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3 ways Industry 4.0 is disrupting manufacturing

KristenReyes

Written by Matthias Roese, HPE Domain Executive – Technology enabled Business Models

We’re currently facing the Fourth Industrial Revolution. Driven by technology and fed with data, this developing revolution is disrupting manufacturing industries worldwide, creating both opportunities and challenges around efficiency, global competition, and safety and security.

The First Industrial Revolution—the development of steam power—allowed the mechanization of production with less human interaction. Electric power ushered in the Second Industrial Revolution, which sped up the pace of mass production. Electronics and information technology increased automation in the Third Industrial Revolution, and today, what some are calling “Industry 4.0” has emerged, driven by the digitization of our physical world.

Capabilities related to the Internet of Things (IoT), including embedded sensors, increasingly robust networks, and greater means of connectivity have inspired entirely different ways of thinking about manufacturing. Companies that embrace the possibilities of digitization through IoT are certain to have the upper hand; those that don’t may find themselves declared “vintage” before too long. With the right IoT technology, manufacturers can readily address possible challenges related to Industry 4.0 and pave the way for future opportunities.

 

Digitizing closed-circuit assembly lines

Most factory-floor assembly lines use equipment and technology from many different providers. All of these various parts work together, but must be maintained separately. This is complicated and time-consuming for companies to manage and hinders efficiency.

Using IoT principles, manufacturers can digitize their factory components and connect them to a centralized network, which provides increased visibility into understanding and holistically managing the value chain. For example, HPE is working with a global vehicle manufacturer to digitize its key manufacturing components, installing sensors on equipment and then connecting all of the sensor data within a central database.

Looking ahead, digitizing these factory environments introduces the opportunity for manufacturers to create horizontal value chains, which could support unprecedented levels of efficiency and automation by encompassing all the transactions that comprise industrial activity.

For example, imagine if your factory equipment could self-assess and automatically order a needed spare part. Now imagine if your machine could not just order a new part from a supplier, but tender in real time to multiple vendors to get the best market rate. This level of automation could eliminate countless minor interactions, so that factory personnel could focus on higher-value activities.

 

Global competition impacting traditional business models

When facing competitors that can produce goods more cost-effectively because they have access to cheaper labor and raw materials, manufacturers embracing Industry 4.0 have the opportunity to consider radical new business models made possible through IoT technologies—particularly as-a-service offerings.

Kaeser Kompressoren, a leading provider of compressed air equipment, had lost market share to competitors that could manufacture components more cheaply. The company partnered with HPE and SAP to find an innovative approach to its market challenge: Rather than providing customers with equipment and maintenance services, the company switched to providing the air itself so that customers now only pay on a per-use basis.

Not only did this weaken Kaeser’s global competitors who were relying on the traditional business model, it also eliminated the overall amount of equipment that the company needed to maintain, since it was no longer providing equipment to customers. Furthermore, because Kaeser’s equipment is now digitized, it can better monitor, assess, and proactively maintain its assets for better product lifecycle management. 


Increased privacy, security, and safety concerns

As Industry 4.0 forges ahead, the manufacturing industry will likely face unprecedented new challenges introduced by IoT—challenges that we should begin discussing now so that we’re better positioned to address them when they start to manifest.

Today, privacy and security are (or should be) standard concerns for any business with an IT component. But once manufacturers start digitizing their factory floors, their IT security concerns will include the security of their equipment as well as the physical safety of their workers. Even the most sophisticated systems can be attacked. Imagine the potential danger of a hacked metal pressing machine while a worker is performing maintenance underneath it, thinking the system is safely disabled.

Manufacturers should anticipate that physical safety of their factory environments—not to mention any services or products they’re providing—will become an industry-wide key issue.

 

Industry 4.0: A new era of transparency and collaboration

The power of IoT technology can address countless problems around efficiency, a constant key issue for manufacturers. But change also brings challenges, such as increased competition and new issues to face such as privacy, security, and safety.

Because these issues are industry-wide, they should be discussed industry-wide. You can get a sense of what some of your peers are thinking and doing around IoT and Industry 4.0 by accessing our “State of Industry 4.0” survey, which collected input from hundreds of attendees at Industry of Things World 2016 in Berlin.

 

 Matthias Roese is an IoT Strategist at Hewlett Packard Enterprise. Follow him on Twitter at @thedigital_7

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KristenReyes

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