How does it work?

The basic principle of Industry 4.0 is that by connecting machines, workpieces and systems via the "Internet of Things", businesses can create intelligent networks along the entire value chain that can control each other autonomously.

The Internet of Things enables a fast and accurate flow of information back and forth, allowing the end user to make real-time, decentralised decisions about the production capabilities of his or her manufacturing facility, thereby creating a connected and digitised "smart plant". For manufacturers, this translates to improved sustainability, less downtime and more profitability across the factory floor.


What are the key principles?

There are four design principles to Industry 4.0 which can support companies in identifying and implementing Industry 4.0 scenarios:

  • Interoperability: The ability of machines, devices, sensors, and people to connect and communicate with each other via the Internet of Things.
  • Information transparency: The ability of information systems to create a virtual copy of the physical world by enriching digital plant models with sensor data. ​​
  • Technical assistance: First, the ability of assistance systems to support humans by aggregating and visualising information for making informed decisions and solving urgent problems at short notice. Second, the ability of cyber-physical systems to physically support humans by conducting a range of tasks that are unpleasant, too exhausting, or unsafe for their human co-workers.
  • Decentralised decisions: The ability of cyber-physical systems to make decisions on their own and to perform their tasks as autonomously as possible. Only in the case of exceptions or interferences are tasks delegated to a higher level.

How does an Industry 4.0 factory differ to a traditional factory?

In the current industry environment, manufacturers want to produce a quality product at the least cost. There are commercial tools available to provide overall equipment effectiveness information to management, in order to highlight the root causes of problems and possible faults in the system.

By contrast, in an Industry 4.0 factory, in addition to condition monitoring and fault diagnosis, components and systems have "self-awareness" which provides management with more insight into the status of the factory. Collation of information from various systems provides a precise health prediction at a component level, allowing management to trigger required maintenance at the optimal time to achieve near-zero downtime.


Are there any challenges?

As with any major shift in industry, there are challenges inherent in adopting an Industry 4.0 model. PwC produced a report detailing the challenges for consumer product and retail companies which highlights the following:

  • Data security issues are greatly increased by integrating new systems and more access to those systems.
  • A high degree of reliability and stability are needed for successful cyber-physical communication that can be difficult to achieve and maintain.
  • Maintaining the integrity of the production process with less human oversight could become a barrier.
  • Loss of high-paying human jobs is always a concern when new automations are introduced.
  • Technical problems that could cause expensive production outages must be avoided.
  • There is a systemic lack of experience and manpower to create and implement these systems.

How can industry 4.0 benefit my factory?

Despite these challenges, the benefits of an Industry 4.0 model could outweigh the concerns for many production facilities. In very dangerous working environments, the health and safety of human workers can be improved dramatically. Supply chains can be more readily controlled when there is data at every level of the manufacturing and delivery process. Computer control could produce much more reliable and consistent productivity and output. And the results for many businesses could be increased revenues, market share and profits.

As with big data and other business trends, it's very possible that early adopters will be rewarded for their courage when jumping into this new technology, and those who avoid change risk becoming irrelevant and left behind.


How do I go about implementing it?

Connectivity is the key to any data-driven manufacturing implementation. This means companies must find a way to get every machine talking to the corporate network, and to do so securely, using standards-based technology.

To get the most out of Industry 4.0 technologies, companies will have to prepare for a digital transformation. Manufacturers should begin the hunt for the best digital talent today, and think about how to structure their digital organisation. Data management and cybersecurity will be critical problems to solve. Many companies will find that a "two speed" data architecture can help them deploy new technologies at the speed required, while also preserving mission-critical applications.

Industry 4.0 can be implemented in phases and doesn't have to be done all at once. Implementation is a process that includes multiple stakeholders and step gates.


How much are we talking?

As per another PwC report, industrial companies expect to generate 3.6% p.a. in cost reductions over the next five years. But before those reductions can be realised, some money needs to be spent. Costs depend on a variety of factors including the number of machines to connect, the addition of hardware components to enable connectivity and the price of associated software licensing.

Solutions can start at anywhere between €2,000 and €10,000 per machine. When this price is paired with the possibility of only doing a small (one or two-machine) installation, it becomes apparent that data-driven manufacturing is well within reach of everybody.


Contact GRENKE to discuss how we can support your investment into new technology via finance leasing.