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What is Industry 4.0? Unleashing the fourth industrial revolution

The fourth industrial revolution may not have reached its full scale yet, but the march has already begun.

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Digitally connected manufacturing, often referred to as “Industry 4.0”, encompasses a wide variety of technologies, ranging from 3D printing to robotics, new materials and production systems.

A move towards Industry 4.0 would benefit the private sector. Large, integrated manufacturers would find in it a way to optimise and shorten their supply chain, for example via flexible factories. A more digitalised manufacturing would also open new market opportunities for SMEs providing such specialised technologies as sensors, robotics, 3D printing or machine-to-machine communications.

One set of companies particularly well positioned in that regard will be those that can help build the ecosystem of production on which the Industry 4.0 concept relies. These include platform-as-services companies, such as Pivotal, as well as those that can provide the networked infrastructure for the Industrial Internet.

No wonder, then, that despite the lack of an accepted definition of the Industry 4.0 concept, developed and developing countries alike are looking into it, albeit for slightly different reasons.

For developed nations, Industry 4.0—a term initially coined in Germany—could be a way to regain manufacturing competitiveness. This is particularly relevant in the case of Western Europe, which, unlike the US, does not currently enjoy reduced energy costs.

As for emerging markets, Industry 4.0 could provide the much-needed route to moving up the value chain, something that has become increasingly important to achieve in the face of rising labour costs. For example, China’s new ten-year plan, issued last May and unambiguously named “Made in China 2025”, targets key sectors such as robotics, information technology and energy in the hope of turning the country from a “manufacturing giant” into a “world manufacturing power”—to do so, China will boost R&D investments to 1.7% of manufacturing revenues by 2025.

Large integrated manufacturers such as Intel or GE are already gearing up. In just 18 months, the Industrial Internet Consortium (IIC) they helped create in collaboration with IBM, AT&T and Cisco went from 5 companies to over 200, both large and small.

As promising as it is, much more work remains to be done to make Industry 4.0 a large scale reality. On the regulatory side, for instance, policy makers will have to ensure that data—the blood of Industry 4.0—can move freely and securely throughout the supply chain, including across borders. This is an effort that is likely to take some time.

Meanwhile, it will be key for the private sector to demonstrate that the gains from Industry 4.0 justify its costs—both capital and political. This is already under way, with companies like GE, BELECTRIC and Kofler Energies testing the potential of the Industrial Internet in combined heat and power generation, or the IIC deploying a series of testbed projects, the latest of which provides machine parts with a “digital birth certificate” that tracks them throughout their lifetime, helping engineers predict where and when maintenance will be required. The IIC is also organising conferences during which its members can share best practices on early-stage implementation of the concept, such as the Industry of Things World USA Conference happening in San Diego next month.

The fourth industrial revolution may not have reached its full scale yet, but the march has already begun.

This post was originally posted on GE Look Ahead.

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