The Customer Benefits of Industry 4.0 Explained
Industry 4.0 brings a lot of opportunities in the industrial environment when it comes to creating value (a concept that can only be recognised by the customer). Companies accelerate on different levels in their road to digital maturity. Thus, it is key to further understand the customer benefits of Industry 4.0.
This may come as no surprise when realizing that on the one hand there are companies that are solely focusing on ad hoc initiatives that are not vision-driven (‘let’s try out this new Cobot’), whereas on the other hand the striving companies have Industry 4.0 pinpointed as an important lever that is integrated on the whole value chain.
In this article, the aim is to explain the customer benefits from an abstract perspective and from a concrete perspective. The first goal will be achieved by understanding the transformational nature of Industry 4.0 and the related sense of urgency, whereas the second goal will be attained by presenting common and tangible Industry 4.0 use cases and their customer benefits.
What is Industry 4.0?
First, what is meant with Industry 4.0? Industry 4.0 refers to the fourth industrial (r)evolution. After the first (water and steam), second (electricity) and third (electronics and IT) wave, this fourth phase is based on data and connectivity.
While Industry 4.0 and the Internet of Things (IoT) were still relatively new concepts, innovations in these domains focused on “proof of concepts”. Today, digitization and new technologies are accelerating the increase of efficiency and quality in manufacturing and supply chain.
Understanding the transformational nature of Industry 4.0
Four key areas can be identified that help to explain the accelerating power of Industry 4.0. First and foremost, the impact which can already be made with Industry 4.0 is substantial. Second, the technological advancements in recent years truly support more and easier digitization. Third, Industry 4.0 creates new business and revenue models. Fourth, Industry 4.0 can be seen as the global equalizer in manufacturing and operations.
Let’s take a look at each of these factors in turn in order to understand the complete range of customer benefits brought by Industry 4.0.
Companies and organizations that are embracing the opportunities Industry 4.0, IoT and Data Analytics have to offer, have already been reporting significant improvements. From a productivity point of view, OEE and output per FTE rise, while scrap and energy costs drop. Companies also become more agile, reduce their inventories and their lead- and change-overtimes. The numbers presented below are from actual clients we serviced.
More and more, it can be said that the ‘time is now’. Costs and size of technologies enabling Industry 4.0 and digitization have never been lower. Meanwhile, performance of these technologies has never been higher.
Sensors, for example, have approximately decreased 50% in price over the past 10 years. Connectivity is made easier due to bandwidth being around 40(!) times less expensive compared to 10 years ago. Data storage, processing power, … All these components have become less expensive and more performant.
Besides cost, flexibility, quality and safety, Industry 4.0 offers the opportunity to expand business and change your business model. These smart technologies allow organizations to change from ‘only’ selling products to selling services, as truly understanding the right data can be valuable for a number of external parties. The infographic below illustrates that statement.
Finally, Industry 4.0 can be seen as a true global equalizer. This can be observed from 2 perspectives. First of all, for the mature economies. Second, for developing economies. Traditionally, the former was strongest in quality, while the latter competed on costs.
Industry 4.0 and the previously discussed technological opportunities, such as Digital Twins, allow any organization to decrease costs while also improving quality. As such, with the right use of Industry 4.0, mature economies will be able to compete on costs, while developing economies can compete on quality.
Industry 4.0 customer benefits explained
Following on coverage of the accelerating and disruptive power of Industry 4.0, the next step is to understand how these advancements result in actual customer benefits experienced by companies. First, the link between Industry 4.0 and Operation Excellence (OpEx) will briefly be presented, as the interwovenness between the two concepts helps to recognize that the use cases that are presented hereafter build upon a certain level of OpEx.
Combining Industry 4.0 and OpEx
In many ways ‘traditional’ operational excellence approaches (OpEx) and Industry 4.0 advancements share the same goals, such as improved efficiency or optimal decision making. The real leading companies endorse this commonality and aim to combine both approaches as to unlock the most improvement potential. The illustration below visualizes the connecting link.
The visualization shows that in a so-called Factory of the Future way of working, the systemic appliance of OpEx methods is accompanied by Industry 4.0 networked technology and its usage of data. Thereby, it shifts the required expertise to be more data driven instead of process driven. This shift enables transparency of information and will in some cases even result in the use of autonomous systems.
