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Industry 4.0
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What course of action should enterprises choose in the face of the tide of Industry 4.0?

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The Industry 4.0 revolution has been present for many years. Despite the fact that numerous enterprises have moved from the conceptual stage to practical applications, enterprises tend to lack a clear understanding of the following: Industry 4.0 is not a solution which can be directly adopted, and the main focus is not on technology or equipment. Once enterprises decide to fully embrace transformation, they must start with a revision of organizational concepts, management approaches, and relevant processes.

Industry changes spur paradigm shifts
Most people tend to focus on technical aspects in their discussions of Industry 4.0. This obscures the real benefits of this new trend, namely transformation, upgrades, and succession. Enterprises all over the world universally face these three major challenges, which not only represent a new struggle for survival but also a great opportunity for industries.

Not only the hi-tech sector but also traditional industries are starting to embrace Industry 4.0 for the following reasons:
1. The rising number of software tools which can be acquired conveniently at decreasing costs represents a significant incentive.
2. In the face of changes in demand and vigorous competition in the market, standardized manufacturing, product life cycle extensions, and a large variety of equipment types in plants are no longer the paradigm. Even traditional industries need to shift to personalization and customization, shortened product life cycles, constant changes in production lines, materials, and processes, connection of equipment to networks, and consistent quality requirements, which in turn leads to a complete redefinition of costs.

Redefinition of organization as the first step of Industry 4.0
However, a close scrutiny of different industries reveals that a large number of enterprises are not in a position to fully adopt an Industry 4.0 framework. For instance, some businesses only need tiny upgrades in the field of smart manufacturing for their practical operations. In other words, they may realize intra-factory networks and enhancement of overall management efficiency through installation of a few sensors on existing equipment. They do not have to make a large investment in so-called “new Industry 4.0 equipment.”

Moreover, the direct adoption of smart manufacturing in companies whose organizational design is based on a traditional apprentice system may represent a wasted effort since the ultimate goal of Industry 4.0 is to convert the experiences of the master into data which can be reproduced and learned. The desired effects cannot be achieved through mere adoption of one machine with the most advanced technology if the organizational structure and manpower philosophy remain unchanged.

Industry 4.0 has turned into a catchword, but most discussions focus on technologies, automation, and robots which only represent tools. The main emphasis lies on conceptual change, innovative thinking, and redefinition of organizational structures. If no changes are implemented in these areas, even large capital investments to implement the adoption of multiple systems and facilities will not produce the desired results. Industries must first consider how to utilize their competitive advantages to respond to external changes. Organizational reform represents the first step.

Current factory designs and manufacturing modes which are characterized by fine division of labor, standardization, and centralization are inherited from the third industrial revolution. Industry 4.0 completely revolutionizes traditional concepts with a shift to decentralization, collaborative approaches, emphasis on ecosystems, and potential sharing of information with suppliers and clients. The term “organization” will acquire a completely different meaning. In the future, the core operations of certain industries will no longer be centered around manufacturing. We may see a shift to services, marketing, and data.

”Pain points” represent the main focus of Industry 4.0 application
How should enterprises apply Industry 4.0 concepts in practice?

A large number of businesses welcome Industry 4.0, but their starting points, issues and difficulties, and level of readiness differ completely. For instance, some companies possess highly automated production lines with only limited linkage to up- and downstream processes, while others are still stuck in stage 1.0 and 2.0 with no signs of automation.

This is reminiscent of the discussions on electronification of enterprises in the past. Industry 4.0 is an evolutionary process with no clearly defined apex or completion point, just like there is no 100% electronified company. Industry 4.0 is an ongoing process characterized by constant evolution. This process varies from company to company based on unique industry characteristics.

As a matter of fact, “adoption” of Industry 4.0 is a misnomer. The goal is rather to identify usage scenarios and determine whether Industry 4.0 related new technologies are capable of solving the issues associated with such scenarios. These two concepts are completely different. In conclusion, it is recommended that enterprises should focus on their own “pain points” and future development needs when applying 4.0 Industry concepts.

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