companies and players that do not keep up with developments. We therefore expect major changes in the line-up of leaders among both businesses and regions,” write the BCG consultants.

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