Industry 4.0: Transforming People, Processes, Technologies and Organizations

Industry 4.0 is here, and it promises to transform manufacturing operations with autonomous machines that are self-monitoring, organize their own maintenance, and link directly into scheduling and logistics systems — without human intervention.

Customized products will be built on highly flexible production floors that are no longer tethered to a fixed flow conveyer belt. These customized production operations will link the factory floor to inventory systems, ordering and pulling just-in-time delivery of needed parts to create this customized product. Managers will have access to fused data that points to emerging production problems before the machine or line is down for repair, eliminating unplanned downtime. Industry 4.0 represents a fundamental shift in manufacturing that will transform people, processes, technologies, and organizations.

But what does it take to get from where most companies are today to a future that embodies Industry 4.0? Here is where the rose-colored glasses come off. My colleague, Faith McCreary, and I have been working with manufacturers and their ecosystem partners to better understand how this transition to Industry 4.0 is evolving. The result from our work has been published in a report, Industry 4.0 Demands the Co-Evolution of Workers and Manufacturing Operations, and summarized in a white paper. We’ve discovered some interesting trends that may help business decision-makers prepare for the future.

The Power of Vision
First, most of the companies we surveyed are following the advice of pundits: Start small. Using this guidance, companies focus on creating point solution pilot or proof-of-concept projects. Progress, we are told, happens when companies experiment, fail fast, and learn. Not surprisingly, many companies are struggling in their initial efforts to implement fundamental changes.

Even when pilot projects are successful – and many of them fall short – these islands of excellence are not scalable, because they don’t take into account a systems-of-systems view of the factory. They often neglect the integration of technical, operational, and enterprise-level issues. We are also finding that the companies pursuing Industry 4.0 to transform processes, fail to appreciate the importance of the organizational structure to support this transformation.

Based on the feedback we have collected, companies should be following the mantra when it comes to Industry 4.0: Think big, start small. Be holistic.

It Takes More than Technology
Another fallacy in the transformation process is the belief that simply having a technology solution will solve a problem. For example, a predictive maintenance solution requires that the project leader possess a clear understanding of the physical forces that impede machine performance. In essence, they must possess a cumulative damage model. Driving decisions and action with this model, however, requires that the data exist and can be collected in a form that is useful across time and systems.

But the results of our study found that lack of information in a suitable form can impede even the best technological solutions. A lack of aggregated data, sharable across organizational silos and available in a timely manner, are two of the most significant obstacles to Industry 4.0 transformation.

Data Driven Culture
A third hurdle to Industry 4.0 transformation is corporate culture. Many companies have a reactive mentality to change, rather than a proactive view of how things can be different in the future. One participant in our survey noted a difference between current leadership, mired in reactive thinking, and more proactive, emerging leaders in his company.

This is indicative of the divergent thinking of manufacturing executives as they grapple with change. On the one hand, the return on investment (ROI) is too unclear to be decision-ready, particularly with risk factors included. On the other hand, many leaders understand the need to evolve by taking small steps to start the transformation process.

Either way, simply looking at ROI and embracing baby-steps misses the mark. The problem lies not in how to get started, but in how to develop teams that can define the problem, assess the digital technology options, and understand how to gauge the value of any particular solution in terms of metrics that drive operational performance and the bottom line.

Convergence Is Essential to Transformation
At the heart of the challenge of the Industry 4.0 transformation is the need for a meeting of the minds. The physical and digital worlds must converge. This is a transformation being driven by digital technologies, in which operational technology (OT) must blend with IT excellence, experience, and tools. Having one without the other results in one of two basic problems. First, great operational ideas lack the digital infrastructure needed to be sustainable and scalable. Second, advances in IT tools and technology fail to be deployed on the factory floor because the ROI cannot be described in metrics that reflect operating imperatives.

The solution to the convergence problem is very simple, but hard to achieve. Manufacturers must build an organizational culture where convergence and empowerment are linked, and OT and IT converge. If “smart” machines are to become more useful, OT and IT professionals must work together to optimize both data integrity and the operational dynamics.

It’s not just OT and IT professionals who need to be involved. Manufacturing expertise resides throughout a factory. Our study suggests that workers from the factory floor to the C-suite want to see changes in their operations. In fact, our study found that there is a mandate for change as companies move toward an Industry 4.0 future. Here is where empowerment comes in to play. Companies that embrace change must empower individuals to create, test, and deploy new ways to work with technology and business solutions.

Industry 4.0 Requires Organizational Changes
Industry 4.0 requires re-thinking the status quo. Current organizational silos that have supported production at scale may not be well-suited to a future Industry 4.0 environment. Historically, manufacturers have sought economies of scale in which efficiency was the primary driver toward success. Separating purchasing, IT, and operating functions made sense in this world. But in the Industry 4.0 world, in which cyber-physical systems are emerging, efficiency must be balanced with lower volumes and with a focus on quality and agility.

Moreover, decision-makers must be empowered across the enterprise. Companies serious about Industry 4.0 transformation need to embark on a journey that will enable people, processes, and operating technologies to coalesce within a redefined organization. Overcoming obstacles to organizational transformation will help Industry 4.0 companies embrace change.

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Published on Categories connected devices, Industrial, Internet of Things, smart factoriesTags , , , , ,
Irene Petrick

About Irene Petrick

Dr. Irene J. Petrick, Senior Director of Industrial Innovation Internet of Things Group, joined Intel in 2015. Irene focuses on emerging technology, social, and global trends and their combined impact on the industrial space. Her work highlights the industrial internet of things, edge computing, the transition to intelligent manufacturing and the needs of the future workforce, 3D printing and distributed manufacturing and the new business models that are enabled by intelligent manufacturing. Prior to joining Intel, Irene was a professor at Penn State and has been actively engaged with companies in their innovation and technology strategies for over 25 years, including work with twelve Fortune 100 companies, the U.S. military, and a wide variety of small to medium sized enterprises. Petrick is author or co-author on more than 180 publications and presentations. (

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