What is the fourth Industrial Revolution?

From the July 2017 issue.

The fourth Industrial Revolution is coming. Fusing the physical world with the digital one, it will fundamentally shape our understanding of manufacturing and challenge the very notion of logistics as a freight forwarding system.

The term fourth Industrial Revolution has morphed into somewhat of a buzzword since it became a focal point of conversation at the recent World Economic Forum held in January, with Executive Chairman, Klaus Schwab, saying it might even lead us to contest the very idea of what means to be human.

But, what exactly is the fourth Industrial Revolution, and what does it mean for the trailer manufacturing community? And, how does fit into our understanding of industrial processes?

According to futurist Jacob Morgan, to understand the impact of Industry 4.0 or the Industrial Internet, as it also referred to, we must take a look back into the history of industrialisation itself. He says while the first Industrial Revolution was characterised by steam and water, the second marked the introduction of electricity and Fordian mass production. The third then saw the rise of the Internet and new communication technologies that led to the digitalisation of almost every aspect of our lives. 

The fourth Industrial Revolution could now mark the watershed moment where digital technologies and the physical world merge to create a new manufacturing reality. “The fourth Industrial Revolution is the concept of blurring the real world with the technological world,” he says. “We can see this happening in several areas already: Virtual reality allows us to transport to new worlds or consume and interact with information in new ways, robots and software work side-by-side with humans [and we are able to] 3D print tools and even limbs from digitally transferred information.”

What Morgan is referring to is the creation of Cyber-Physical Systems (CPS), which integrate computation, data and networking to form physical processes with minimal human interaction and allow for the creation of what is commonly called the ‘smart’ factory.

In such a factory, industrial production machinery no longer simply processes a product, but the product communicates with the machinery to tell it exactly what to do – creating feedback loops where physical processes affect computations and vice versa. As such, Industry 4.0 could provide significant quality, time, resource and cost advantages in comparison with classic production systems that are still based on human decision making processes.

According to a 2014 report by Germany Trade & Invest (GTAI), a German Government organisation, these new processes provide industry with the ability to respond to demand in near real-time and allow production to be ‘radically optimised’. 

In the report, which aims to outline Germany’s potential to lead the fourth Industrial Revolution, GTAI CEO and Chairman, Dr Benno Bunse, describes the imminent transformation of manufacturing as a “journey which will effectively reinvent industrial production as we know it”. Bunse continues, “Value chains [will] become value networks; and countless new markets and market opportunities [will be] created. We now move into the age of integrated industry.”

The resulting impact on industrial production itself, but also on the supply chain surrounding it, could be of historical significance. According to the Wall Street Journal, the German Research Centre for Artificial Intelligence (DFKI) is already working with private businesses to bring the first generation of smart factories to life. A shampoo firm, for example, is aiming to use virtual customer input to customise the product on demand. A smart factory would able to process the request online, create the physical product and ship it without any middlemen required. What’s more, it may also be able to control stock, automate material sourcing processes and co-ordinate the supply chain behind it.

As such, the smart factory of the future may not only be able to design and build trailing equipment and related componentry automatically, but directly link itself into the logistics network.

Still a far way from complete automation, Knorr-Bremse and TIP Trailer Services are already working on a system that could allow trailing equipment to self-diagnose brake pad wear, for example, and schedule maintenance accordingly. In the future, Industry 4.0 technology may also integrate the whole parts sourcing and production process behind it; probably even allowing transport businesses to 3D-print the parts needed right where the auto-scheduled service will take place.

To achieve such a high level of automation, experts from the World Academy of Science, Engineering and Technology (WASET) say manufacturing businesses will have to fundamentally re-think their roles in the supply chain, though. Only by focusing on their core competencies and outsourcing other activities to collaborators can they maintain a competitive advantage, according to WASET, with significant implications on an information sharing and IP level. “To ensure that customer needs can still be reliably satisfied, there needs to be a high level of synchronisation between organisations, wherefore information sharing is paramount,” WASET found, realising that our traditional, competition-based economic model might not be the right fit anymore.

