Three good reasons to learn about Industry 4.0!
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- Marjorie Owens
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1 IMP denk werk statt iimp THOUGHT FACTORY IMPULSES FEB 2015 INDUSTRY 4.0 Why companies need to restructure in order to make factories more intelligent, produce more flexibly and meet customer demands more effectively. And to grow!
2 INDUSTRY 4.0 Why companies need to restructure in order to make factories more intelligent, produce more flexibly and meet customer demands more effectively. And to grow! The competition between industrial centers has increased dramatically since the world economic crisis. People say Europe will soon lose a vast majority of its production output to overseas operations due to high cost structures. Do European companies have to jump on the Industry 4.0 bandwagon to ensure growth or just to survive? The fact is that the opportunities in digitization aren t even being exploited my most companies and only few managers and entrepreneurs are aware of the potential Industry 4.0 really has. According to a current study, 24 percent of the people surveyed had no real idea what Industry 4.0 was; among OEMs it was 34 percent. That is an astonishing figure, according to the consulting company. [1] It s high time to get familiar with the topic and there are reasons for that. Three good reasons to learn about Industry 4.0! ONE: It is wrong to believe that cyber-physical systems and smart factories will not arrive for another 10 or 15 years. The Industry 4.0 train has long since left the station, mostly because much of what is needed already exists. Companies already use machines equipped with web clients that help generate data via the Internet, or machines with sensors that oversee certain functions. We have established production processes that use RFID and bar codes to help entire product lines communicate with machines. People in factories work with smartphones or ipads. We are talking about a constant state of change, an evolution of sorts, but this evolution will develop more quickly than we can currently imagine. [2] TWO: Many countries are already working with Industry 4.0 and are even more highly developed than industry in Germany, Austria and Switzerland. Indeed, in order to ensure that Europe remains a competitive center of manufacturing in the future it is time for a swift response from key players in business, research and politics. The next industrial revolution is already underway whether we want to be part of it or not. [3] THREE: Against the backdrop of increased complexity, dynamism and overall diversity, the digitized intelligent networking of people, machines and things along the entire value chain of a product will most certainly become a factor in global competitiveness and a growth opportunity for highly developed production facilities in Europe not least because 90 percent of world economic growth already takes place outside of Europe. IMP 2
3 Plainly stated: What most companies know, namely continuous improvement of tangible products, is a thing of the past. The digitized, networked economy is different. It s faster, more chaotic, less predictable and, most importantly, more customer oriented. The real IT-based new economy. Cloud computing and big data are not bubbles! On the contrary, in conjunction with Industry 4.0 and the old economy they are rapidly developing into targeted new business models. But what do these business models of the future look like? What are the requirements and challenges for management? The first step is all about: A departure from the traditional concept of a factory. Intelligent factories work completely differently Industry 4.0 means a change in the entire value chain process, which now focuses on self-organizing mechanisms, automated control of the various systems, and increased customer orientation. The factory of the future requires a new way of thinking. A factory is no longer a (mass) production facility based in one location. It is a concept by which the actual manufacturing processes are self-organized, networked and distributed, and only represents one part of the organized overall life cycle. New methods of communication between machines leads to increasingly decentralized, smart factories and thus allows for on-demand, small-scale distribution and production. [4] According to a Fraunhofer IAO study, a production order in the future could be initiated by the customer and make its own way through the entire value chain. Not only would process steps, machines and materials be automatically controlled by intelligent systems, but all inspections and possible corrections would be carried out as if by invisible hands. The production order would recognize possible delivery bottlenecks, report them directly to the customer and even organize additional capacity. Manufacturing facilities could exchange drawings, schedule order sequences and communicate with each other about any necessary maintenance or repair work. [5] What do all of these changes in production mean for our business models? Well, at least one thing is clear: To exploit the enormous potential of growing networks through the Internet, machine-to-machine communication and Industry 4.0 companies will have to restructure. Organizations, processes, IT and even company philosophies will have to play along. Industry 4.0 requires new, networked and integrated business models Many Industry 4.0 scenarios require business models that are executed by a (preferably) highly dynamic network of companies, not just by one company. This enables new integrated models of collaboration and business that can be much more effectively tailored to meet individualized, short-term customer demands due to a harmonized structure of customers, suppliers, partners and the market. This also means, however, that customers will involve themselves in processes with product ideas and delivery schedule demands that will result in dramatically reduced turnaround times. In Industry 4.0 the main goal is real-time manufacturing with full customer and partner integration. This will no longer just mean production, but the entire product development process. It will start in the innovation phase. Products will have to be readily adjustable and modifiable. Only then will customer involvement be feasible. In that respect, Industry 4.0 is not just a change in our relationship with the factory, but with the entire process of adding value, which will be denkwerkstatt 3
