29. April 2021

Supporters in business, research, and politics like to refer to Industry 4.0 as the fourth industrial revolution. In reference to previous industrial milestones, the term describes the digitalization of production facilities with the integration of modern IT systems and the use of AI applications. Industry 4.0 is intended to enable companies to take account of advancing challenges such as mass customization or increases in efficiency. The digitization of production is based on the pillars of networking, information transparency, technical assistance, and decentralized decision-making.

We currently see that a large amount of Industrie 4.0 applications are already in use in most companies. However, these are often selected to gain experience with a specific technology or to create added value in specific, very narrowly defined situations. This type of application is also often widespread because the arguments “explore new technology” and “solve a concrete, easily measurable problem” are often a good way to release investment funds.

However, disappointment sets in when the calculated ROIs do not materialize because the applications are not rolled out on a broad scale. After piloting, it is often discovered that rolling out the solution would require new infrastructures, such as upgrading the IT architecture, installing a stable IoT platform solution, or significantly faster physical data transmission. The higher cost then often no longer justifies the narrowly defined benefits of the application, which was designed in isolation to address a single problem such as the availability of a particular machine. Pilots were often already deployed in places where the highest effect could be expected, in order to enable a classic ROI calculation – this then often no longer fits across the board.

Pilots are and remain the most important means of introducing a new Industrie 4.0 application. They are almost indispensable for building competencies and validating benefits. However, it does not make sense to stack “pilots on pilots” in order to be able to justify a small step further again and again with a small benefit. In doing so, compromises are made that do not hurt today but will make it more difficult to introduce new holistic approaches in the coming years. In particular, the use of self-developed or proprietary interfaces can often become a problem, as they have to grow with new requirements. This in turn creates dependencies on individual manufacturers or means a high level of in-house maintenance effort.

In our experience, after the pilot phase, it makes sense to take a strategic approach that defines which capabilities the company as a whole currently needs, how requirements will shift against the backdrop of market trends, and which infrastructure decisions need to be made today in order to avoid sunk costs and high stabilization efforts in the future. Industry 4.0 creates the most added value where information from the entire value chain can be integrated – without detours via Excel or similar. Only then does it make sense to talk about applications that are current today, such as machine learning. While it is also good and sensible here to already gain experience with a few well-defined pilots, these approaches will also only show their full value when the necessary infrastructure has been built up across the board.

On the other hand, there are already many very positive examples of a strategic introduction of Industrie 4.0. Experience from this is that strategic introduction must not be confused with a focus on a few providers – the dynamics of Industrie 4.0 thrive on the interoperability of small solutions such as industrial apps via standardized interfaces. Furthermore, the hard part must not be left out – already single media breaks, where a process is no longer traceable due to a manual step, or for example tracking of parts breaks off at single difficult processes, strongly reduce the value of the introduction in the end. Finally, it must not be forgotten that the market environment may look very different in 5 years, but infrastructure decisions made today, such as for an IT/OT architecture, will have effects for 20 years and more. The derivation of a meaningful strategy for the introduction of Industry 4.0 should already take these trends into account in order to allow it to grow with the requirements.

The INC Invention Center accompanies companies along the entire transformation process. Worldwide, our experts have accompanied a large number of companies in the introduction of Industrie 4.0, and created strategies for rolling out the concepts from pilots to plant networks. Our experience is that the clear focus on the goal of the overall strategy for digitizing the value chain is important to derive the optimal benefit from the introduction of Industrie 4.0.