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Germany’s ‘Industry 4.0′ Platform Leverages IoT As Backbone of Future Manufacturing

Germany’s “Industry 4.0″ – touted as the “fourth industrial revolution” by industry pundits for the past several years – has inspired manufacturers the world over to begin leveraging the Internet to create “smart factories” and retool their information systems around shared analytics and the infrastructure of the Internet of Things.

Citing steam power, electric power and computing power as the first three phases of industrial evolution, this new paradigm assigns equal power to IoT, rebuilding fabrication, distribution, and product marketing in the B2B universe on digital information technology and the growing universal network of interconnected devices.

The Boston Consulting Group, in an article on ZDNet, listed several technological underpinnings in this new industrial paradigm, all enterprise-oriented and based on integrated networks.

Big data analytics. Emphasis on across-the-board big data thinking and methodology, including product development, marketing, production, distribution and finance.

Commitment to both horizontal and vertical integration. The enterprise view must include deep integration of both internal and partner systems, to ensure universal collaboration.

Simulation. An under-utilized step in manufacturing and logistics, simulation is a centerpiece of 4.0, boosting innovation with resource-economic test time savings.

3D Printing. ‘Addictive-manufacturing methods’ are the key to customized products, an obvious strategic advantage in many industries. 3D Printing enables the economic production of small batches of specialty products that can be rapidly produced and distributed with minimal logistical difficulty.

Robotics. Long-established in manufacturing at this point, robots with access to real-time data throughout the manufacturing process can be increasingly context-sensitive, allowing more sophisticated performance and giving them a more critical real-time role in overall production logistics.

‘Augmented Reality’.
Google’s Oculus Rift and Microsoft’s HoloLens are examples of decision support systems enabled by this new paradigm. Virtual training and OTJ help systems will take huge leaps forward, reducing downtime and optimizing operational efficiency.

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Physical Internet Offers Game-Changing Benefits in Logistics

While sharing data throughout a supply chain is rapidly becoming a standard approach to logistics, it may not be enough to cure the deficiencies still experienced in a commercial world still built upon yesterday’s infrastructure.

Professor Benoit Montreuil of the Georgia Institute of Technology believes the answer is the creation of a “Physical Internet” – a new, shared infrastructure that would revolutionize logistics and create new efficiencies, savings and environmental relief in the emerging global economy.

“Our shipping system is becoming ever more inefficient and unsustainable – economically, environmentally, and socially,” he said. His proposal: mimic the Digital Internet, which is communications infrastructure shared by all market participants, and build a global physical logistics infrastructure upon the same principle: shared resources.

In this Physical Internet, trucks and drivers would be shared among companies. “Open hub” distribution centers would replace standalone warehouses. Duplication of effort would become a thing of the past. Far less energy would be expended to achieve the same levels of logistics activity the current system support, and far less harm would be done to the environment.

A study by researchers at Virginia Tech and the University of Arkansas estimated that if only a fourth of the current distribution infrastructure in the United States was rebuilt according to Montreuil’s principles, an annual savings of $100 billion could be achieved and carbon dioxide output reduced by one-third.

Kevin Gue, Professor of Industrial Engineering and Director of the Logistics and Distribution Institute at the University of Louisville, sees the Physical Internet as a case of ‘disruptive innovation,’ one that will stimulate the creation of entirely new supporting industries.

“It provides a backbone of logistics services, processes, and information upon which one could easily imagine many new innovations arising,” he said. “In a PI world, it is easy to imagine that hundreds of new companies would spring up offering previously unimagined products and services, which is one reason the Physical Internet is so exciting to think about.”

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Manufacturers Who Don’t Move Toward “Smart Factory” Risk B2B Obsolescence

Manufacturers with traditional approaches to infrastructure risk falling behind in meeting the challenges of current B2B logistics methodologies and partnership expectations.

In a recent technical paper, Cisco Systems reviewed trends in the networking of manufacturing hardware, as well as within the energy industry, noting its impact on operational efficiency, failure prediction, and enhanced analytics for capacity planning.

The “smart factory” – a facility that integrates sensors embedded throughout its infrastructure via the Internet, making possible the constant collection of performance data in real time – is no longer a concept of the future. Cisco’s analysis notes that Internet connectivity is increasing exponentially, with the global number of connected devices doubling every five years (the number as of 2015 was 25 billion). In manufacturing, that translates to a doubling of manufacturing networking infrastructure, globally, from $923 million to $1.73 billion over the past five years, according to another study by Frost & Sullivan.

The internal benefits are numerous, the Cisco paper reported, and include increased productivity, cost reductions, energy savings, reduction in unplanned downtime, enhanced security, improved safety, faster response time in implementing customized processes or build-to-order. In addition, faults and failures can be traced far more quickly and accurately when real-time data is available for analysis when problems surface.

But the benefits to B2B partnerships may outweigh even these. A “smart factory” enables the enterprise to aggregate big data covering production, energy cost, materials and other essential factors for sharing with partner companies in capacity planning; faster response between partners to disruption events; and, most importantly, unprecedented visibility in interdependent processes throughout the chain.

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“Smart City” Initiatives Bring B2B Innovation to Government and Industry

With the advent of the Internet of Things and analytics, new opportunities for innovation, supply chain efficiency and improved services are emerging in the concept of the “smart city.”

Leveraging the connectivity of commonplace objects and possibilities for applying the resulting analytics to logistics, the “smart city” is an opportunity to create new technological ecosystems that can bring increased efficiency, financial savings and enhanced services to communities.

The benefits to the relationships between cities and the vendors that supply them are obvious. Analytics generated by such integration can increase the efficiency of the city’s supply chain, eliminating waste and enhancing the quality of services. Outcomes can be more effectively monitored and evaluated, opening up opportunity for additional improvement.

“Smart Chicago” is such an organization dedicated to creating such an ecosystem, and “devoted to improving lives in Chicago through technology. We work on increasing access to the Internet, improving skills for using the Internet, and developing meaningful products from data that measurably contribute to the quality of life of residents in our region and beyond,” according to its website.

A partnership between the city, the John D. and Catherine T. MacArthur Foundation, and The Chicago Community Trust, it will “help bring together municipal, philanthropic, and corporate investments in civic innovation.”

An unusual example of such innovation can be found in nearby Louisville, where city government has initiated a pilot program to equip municipal trash recepticals with wi-fi and internal sensors, so that they can report their status to city monitors via the Internet.

Similar opportunities in Louisville and many other cities exist in traffic management, where traffic signals, parking meters and municipal parking facilities are already now largely Internet-capable, making possible enhanced traffic management and enabling predictive analytics for use in maintenance, street-sweeping, and safety improvements.

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