This article was first published in Manufacturing Today, and the same has been republished here.
Industry 4.0 is set to change the world and make manufacturing more sustainable while enabling companies to substantially improve their operating efficiency and optimise costs, writes Niranjan Nadkarni.
In his celebrated book, Collapse – How Societies Choose to Fail or Survive, the best-selling author Jared Diamond made an astute observation. Every society at some point comes to a crossroad while dealing with sustainability issues. It makes the right choices, protects the environment and, survives or if it makes the wrong choices and continues with untrammeled over-exploitation of resources, it collapses.
Modern societies and economies are centered around manufacturing. The reason homo sapiens have emerged as the predominant species on the planet, is because of our ability to manufacture tools – from the earliest Stone Age weapons to today's gigantic machines and industrial plants.
Starting from the mid-18th century, we have had three industrial revolutions powered respectively by steam, electricity and for the 1970s by technologies like electronics, communications, and the rise of computers. Each of them progressively fueled exponential growth in output, efficiency, productivity and prosperity.
However, this prosperity has come at the cost of unfettered exploitation of Earth's resources – deforestation and desertification, pollution of rivers and oceans and the looming threat of climate change, to name just a few.
The consensus is that this model of manufacturing is not sustainable. Countries and businesses need to find sustainable alternatives. Technology now provides an answer.
Writing for the 250th-anniversary edition of Encyclopaedia Britannica, World Economic Forum (WEF) Founder and Executive Chairman Klaus Schwab said, "Industry 4.0 technologies are rapidly changing the way humans create, exchange, and distribute value". The range of possibilities opening up is dazzling and seemed in the realm of science fiction only a few years ago. Smart factories, mass customization of products, energy-efficient and green supply chains are just some changes being wrought by Industry 4.0.
According to a United Nations Industrial Development Organisation (UNIDO) report, Industry 4.0 could contribute to finding new ways of dealing with significant global challenges, such as climate change, lack of clean energy access, depletion of natural resources, economic stagnation, and reducing the digital divide.
Industry 4.0 is important not just because it boosts energy efficiency and reduces cost – though every CEO will tell you these are critical areas of focus for his teams. Industry 4.0 has a far more significant and broader impact. It is a pathway to sustainable development and can help companies meet their Sustainable Development Goals (SDGs).
The challenges we face are multifarious – population pressure, climate change, energy security, environmental degradation, water and food availability – to name a few. To address them we will have to change our business and production processes, become significantly more energy and resource efficient, and minimize waste. Advanced technologies will accelerate this process of transformation and will play a pivotal role in addressing the immediate need of resource conservation and climate change concerns. Technologies that support in utilizing renewable energy resources, establishing smart water systems, developing smart grid systems, making efficient public infrastructure producing environmentally friendly materials and products will be crucial to achieve the overall goal of sustainability. Industry 4.0 is likely to do this through a combination of technologies like the Internet of Things, artificial intelligence, data analytics, machine learning, 3D printing, among others.
The UNIDO report mentioned earlier makes an interesting point. It says, "Industry 4.0 presents opportunities for both transforming and leapfrogging. For industries that are already advanced (in the use of Industry 3.0 technologies), the transformation to Industry 4.0 would "involve retrofitting existing industrialized systems with Industry 4.0 technologies that could provide more sustainable solutions". For other manufacturing units that may not be as advanced, say from developing countries, Industry 4.0 will provide an opportunity to leapfrog to a more sustainable pathway "without repeating the mistakes of traditional development."
For most companies, however, transformation or leapfrogging is not easy. According to my colleague, Dr. Andreas Hauser, who, as Managing Director, leads the Digital Service Centre of Excellence, TÜV SÜD, "Many companies find it hard to formulate an Industry 4.0 roadmap which is customized according to their strengths and challenges. They are often overwhelmed by the multitude of technologies in the market and how they can be integrated seamlessly into their infrastructure and operations".
The solution seems to seek expert help to guide them through this seemingly, radical and challenging change. This is precisely the route that CEOs are investing in.
Meeting the Challenge
A three-step process can be identified to help industries deal with the challenges of industry 4.0. The first step is a gap analysis using the Smart Industry Readiness Index (SIRI). The World Economic Forum (WEF) and the Economic Development Board of Singapore (EDB) together with McKinsey, Siemens and TÜV SÜD have jointly embarked on a project to proliferate the global adoption of the Smart Industry Readiness Index (SIRI) as the internationally recognized framework to help the manufacturing community accelerate digital transformation by adopting Industry 4.0 (I4.0) globally.
The second step is "Solutioning", where a roadmap is defined and the business case for each initiative evaluated. These are then implemented while ensuring that quality requirements of safety, security, reliability and interoperability are met. In the last step, 'Operation', the company's running systems are controlled to ensure reliable and smooth operations while minimizing operation and maintenance costs.
Industry 4.0 is set to change the world and make manufacturing more sustainable while enabling companies to substantially improve their operating efficiency and optimize costs. Above all, companies that embrace Industry 4.0 will stay relevant and be future-ready.