How Industry 4.0 Is Shaping the Future of Manufacturing

Manufacturers constantly search for ways to reduce costs, improve efficiency, meet new customer and partner expectations and become more profitable. At the same time, regulatory pressures, increased globalization and intensifying competition force enterprises to rethink and reimagine their businesses. More recently, workforce challenges, the urgent need for environmental sustainability and disruptions caused by COVID-19 have led many to accelerate their digital transformation agendas by deploying smart factory technology.

The ongoing digitization of design, engineering, development, and production of goods has already driven greater efficiency and productivity. Now, serving customers with the agility and flexibility of an intelligent or smart factory—which is to say, realizing the promise of Industry 4.0—is poised to become a true differentiator for manufacturers.

Key Technologies Powering Industry 4.0

  • Data and Analytics: Ingesting vast quantities of data from disparate sources and analyzing the data in real-time to extract actionable business insights leads to proactive, deterministic, and rapid decision-making.
  • Enterprise Cloud: Cloud computing solutions help organizations take advantage of the latest digital technologies while enhancing business resiliency, enabling better crisis management, reducing downtime and increasing security.
  • Artificial Intelligence (AI): AI’s inherent ability to learn and continuously improve from the data it collects helps organizations become more efficient and productive.
  • Robots and Autonomous Equipment: By safely and even independently manufacturing goods and moving products in, from, and to warehouses and shipping yards, robotic equipment increases efficiency, streamlines operations and improves floor management.
  • Automated Workflows: Integrating enterprise data with information collected at the edge through automated workflows supports improved decision-making and collaboration.
  • Industrial Internet of Things and Edge Computing: Gathering, storing and interpreting data from nearby sources that are generating the data reduces latency in data transfer and enables benefits such as rapid insights to improve operations, remote tracking and tracing, and predictive maintenance.
  • Cyber Physical Systems (CPS): Foundational for a smart factory, CPS have embedded software in them to enable seamless communication with other “smart” devices, creating operational efficiencies with real-time optimization and added value creation.
  • Augmented Reality / Virtual Reality and Digital Twin: Digital representations of physical products or systems help improve design and engineering of the products without requiring investment to iteratively create the actual product and can also simulate different scenarios to help optimize outcomes or enable predictive maintenance of parts or entire systems.
  • Cyber Security: Embedded security safeguards the data and information in enterprise environments.
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NEW RESEARCH: The Road to Industry 4.0

NTT DATA and Oxford Economics surveyed 500+ business and IT executives to understand how leading manufacturers are progressing in their industry 4.0 journey

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What’s Driving Industry 4.0? Customers, Customers, Customers.

In our survey of more than 500 businesses and IT executives in seven manufacturing industries, revenue growth was the highest strategic priority. But over the next three years, there is a clear shift from inward-facing initiatives, such as reducing costs and improving process efficiency, to market-facing priorities like superior customer experiences and developing new products, services, and business models. Transformation emerged as a key theme. And even though only 24% say they have completed their transformation fully, nearly all respondents have started transforming some aspects of their business models.

Our study uncovered the following macro trends driving Industry 4.0:

  • Customer experience and meeting marketplace demands: Customer experience is a key focus and executives are also prioritizing Industry 4.0 initiatives to drive performance. Respondents are focusing on product and service quality (45% say this was a top priority three years ago, versus 57% for the next three years) and responsiveness to changing demand (33% three years ago, vs. 57% in three years).
  • Sustainability gains visibility: Customers are driving demand for sustainability initiatives and executives are looking to Industry 4.0 to meet their needs. Three years ago, 42% of respondents cited sustainability for the next three years, this number now jumps to 56%.
  • An emphasis on resiliency. A chaotic 2020 highlighted the importance of organizational resiliency and adaptability. One third of respondents say responsiveness to changing demand was an important outcome of transformation during the last three years. That number increases sharply for the next three years to 51%.
  • Maturing strategies, changing goals. Respondents seem happy with cost and efficiency gains realized to date, as those priorities will be slightly deemphasized in the next three years—yet they also identify shortcomings in cost and efficiency in particular areas, including inventory levels and costs, production costs, and asset reliability and availability.
  • Successful transformation depends on people. Reskilling for work with digital technologies (70%) and training employees around new processes (66%) have been major points of emphasis. While over half still rely on IT to act as the key integrator of new technologies, responsibility for transformation is increasingly distributed across the enterprise.
  • Technology is critical to the transformed workplace; half of respondents say using data, sensors and digital workplace services to manage employees is important to their company’s strategy for the coming years (vs. 35% three years ago) and 41% cite sensor-based process control (vs. 26% three years ago). To achieve these goals, executives need to address their biggest obstacles to 4.0 transformation: data governance and security (51%) and updating legacy IT infrastructure (38%).

All manufacturers are not on equal footing when it comes to digital transformation. Sub-industries within the manufacturing sector vary widely when it comes to how products are made, where products are shipped, and what services are provided to which customers. These differences demand unique approaches to Industry 4.0 transformation—and our research shows that specific needs determine the path an organization follows.

Get the full report to learn how executives in automotive, high tech, industrial equipment and supplies, oil and gas, utilities, process manufacturing, as well as packaging and paper goods are tackling Industry 4.0.

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Industry 4.0 Adoption – How to Overcome Challenges

There are significant challenges to Industry 4.0 adoption. Some of the common ones include data management, IT modernization, talent and internal friction. Here’s how organizations can overcome these challenges:

  • Invest in critical technologies: Investments in critical technologies will power the transformation to Industry 4.0. Our respondents are already investing in cloud, analytics, automated workflows, artificial intelligence/machine learning, and the Internet of Things to achieve specific business outcomes.
  • Manage and secure your data: Even as organizations continue to praise the transformative power of data on their businesses and operations, they struggle to manage and secure it, with over half citing data governance and security as standing in the way of Industry 4.0 transformation and nearly two out of five grappling with updating their legacy IT infrastructure.
  • Invest in the workforce: The success of Industry 4.0 depends on capable workers and a cohesive, enabling business ecosystem. A skilled workforce is a critical part of the change that organizations need to manage, and our survey indicates that many are addressing this need already, but leaders must tread cautiously when it comes to using monitoring technologies like using data, sensors, and digital workplace services to manage employees.

While Industry 4.0 promises true transformation, merely adopting smart factory technologies and checking the box is not the solution. Organizations will also need to reimagine what the intelligent factory looks like and how these technologies fit into their core operations such as finance, sales and marketing. The goal is to create a dynamic digital ecosystem that enables humans, machines and systems to continuously interact and communicate with each other while at the same time empowering new workforces and workspaces  to become innovative, productive and generate lasting customer value.

Accelerating the Journey to Industry 4.0

The pressure on manufacturers to remain competitive and agile has increased. Hear experts from the Manufacturing Leadership Council & NTT DATA discuss how to accelerate Industry 4.0.

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Prasoon Saxena President, Manufacturing,  NTT DATA Services

“The unique events of the past two years have combined with all the challenges already familiar to manufacturers, driving an inexorable need for digital transformation and the full embrace of Industry 4.0.”

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