“[A key] obstacle to the establishment of close collaborations between companies is the absence of trust, as managers are not used to sharing critical information with companies with whom they compete with on the market,” it says. “In order to overcome trust issues, dominant market forces like major OEMs from the automotive industry need to structure entire value chains and urge suppliers to share information.”

While experts agree that a re-structure of entire supply chains will – if feasible at all – be a complex and time-consuming task, the first semi-smart factories are already emerging. German equipment specialist, BPW, for example, invested in a highly automated production facility for wheel ends last year, where individual components pass through a total of 15 stations on their way to the finished product without human interaction – from feeding in the wheel hub up to the test rig.

“Within the factory of the future … CPS will enable the communication between humans, machines and products alike. As they are able to acquisition and process data, they can self-control certain tasks,” WASET summarises – adding that manufacturing-heavy economies like the German one have transform substantially to remain cost-competitive on a global scale.

To lay the right foundation for such a historic shift, the German Government has therefore commissioned work on a national Industry 4.0 strategy as part of its High Tech Strategy 2020 Action Plan. According to Professor Henning Kagermann, President of Acatech, Germany’s National Academy of Science and Engineering, with its rich manufacturing tradition, Germany has the potential to become the leading market for Industry 4.0 solutions, too.

“This brave new world of decentralised, autonomous real-time production being pioneered in Germany has its basis in two things: Germany’s continued role as one of the world’s most competitive and innovative manufacturing industry markets; and the country’s technological leadership in industrial production research and development,” he says.

However, the revolution will not only take place in Germany – even though the governmental support behind it is currently unmatched at a global level. By definition, the fourth Industrial Revolution will be borderless and affect every nation around the globe. Even in remote Australia, the county’s Centre for Economic Development of Australia (CEDA) recently identified the importance of preparing for Industry 4.0 in a major research project.

Drawing together an advisory group from the country’s leading universities and technology businesses, the project aimed to show how the inescapable changes to manufacturing will affect the labour tasks involved. The result: “Activities previously considered forever outside the scope of programming are increasingly being undertaken by computers,” says CEDA Chief Executive, Professor Stephen Martin. “In fact, [our] modelling … has found that almost five million Australian jobs – around 40 per cent of the workforce – face the high probability of being replaced by computers in the next 10 to 15 years.”

So, does the fourth Industrial Revolution also mean the end of craftsmanship as we know it? Not quite, even though a 2016 US report found that, “Technology can most readily replace labour in tasks that are easily automated, which tend to involve routine tasks.” However, the US research also realised that the employment shift from increasing technology isn’t necessarily a negative outcome – stating that it instead complements the abilities of highly skilled workers and improves manufacturing productivity and efficiency through analysing the data created from CPS.

As such, the fourth Industrial Revolution will most certainly challenge the current thinking behind human resources management – and arguably also educational systems – as having the skills available within a company to understand data and digitalisation is now a core requirement.

“Data from smart, connected products is generating insights that help businesses, customers and partners optimise product performance,” Harvard Business Review (HBR) summarises. To harvest and process that kind of data in a manufacturing context, HBR predicts a shift in the makeup of design teams from a majority of mechanical engineers to a majority of software engineers.
With that in mind, World Economic Forum head Klaus Schwab is convinced that we are only at the beginning of a revolution that will fundamentally change the way we live, learn and work.

“The resulting shifts and disruptions mean that we live in a time of great promise and great peril,” he says. “The world has the potential to connect billions more people to digital networks, dramatically improve the efficiency of organisations and even manage assets in ways that can help regenerate the natural environment.”

The challenge the world community is facing now is to adapt fluently to new technologies and “together shape a future that works for all by putting people first, empowering them and constantly reminding ourselves that all of these new technologies are first and foremost tools made by people for people.”

In May 2018, Melbourne will play host to the most ambitious supply chain event ever attempted in the country. Aptly named MEGATRANS2018, the event aims to connect national and international supply chains and the businesses serving them. Show Director, Simon Coburn says the show is meant to facilitate in-depth discussions on how global megatrends like Industry 4.0 will affect Australian supply chains, uncovering new business trends and exploring new, innovative technologies along the way.

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