A skilled labor shortage, a fluctuating marketplace, and regulatory issues have drastically impacted manufacturing operations. These disruptions have forced many entities into rapidly acquiring or scaling their technology capabilities.

The demand to increase efficiency in a highly competitive landscape through technology-driven change is at the heart of Industry 4.0 and its direct impact on the manufacturing industry.

What is Industry 4.0?

Industry 4.0 refers to the Fourth Industrial Revolution, which focuses on the arrival and advancement of technology not previously available.

With a merging of artificial intelligence, robotics, IoT, IIoT, and other innovative technology and data-driven components that increase efficiency, Industry 4.0 has embedded itself into manufacturing.

In fact, McKinsey found that in operationally intensive industries, like manufacturing, there is 1.3 times more automation potential than in other industries. This equates to almost 60% of work that could be automated with current Industry 4.0 technologies.

What it doesn’t mean is abandoning everything you already do best. Incorporating Industry 4.0 ideas should enhance your operations and help you identify how to operate better.

Putting an Industry 4.0 Strategy into Place

When it comes to embracing Industry 4.0 opportunities, always begin with alignment to overall business strategy.

Effective change puts people and processes first. Streamlined processes help your employees be more productive, allowing for better customer service and more efficient operations overall.

For many manufacturers, Industry 4.0 has reached the “intermediate” stage in their digitization efforts. This looks like pilot programs, assessments, experimentation, or gradually scaling these technologies company-wide.

The Manufacturing Leadership Council found that nearly 70% of respondents indicated they would continue their Industry 4.0 investments. Nearly 20% said they would increase their investments.

Not even 7% of manufacturers have “extensively” digitized their factory operations today. However, almost 15% are planning to do so by 2026.

Source: Manufacturing Leadership Council Survey

Industry 4.0 Technology Tools to Consider

Specific examples of Industry 4.0 technologies to better optimize your organization include:

• Enterprise resource planning (ERP)
• Automation and the IoT
• Data analytics and warehousing
• Artificial intelligence (AI)

This list is far from exhaustive, and adoption of new platforms and processes in manufacturing is as varied as the tools available.

Enterprise Resource Planning for Manufacturers

Manufacturers often piece together multiple applications to run their operations. This infrastructure approach results in a lack of integration, limited visibility, bottlenecks, manual tasks, and an increased risk for error.

Scaling current technology capabilities is necessary for optimized and efficient business performance.

This begins with the establishment of a business management system designed specifically for your company’s needs. ERP systems are the backbone of Industry 4.0, with the power to orchestrate digital processes and provide real-time information to drive overarching strategy. The result is the necessary data needed to fuel the success of a product throughout its lifecycle.

To start, review your current business management system and ask: does this give me access to accurate information to drive decision making?

If not, the first step is updating the technology you use. A streamlined, cloud-based ERP can integrate inventory, supply chain, e-commerce, finance and more, increasing visibility and enabling you to react to customer and business needs in real-time.

Ideally, your ERP should be part of an overall integrated data system that encompasses your ERP, CRM, and material resource planning (MRP).

Leveraging the knowledge gained from this type of integrated knowledge allows manufacturers to tailor interactions, map potential weaknesses, and address future obstacles early.

Automation and the IoT

Business Process Automation (BPA) can help streamline processes such as hiring new employees, reconciling databases, fulfilling warehouse returns, tracking equipment details and flagging routine maintenance or replacements. Automations can essentially function as a digital project manager that seamlessly coordinates an entire process.

Robotic Process Automation (RPA), on the other hand, can transform manual, tedious and repetitious processes into hands-off, bot-controlled tasks that allow employees to spend more time on higher level work. From purchase order processing and order fulfillment to marketing and finance, RPA is a big component to many manufacturers’ Industry 4.0 strategies.

Manufacturers are also incorporating the Internet of Things (IoT) into their warehouses and workflow. IoT sensors and RFID tags provide valuable information about nearly every process, including inventory, supply chain, production line, and transportation. The strategic use of this information can help manufacturers automate supply chain operations, modify production as needed, prevent potential downtime, and more.

The Power of Data

The reality is any Industry 4.0 technology is only as good as the information you put into it. In a widely connected, digitized marketplace, these technologies can collect data from a wide range of sources, including:

• Equipment
• IoT enabled-devices
• Market trends
• Transportation and traffic apps
• Inventory assets

With a sound data strategy that takes into account all of your data (data sources, ETL processes, data storage, learning and analytics, and data visualization), you can be sure that your data is instant, accessible, and reliable.

Your operational and financial data can be combined with data from your IoT products to improve processes, make forecasts and reduce inefficiencies. Data analytics opens the possibilities for forecasting, warehouse management and supply chain improvements.

The Use of AI in Manufacturing

Studies show that AI is projected to increase productivity in manufacturing by 40% by 2035, and implementing AI in manufacturing processes can potentially lead to a 30% reduction in costs.

Generative AI applications have great potential for manufacturers, as they affect manufacturing operations in meaningful ways. Use of generative AI can help manufacturers:

• Plan by providing information on inventory levels or areas of overstock.
• Produce by automating ordering and setting targets to help avoid supply chain issues.
• Deliver products by augmenting staff on the factory floor, verifying transportation and shipping, and review warehouse designs for enhanced productivity.

Instead of getting carried away by AI, the best leaders look for the right solutions for their business problems. AI usually fits into existing processes and applications, so it's important to consider your overall business case and data readiness before adopting AI.

Next Steps Toward Industry 4.0

Today’s manufacturing environment requires humanization, optimization, and digitization. Here’s how to get started:

1. Assess your current technology climate. What tools do you already have that can serve you even better? For example, if you already use an ERP, does it have additional modules that would make sense to implement in your organization?
2. Talk to your team. Your employees know where inefficiencies already exist or areas that create excessive mental tolls during the workday. Look for tools that lead to efficiency and increased productivity, coupled with ease of use.
3. Engage with your supply chain partners. In today’s ever-changing supply chain environment, talking to your partners can help you identify gaps in processes. Use this to help guide your assessment.
4. Get really good at your data. At any moment, you should be able to access real-time data across your organization. The quality and accessibility of your data will dictate how well any Industry 4.0 technology performs.

Industry 4.0 strategies are about so much more than new technology. A true optimization ties everything back to business-focused goals and growth across the organization.