Industry 4.0 benefits
Appliances of Industry 4.0 vary widely depending on the scope from which it is considered. In the picture below, appliances are presented from a supply chain perspective.
In essence, all these applications can result in an improvement in productivity, efficiency, flexibility and agility, when implemented as the next needed step in maturity level.
The following applications are worth pointing out specifically, because these techniques are starting to be more used widely and proven to be positively impacting the indicators mentioned earlier: digital shopfloor management, predictive maintenance and intralogistics.
Digital shopfloor management
Receiving the shift planning on a smartphone, updating action logs on a virtual dashboard or comparing root-cause analyses over multiple sites. These are all real-life examples on how digital shop-floor management is used by clients.
The important note here is that digital shopfloor management is not simply about going from analog to digital by showing KPI’s on a central screen. That would for some end-users sure count as a work simplification aiding in convenience, but that does not tell the whole story.
Digital shopfloor management truly is a tool that is used to allow processes to remain under control. The real differentiator is that, through the use of IoT technologies, data can be integrated from all relevant sources.
All in all, this point of Industry 4.0 benefits the whole company, as it helps to consolidate, manage, improve and learn in a more efficient manner, making use of all possible opportunities presented by the data in real time, at any level. This allows for a general boost in productivity, a capitalisation of data and the capture of knowledge.
The goal of predictive maintenance in Industry 4.0 is to find the right maintenance frequency on equipment. Finding that optimum benefits in the following ways:
- Preventing unplanned down-time and reactive maintenance
- Preventing unnecessary costs due to excessive and unfocused preventive maintenance
- Minimizes the costs of supplies, materials and spare parts.
This method uses both forecasting techniques and sensoring. Assets and systems work together by sharing data, which in turn leads to the buildup of intelligence and the identification of specific areas that need attention on the time when it is needed.
The core elements of any warehouse are intralogistics: the set-up of all material and physical goods flows, including necessary support functions and processes.
Even today, for many companies the bulk of these intralogistic processes and flows are highly manual. Automation is still quite rare. A typical order-picker will spend most of his/her time walking or riding through the warehouse.
However, it does not have to be like this. The latest technological advancements of Industry 4.0 have profoundly altered the playing field. When evaluating how to set-up your intralogistics in the best way, there are many possible solutions to take into account.
- autonomous transport robots (AGVs)
- Smart Racks / Smart Shelfs,
- Collaborative picking and handling robots (Cobots)
- combined assistance systems (example: Pick-by-Voice & Pick-by-Vision).
Where in the early days of these technologies the necessary initial investment was quite significant, this has changed a lot. Today, these technologies are modular and scalable. This even allows for a step-by-step or module-by-module roll-out.
Therefore, the financial risk can be limited and the potential benefits can be huge! Next to the cost side, the performance of these solutions has improved remarkably. Combining these two facts, leads us to a situation where it is now useful and possible to consider automation where this was not possible earlier. In some cases, it is even a no-brainer.
In summary, the opportunities for automation and smart technologies in intralogistics are plenty. The biggest question to answer is which concrete use cases offer the biggest possible benefit for your specific situation.
How EFESO helps clients and partners achieve the full potential of benefits in Industry 4.0 initiatives?
When considering possible use cases or priorities for new technologies, we are able to guide you in every step of the way. Important to note is that we will always make sure to start from your specific situation and business objectives. Don’t hesitate to contact our Industry 4.0 specialists today.
As mentioned before, technological advancements are possible in every part of your value chain. Our services include:
- Development and operationalization of the digital strategy
- Measurement and evaluation of the digitization maturity levels (digital readiness)
- Design and implementation of Smart Factories (technologies, methods, structures, processes)
- Analysis and evaluation of the as-is situation (type and number of warehouses, internal and external services, network and transshipment points etc.)
- Design and implementation of integrated planning systems
- Conception and realization of Digital Twins
- Implementation of data analytics projects in production and supply chain
- IT architecture, IT development planning, platform and system selection
- Adaptation of the management system
- Extensive training and qualification offers