What is Industry 4.0? A Guide to the Fourth Industrial Revolution

Written by: Leah Gourley

Read Time: 5 min

It’s nearly impossible to research trends in manufacturing without encountering Industry 4.0. It has become a ubiquitous term, and in doing so, can fall victim to being overused and hollowed out as a buzzword. It can be used to describe the current industrial revolution, a specific set of technology, integrated practices, and a perfect-state goal for manufacturers. But what, exactly, does Industry 4.0 mean?

What is Industry 4.0?

The term Industry 4.0 has modest origins. It was first coined in 2011 by the German government to describe a manufacturing digitization project. It quickly evolved to become a set of recommendations for implementing technology. If the term had been left alone there, there’s a good chance we wouldn’t still be discussing it in 2020. But in 2016, Klaus Schwab, head of the World Economic Forum explicitly linked the term to his presentations and writings on the Fourth Industrial Revolution. The term expanded beyond specific recommendations and is now used to describe a major revolution in manufacturing.


Defining Industry 4.0

In this context, Industry 4.0 becomes easier to quantify. Situated at the crossroads of information and operational technologies, Industry 4.0 converges previously separate physical and digital systems in industrial manufacturing. Why is this important? By tearing down these barriers, companies can dramatically improve efficiency, productivity, and agility—in ways that were never possible before. To understand the scope of Industry 4.0’s impact, it is helpful to look at the precursors to today’s Fourth Industrial Revolution.


Putting the Fourth Industrial Revolution into a historical context

In the mid-18th century, an industrial revolution replaced manual, hand-made production with early mechanization through water and steam power. A second revolution introduced electricity—paving the way for mass production and assembly lines in the early 20th century. In the 1970s, computerization and automation unleashed a massive third revolution. And a few decades later the Fourth Industrial Revolution, also known as Industry 4.0, has arrived to reshape manufacturing through a deep harnessing of data to automate, predict, control, and optimize operations. It does warrant noticing that the pace of subsequent revolutions has accelerated.


Industry 4.0’s effect on the value chain

To better understand Industry 4.0, and why it matters, it is important to look at the full value chain from suppliers to the end customer. Reimagined service and business models powered by smart manufacturing now allow companies to streamline production relationships across the value chain from suppliers, producers, and customers. It also uses technology to create unification between people, process, and products. Manufacturers and service organizations can enjoy access to unprecedented levels of data making it easier to understand, control, and improve every aspect of their operation.


Making an impact—Industry 4.0 technologies

Industry 4.0 is more than a specific use case or technology. Rather, leveraging a group of complementary technologies can jumpstart digital transformation and massive growth. Specifically, engineering, manufacturing, and service teams are realizing Industry 4.0 practices through the following technologies.

1. Standardized industrial connectivity to harness data: Making data actionable begins with being able to liberate data that’s been historically trapped within equipment, machines, and products. While newer iterations are baking connectivity into native machine functionality, manufacturers are embracing ways to introduce connectivity—specifically standardizing connectivity—across their factory floors and product lines, even extending them to legacy machines that were never designed to share data.

2. Industrial Internet of Things: For manufacturers, the IIoT offers incredible insights into their products and operations to securely access, monitor, analyze, and act on their data in new ways. Enterprises can leverage this information to drive smarter, faster business decisions.

3. Big data, analytics and AI to inform action: Building on the IIoT and connectivity, applying analytics and AI to production equipment and systems is becoming the Industry 4.0. standard to support real-time decision making as businesses uncover patterns and hidden barriers to efficiency.

4. Cloud computing to make data more available: Cloud-based systems offer access to remote servers hosted on the internet where companies can store, manage, and process their data and analytics. Cloud computing has been transformative to nearly every aspect of modern manufacturing, from enabling scalability and efficiency, to reducing operational costs.

5. Automation and robotics to accelerate productivity: While automation is not a new concept, Industry 4.0 offers smarter assets, equipped with computers or robotic tools and the ability to learn complicated and precise tasks.

6. Augmented reality (AR) to empower employees: AR overlays digital information or objects onto the physical world and helps employees use, maintain, and service industrial machinery and equipment. AR offers a better way to deliver easily consumable work instructions to on-the-job employees, boosting workforce efficiency and safety. 


Empower your business with an Industry 4.0 model

Industry 4.0 offers unprecedented insights into every part of an organization’s operation, that are also accessible to the whole enterprise. It offers a nearly limitless scope to understand and improve all aspects of production.

Intelligent Asset Optimization: Enhanced asset health monitoring makes it possible to predict and in many cases, prevent downtime, ensuring machines are more productive. Machine maintenance can also be planned more intelligently, through a combination of real-time data and algorithms based on past performance.

Digital Workforce Productivity: Augmented reality enables employees to become more skilled, more quickly, while improving knowledge and skill retention. They can also switch between tasks more easily with the use of digital work instructions as a guide. The incorporation of more automated processes also eliminates the margin for human error as machines consistently perform at a higher standard.

Reduced Operational Costs: Real-time visibility into the entire production process offers a scope to cut manufacturing overheads by as much as 15 percent. Material costs can also be lowered up to 50% by reducing scrap and rework with the help of real-time asset-monitoring, digital work instructions, and predictive analytics.

Scalable Production Management: As products become increasingly complex, it requires flexibility and agility to reduce downtime and ensure quality. With a mix of the IIoT, augmented reality and analytics, companies can introduce products to market quickly and scale production up or down seamlessly.


Overcoming the obstacles of Industry 4.0

While some businesses remain cautious regarding Industry 4.0, the industry as a whole is embracing these technologies. Increasingly, beginning a digital transformation to Industry 4.0 is critical to maintaining competitive advantage. But while most companies have recognized the value and inevitability of the Fourth Industrial Revolution, some are struggling to overcome roadblocks and obstacles to effective implementation.

As seen in the Manufacturing Leadership Journal Editorial, PTC experts take a look at the challenges facing manufacturers in the form of “pilot purgatory”. While companies are leveraging Industry 4.0 to stay competitive, many have yet to realize the full potential of a digital transformation. They tend to run a variety of Industry 4.0 initiatives and struggle to scale out of the pilot stage. Fortunately, there are ways to avoid the common pitfalls of pilot purgatory, which these experts address with actionable guidance.

Digital transformation is not realized overnight. Each of the technologies discussed is unique and it is essential to determine which combination best aligns with your organization’s digital transformation strategy and business objectives. And while full transformation isn’t immediate, smart planning and the right technology can ensure that Industry 4.0 progress begins quickly and continues to add value as it scales up.


Unleash the potential of the fourth industrial revolution

Perhaps what’s most exciting about Industry 4.0 is that it’s still evolving. While manufacturers across the globe are already seeing real and demonstrable gains thanks to Industry 4.0 technology, there’s still huge untapped potential.

What’s clear is, like previous industrial revolutions, Industry 4.0 is transforming manufacturing as we know it. Companies already taking the steps towards digitization now are the ones that find themselves at the front of that transformation and leading the market. If you’re interested in Industry 4.0 practices and technologies, visit our manufacturing, service, and engineering solutions areas to learn how you can make your own digital transformation.

Tags: Industrial Connectivity Industrial Internet of Things Augmented Reality Industrial Equipment Electronics and High Tech Automotive Aerospace and Defense Life Sciences Digital Transformation

About the Author

Leah Gourley

Leah Gourley is a Digital Content Marketing Specialist based out of PTC's Boston office. She enjoys creating and sharing content surrounding the latest technologies that are transforming industries, including augmented reality and the industrial internet of things.