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35 (130) 2018
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Technology & Future

Industry 4.0 – why manufacturing industry has to digitize

By Dr Jerzy Kalinowski, advisor to the KPMG board in Poland
Header jerzy kalinowski kpmg

 

The digital revolution is everywhere. Digital disruption is radically changing manufacturing industries.

The concept of Industry 4.0 was created in 2011 as a result of the German Government initiative aimed at digitisation that will integrate value-added business processes in the value chain of manufacturing. The idea is to exploit functionalities of the Internet of Things that arise from the intelligent connection of people, process, data and 'smart' things (devices equipped with sensors, smart controllers, and communication tools). To safeguard the operation of IoT devices in the industrial environment, a special non-profit organisation, Industrial Internet Consortium (IIC) was formed in 2014. Its goal is to provide resources, ideas, pilot projects and activities about industrial IoT (IIoT) technologies, as well as the security of those technologies (see Fig. 1).

The key drivers for the rapid development of Industry 4.0 is the dynamic growth in the number of mobile connected devices combined with wide availability of low-cost sensors. Fig. 2 shows that in 2020 globally there will be nearly four IoT units per one per person. However, Industry 4.0 is also fuelled by the increasing abilities to process in real time and to cost effectively very big data, combined with the development of artificial intelligence systems, robots, the adoption of cloud technologies, augmented reality, as well as by the increasing amount of affordable embedded digital systems that can be used to manage the business processes of a manufacturer in an effective way.

Digitisation, automation, and networking can support all business processes and stakeholders in manufacturing business (see Fig. 3). It covers the digitisation of the supply-chain processes in manufacturing; it enables the effective management of logistics, complete relationship with suppliers and customers, as well as with other stakeholders like governments. In this dynamically changing  environment, innovation is becoming the core competency that lets manufacturers  adapt to the digital world. This is why many manufacturing companies are creating special functions, dedicated to the analysis of newest technologies and solutions, scouting, acquisition, and smart deployment of innovative solutions. Recently, more and more large European groups have  formed dedicated corporate venture capital funds investing into digital start-ups that can support the digitisation of their value chains.

Manufacturers have very strong motivation to implement Industry 4.0 solutions:

  • Efficiency – due to automation, networked management and data analytics they can develop products, manufacture and make decisions faster using less resources

  • Quality – they can eliminate human errors and implement proactive fault prevention using artificial intelligence

  • Cost – despite initial costs associated with the implementation of digital solutions,  manufacturers will soon benefit from the higher efficiency and reduced number of faults and production downtime

  • Customer experience – in an increasingly competitive business environment, experience with brand and its products becomes the key buying criteria for customers. A digital relationship with clients will significantly improve the perceived customer experience

  • Revenues – the manufacturers that respond faster to market needs, provide the best quality products and customer experience will win the race for customers.

  • Employees – digital manufacturers will be the most attractive employers for the best people available on the market

There is no Industry 4.0-in-a-box complete digital system for majority of industries available on the market yet. We are still at the early stage of the development of Industry 4.0 standards and immaturity of available embedded systems is a challenge when developing the strategy for their digital transformation. There is also one additional, very important risk that from the outset must be well mitigated when converting into smart manufacturing – cyber security. Terrorist attacks, industrial espionage, data theft, or even sabotage by competitors are potential serious threats for factories of the future. Therefore, special attention must be given to the design and implementation of special solutions that will actively identify and handle cyber attacks.

Industry 4.0 creates the real challenge for countries like Poland where manufacturing industry significantly contributes to GDP and export. The winners on the globalising market will be those manufacturers and suppliers who will be able to have all advantages from the quick adoption to the smart, connected manufacturing model. On the other hand, the losers will be those who won't be able to cooperate effectively in a digitally integrated value chain with suppliers or customers. Therefore, the development of Industry 4.0 should be a real priority for both Polish manufacturing industry as well as for other stakeholders like the Polish government, universities and R&D centres, international groups that have Polish suppliers, etc.

The strength of Poland is resulting from very good engineering and software development skills. High priority given to innovations in the Government strategy for responsible development should also support faster digital transformation of the Polish manufacturing industry. On the other hand, very low level of cloud computing  services adoption (only Bulgaria and Romania are behind Poland among EU countries) must be recognised as key barriers for the rapid development of digital factories.

We need to put much more attention to the promotion of digital technologies and Industry 4.0 concept and solutions among Polish manufacturers, development of sector specific solutions. There is a need to develop, test, and implement dedicated solutions focusing on sectors that drive Polish industry. Closer cooperation between all stakeholders is the prerequisite if Poland wants to join the club of countries that lead in the development of digital industry.

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