Industry 4.0: What does it mean for the manufacturing industry?
What is Industry 4.0?
Industry 4.0 is the new wave of technological and digital advancement within the manufacturing industry.
The original industrial revolution was powered by steam, the second by electricity and the third by early-generation automation and machinery. Smart computers – AI, cloud connectivity and the internet of things, to name a few – are shaping the fourth.
Smaller manufacturers might assume this technology is either unattainable or unnecessary – it’s neither. It will soon be impossible to run a manufacturing business without this integrated tech. Customers, suppliers and partners will not only expect it, but you’ll need it to continue meeting changing regulations and compliance rules. Do nothing, and you may find yourself being outbid by more agile businesses who can use tech to enhance their service, optimise processes and ultimately service client needs better and faster.
The good news? You don’t have to go straight to advanced robotics and a fully AI-driven plant. A sophisticated enterprise resource planning (ERP) system can help deliver the precision, automation and efficiency demanded by the new era of industry. It lets you streamline workflows, make connections, automate and accelerate across your business, improve safety, reduce reliance on staff, connect your supply chain and boost visibility.
Industry 4.0 technologies in manufacturing
Instead of using computers, manufacturers must build ecosystems of smart, autonomous technology, including:
Connectivity, data and computational power – cloud technology, the Internet, blockchain, sensors
Analytics and intelligence – advanced analytics, machine learning, artificial intelligence
Human-machine interaction – virtual reality (VR) and augmented reality (AR), robotics and automation, autonomous guided vehicles
Advanced engineering - additive manufacturing like 3-D printing, renewable energy and nanoparticles.
What are the advantages of Industry 4.0 tech?
While Industry 4.0 will change the way manufacturing businesses work in a multitude of ways, its benefits can be categorised into four key areas.
Better productivity
Whether you’re a small or medium manufacturer, Industry 4.0 tech almost universally allows you to deliver more, faster. For example, cloud technology coupled with big data and analytic systems can unlock real-time insights, which help you shift from reactive to proactive maintenance, stock and labour management. Smarter analytics will also let you spot places to improve efficiency, minimise waste and boost production.
Easier quality control
The vast majority of system failures and day-to-day mistakes can be linked to human error – we simply aren’t wired to deliver repetitive tasks accurately. Luckily, computers are. When programmed to complete a task, they’ll do it consistently and accurately. This makes checking quality simpler and less time-consuming.
Easier customisation
Digitisation allows far greater customisation, making it easier to tweak your output to each customer without huge overheads or expert intervention.
More revenue
Underpinning all of these benefits are reduced costs and increased revenue. You’ll find your market, offering, or both will expand as you can better deliver improved services and customised or shorter-run products, with reduced costs almost all but guaranteed. McKinsey reports that companies who have embraced 4.0 technology have seen drastic improvements, some reporting a 25% decrease in manufacturing costs across the board.
How to get started with Industry 4.0
Shifting to a digital-first operation isn’t a one-and-done exercise. While it will involve choosing and implementing new software and other tech, it also requires a fundamental change in approach at every level of business.
Cybersecurity
As a more analogue business, you may have paid little attention to the chance of cyberattacks. However, digitising your business opens your data and client information to potential threats, making cybersecurity far more of a priority for all your staff. With cyberattacks growing in frequency, sophistication and severity, it’s essential to invest in robust security systems and personnel training.
The right skills
While every business is struggling to find skilled workers, manufacturing is doing it especially tough. The Labour Market Update report from Jobs & Skills Australia reports that manufacturing and industry skills are among the most in-demand, yet most in shortage. However, shifting to a more digital-driven business can help reduce the reliance on labour.
Amended processes
New technology comes with new ways of working – and that inevitably can cause disruption and a slowdown in productivity in the short term, as processes get bedded in and people get comfortable. It’s why SMEs, that are generally dealing with tighter resources than larger companies, need to carefully plan how and when they move.
ERP at the heart of Industry 4.0
Regardless of how you innovate, at the core will be a move to a fully-automated digital platform. This will connect every part of your workflow, allowing greater automation, boosting efficiency and production, delivering real-time data, and offering seamless connections with suppliers and customers.
As more manufacturers make the most of integration, this will become a basic requirement, not a competitive advantage – consumers’ expectations will rapidly shift around the customisation of products, pricing and turnaround times. An ERP is already foundational to international expansion and winning larger, higher-value contracts.
But there’s no point in change for its own sake – here are key moments in your business that should trigger your journey to implementing Industry 4.0 technology:
Expanding into new or custom products
Creating to-order or customised products while keeping them competitively priced relies on the flexibility and agility you can only get with automation, connectivity and other Industry 4.0 technology.
Cost of production becoming unworkable
The price of labour, raw materials and shipping continues to skyrocket, but consumers are rarely willing to pay more. Improving efficiency and productivity is the only answer. This can be readily delivered by automating workflows, so your plant relies less on time-consuming, expensive and error-prone manual processes.
Current tech has reached the end of its life
If it is broke, fix it. When your hardware and software have reached the end of life, are struggling to keep up with new production volumes and can’t deliver the reporting, connectivity and automation you need, it’s time to upgrade.
A changing of the guard – 4.0 and the workforce
A core benefit of Industry 4.0 technologies is reduced reliance on manual labour. From the back office to the production floor, these innovations will ensure that manual, repetitive tasks are taken out of people’s hands.
But as we’ve seen with every successive industry revolution, the shift will not remove the need for human workers but simply change the kind of work they do. The most obvious and immediate shift will be seen on the factory floor, where automation will replace some manual roles but require more engineering, software experts and people to oversee the technology.
We’re also likely to see whole industries and new roles spring up to support this new way of working. For example, only months after ChatGPT’s launch, employers are already advertising for AI Prompt engineers. Most manufacturers will find that relieving the burden of manual tasks will let them re-assign workers to higher-value tasks rather than losing them.
To make the most of this opportunity, you’ll need to transform your workers with a focus on up-skilling and new hires to fill skills gaps.
Joining the 4.0 wave
Despite the hype, Industry 4.0 is less a rapid revolution and more a slow-but-inexorable wave. As more businesses adopt advanced tech, from automation, analytics and AI to automation, virtual reality and nanotechnology, the wave gets bigger, and organisations that haven’t jumped on board get further behind.
Fortunately, even if your business is smaller or lacks the budget for a full-scale transformation, you can still take advantage of Industry 4.0 tech. One key stepping-stone is shifting to a cloud business management or ERP system. Instead of assembling a complex (and costly) tech stack with elements that may or may not deliver the desired outcomes, you get a single platform that steps up operations in several ways.
MYOB Advanced Manufacturing is a great example. This cloud ERP platform designed for SME manufacturers in Australia and New Zealand gives you access to many 4.0-level benefits – cloud access, smart analytics, automation, process improvement and connectivity – in one streamlined, user-friendly package. It’s the ideal starting point for your Industry 4.0 journey.
Ready to step up? Find out more about MYOB Advanced Manufacturing now.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.