For those who may still be unaware, Industry 4.0 (I4, for short) is the culmination of many years of sequential developments in several fields, especially IT. Currently, these advances are converging, giving birth to a new movement in industry – the I4. I4 is a way of producing goods and services making extensive use of eight pillars of modern IT – Digitisation/ Digitalisation, Big Data Analytics, Developments of algorithms, Supercomputing, Cloud, IOT, AI and Machine learning. Enhancement in connectivity due to the wireless electronic systems of data transmission, high speed transmissions through 5G+, technological developments in the quality and capability of data gathering devices such as sensors, radio-frequency identification (RFID), robotics are the enablers which are the foundations on which I4 will be built on.
There are several ways in which one can approach the question, ‘why I4?’.
First, there is the productivity view. In the past, whenever we needed to move from I1 (steam engine, circa 1780) to I2 (mass production, Henry Ford, circa 1920) to I3 (computers and IT, circa 1970), one of the key driver was the low growth rate in productivity. Henry Ford kicked off I2 when productivity jumped substantially due to the assembly line way of mass production. This productivity uptrend lost steam around 1970, when the IT led I3 came to the rescue. Owing to the IT intervention, productivity once again trended up, till about 2000. Since then the growth rate in productivity has dropped, and, the time is now ripe for another quantum intervention. Thus, I4, perhaps, is a result of the need to ramp up productivity, else, many industries may find it difficult to compete.
Second, there is the technology view. While IT brought in its wake many improvements in productivity through its myriad applications, the sequential developments of using IT in industry seemed to have hit a plateau. The main reasons for the higher productivity due to IT were: increased ability to gather data using sensors, high speeds of data processing, incisive analysis using IT software to solve previously unsolvable problems and using software for decision making, which led to data based decisions, which led to improved, high quality, consistent operations. However, due to the ubiquitousness of technology, companies soon lost the competitive edge provided by IT. Everyone was using IT, and no one seemed to be better than the other. And all were apparently producing at the same productivity levels, give or take a few. Enter technology. Supercomputing and wireless telecommunications were the first developments which led to I4. Big Data analytics soon followed. Algorithms started to appear in the dozens, and data scientists became the new profession. New technology in devices, routing, transmission etc. made connectivity issues a thing of the past. One is reminded of the Motorola experiment with Iridium which failed due to poor communication channels. I am reminded of the 1990’s when Tata Steel had to stop using Tata Net, a satellite based connecting medium, between the steel plant and its coal and iron ore mines, because of the time delay in the voice transmission. With new devices and widened connectivity, along with the developments in IT software to solve large Big Data problems using statistical methods, was a big jump. With AI, cloud and IOT the era of IIOT – Industrial IOT – had begun in right earnest.
Third, the market view. Driving by looking into the rear view mirror is often resorted to by many. They don’t want to be caught by surprise. But, such viewing may distract one from what is happening in the front – in the market. The key developments which are linked to I4 and driving the I4 transformation are: social media and eCommerce. Markets are speeding ahead in terms of changing consumers taste and preferences, as well as, the way customers want to deal with the world in their own terms – through the social media. Both these are providing platforms to companies to advance their offerings, and, to internalise these atmospheric changes, companies need I4 tools and techniques, as well as, using them, drive I4 deeper and stronger. To track consumer moods and likes, IT software developments are happening across the board, at a furious pace. No doubt, there are some aberrations, such as, the wholesale theft of consumer data, loss of privacy, vulnerability to hacking, but, overall, the new marketplace is welcoming, indeed demanding, of I4. eCommerce has taken customer service, last mile, fill rate and volume of demand to new heights. To cope with such demands, companies have had to come up with innovative solutions, including drone dispatch. And, this is just the beginning.
Fourth, the quality view. Quality 4.0 (or Q4, for short) has been in the making for quite some time now. How to deal with the changes being brought about by I4, has been a big question to those used to total quality management (TQM), lean, six sigma, etc. How will the new I4 organisations practice quality, when all aspects of the processes are being measured by devices, online, real time, and using AI and Machine Learning, making the required changes to make products and services as required by customers, instantaneously? How will team work be affected? What will quality inspectors and process controllers do, after I4 takes away their jobs, through robotics, RFID’s and connectivity? In fact, in one of the presentations in a recent event that I attended, I saw that the Cp/Cpk (process capability indices) of processes, through I4 interventions, has gone up from 1.6 to 2.22 – that’s 6.66 sigma, less than 2.5 PPM defective rates. And, in the same event, many companies spoke confidently about ZERO defects (the ZERO meant really 0). So, unless the TQM, business excellence and the lean/six sigma communities come together to address the new requirements mapping and solutions, Q4 will have be a rag tag bunch of evolving practices.
Finally, the management view. All managements are interested in performance, whether I1 or I2 or I3 or I4. Unless the relevant Ix helps achieve the goals set for/by managements from time to time, and results in performance which can address the triple bottom line, none of the Ix’s is going to hold much fancy for any CEO. Hence, linking I4 to P4 (Performance 4.0) is the key. The contours of P4 are evolving. And the expectations, goals, accomplishments of P4 are going to far exceed any that we have seen so far. For example, it will be possible to achieve 7 and 8 sigma performance, consistently. It will be possible to increase throughputs by magnitudes will also be seen. Instantaneous data gathering-processing-decision making will make silos a thing of the past. Till date, silos in organisations have eaten away at the vitals, no more. Silos are likely to dissolve due to the mega connectivities, supercomputing speeds, cloud facilitated, AI driven, robotics actioned performance. In fact, due to the ‘attack of the robotics’, shop floor gossip will die a natural death. We are in for exciting times. But only one thing is a contra development, which can change I4 to I5. And that is 3D printing. We will see this later. I4, in, and, of itself, is something big enough to chew on for some time.
Views are personal.
The author is professor, operations management at SPJIMR.