Advantage of the digitalisation

The digitisation of value chains through Industry 4.0 will bring lots of benefits to businesses: They will be able to meet customers’ needs and wishes more quickly and effectively, design processes more efficiently, and even create new business models.

Industry 4.0 is a real productivity driver. The digitisation and connectivity of production and smart products is revolutionising value chains,” asserts Prof. Dieter Kempf, President of the German manufacturers’ association BITKOM. “Industry 4.0 applications extend from product development, through production and logistics, to supporting functions such as quality assurance, customer service and personnel planning,” Kempf concludes.

On the way to distributed self-management

Flexibility and customisation of production are the key benefits of Industry 4.0. They are realised through cyber-physical systems, enabling distributed self-management of production. The workpiece communicates autonomously with the production plant and intervenes actively in the production process. Michael Stiller, scientific specialist in industrial communications at the Fraunhofer Institute for Embedded Systems and Communication Technologies ESK, comments: “Distributed management concepts, also enabling Cloud-based control of production plant, are essential in terms of realising the benefits linked to Industry 4.0: from improved capacity utilisation through to cost-effective production of small lots. The more cumbersome, inflexible pyramid of conventional automation cannot do that.” The result is much more flexible production, responding in quasi-real time to changes in markets or value chains. Moreover, the large numbers of connected sensors integrated into plant and machinery are able to supply comprehensive operating, status and environment data. This means complex production processes can be monitored in quasi-real time. This transparency in production enables continuous improvement of processes and makes production much more efficient.

Quantitative and qualitative benefits

According to a study by accountants PricewaterhouseCoopers (PwC), companies in Germany expect to see an average annual improvement in efficiency of 3.3 percent thanks to Industry 4.0. At the same time, digital solutions will help cut costs by 2.6 percent a year. Dr Reinhard Geissbauer, PwC Management Consulting Partner, comments: “The digitisation of the complete value chain will deliver major quantitative benefits. But it will also entail some key qualitative benefits: companies which extensively digitise their processes can manage their production and logistics more efficiently. They are able to respond flexibly to change, and fulfil their customers’ needs and wishes more closely. Also, they conserve valuable resources by using less.”
The scope of Industry 4.0 extends beyond the digitisation of processes and value chains. Companies are also in a position to greatly enhance their offerings of connected products and services. “Examples of digitised products and services can be found in all industries. The automotive industry, for instance, has developed conventional brakes into state-of-the-art anti-lock braking systems based on electronic control units. Plant and machinery manufacturers are utilising sensors to ensure optimum preventive maintenance of their systems,” explains Reinhard Geissbauer.

Additional business based on new service models

Companies’ own products can also be fitted out with Industry 4.0 technologies, so as to create new service models, for example. The intelligent, communicating objects are able to collect all kinds of data relating to their use and to customer behaviour which can be used as the bases for new business models and services. Start-ups and SMEs in particular can gain a foothold on the market through business-to-business services. “Industry 4.0 has the potential to revolutionise our industrial value creation in the same way as the Internet is revolutionising knowledge,” states Prof. Wilhelm Bauer from the Fraunhofer IAO Institute for Work Organisation. Only a small part of the expected potential has been realised to date, however. As Prof. Bauer concludes, much will depend on whether, and how, new business models can be introduced into traditional industries.

(picture credits: Photocase: Marqus)

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