4 initiated in the product innovation phase, i.e. in idea management. Complete integration of this kind is what distinguishes the new logic of added value and provides us with the opportunity to think of new business models. The goal will then be to fairly distribute business potential to all even new stakeholders along the added value chain. [2] It requires us to think and work with completely new business models and consider new areas of potential. Old models will erode because they won t survive our high-wage locations forever, even if we automate production. For this reason, we need to face the Industry 4.0 challenge. It is a true opportunity in two ways: Industry 4.0 is an opportunity for growth and survival Industry 4.0 might be able to retain high-tech products in Europe and even allow the development of new ones but without medium-size companies and suppliers there will be no added value. Another reason for them all to face this challenge head on. CHALLENGE 1: A NEW UNDERSTANDING OF FACTORIES Our current image of a factory is this: a large building somewhere outside of town where mass-produced articles are fabricated before being distributed. Industry 4.0 will have its most drastic effects on the DISTRIBUTION element of that equation. Distribution will be on a smaller scale, making smaller production runs worth it because the machines will no longer be bound to expensive, large-scale retooling from one product to the next. Flexibility increases dramatically as a result. In other words, companies will no longer have to channel all of their products through ONE factory. There will be MULTIPLE, decentralized locations that produce based on real-time demand. [4] CHALLENGE 2: WORKING IN A SYSTEM NOT ON ONE Anyone who has fallen behind with regard to operational excellence, and has not yet reached a certain level of maturity on the subject, can t expect to just do some homework before trying to get a grasp on Industry 4.0. You have to do BOTH. Naturally, existing systems need to be continually improved, but to focus JUST on that is negligent because the risk is too high of OTHERS coming up with new business models in the meantime. You can have the most efficient system possible and still lose the battle. [2] CHALLENGE 3: THINKING IN BUSINESS MODELS Traditional concepts of thought-to-action used to look like this: We have a good idea so we develop a product. The product goes to market and customers do something with it that their business requires. Today customers don t buy PRODUCTS. They buy SERVICES that are arranged into SOLUTIONS, and market success depends not just on the good idea but also on the corresponding logic that shows how an idea finds its way to the customer. [4] Thinking in business models comprises the creative and holistic conceptualization of the individual dimensions of your own business logic (positioning, supply logic, added value logic, sales and marketing logic and profit logic). The key is to focus these dimensions on the common goal the desired market position. CHALLENGE 4: OPENNESS THINKING IN NETWORKS OF ADDED VALUE Another challenge here is OPENNESS: more networking in the development of solutions, new business models and production systems. It s about having an open mind but also having open processes. That is important because everything is becoming increasingly networked. The challenge here is to communicate with each other and work with each other, not to maintain the illusion of being able to do everything yourself. [2] IMP 4
5 CHALLENGE 5: CULTURAL SHIFT AWAY FROM POWER THINKING It used to be that knowledge was power. Things were closed off to the outside. That no longer applies. A cultural shift is required, and to make that shift companies will have to look beyond their old horizons. Industry 4.0 possesses great opportunity for bright new ideas, each of which possesses its own potential. It is vital that competitive angst be replaced by open thought in order to allow new impulses and possibilities to emerge. Companies can develop holistically this way, even if cultural transformations are always linked with growing pains. Behind all of this lies more potential than if we all spend our time thinking about what to do a little better. If companies manage to enter this new realm of open and systematic thinking, the opportunities that come out of it will far outweigh the risks for all industries! [4] CHALLENGE 6: START NOW DON T LOSE ANY MORE TIME! The need to catch up on the innovation and networking front will be THE greatest challenge of them all. STICKING WITH IT will be the way forward. Being on the leading edge is the motto of Industry 4.0. But larger companies, i.e. the OEMs who drive innovation, have to bring medium-size companies with them in the projects, in their pilot programs, etc. Politics also needs create the right environment for companies to get on that train. [2] Companies able to overcome these challenges will surely benefit from Industry 4.0 List of references / sources / further studies / recommendations for implementation [1] Study: Industry 4.0 Eine Standortbestimmung der Automobil- und Fertigungsindustrie (Porsche-Tochter Mieschke Hofmann und Partner GmbH (MHP): Studie_Industrie4.0-Zusammenfassung_V1.4.pdf [2] Prof. Dr. Wilhelm Bauer im IMP-Interview: Industrie 4.0. Wie wir mit einer intelligenten Fabrik individueller, flexibler, volatiler und nachfrageorientierter produzieren können. Und wie wir echte Chancen für alle Branchen schaffen können. IMP Perspectives 6: Wachstum durch Differenzierung, Erscheinungstermin April [3] Arbeitswelt 4.0 (Fokus online ): [4] Prof. Dr. Martin Welsch im IMP-Interview: Born to be different! Oder: Wie es der IBM gelingen kann, sich laufend neu zu definieren und sich von anderen abzuheben, und warum das Unternehmen offensichtlich für mehr geschaffen ist als lediglich für Business Machines, IMP Perspectives 6: Wachstum durch Differenzierung, Erscheinungstermin April 2015 What s uo Watson? Oder: Was sich aus Sicht von IBM Deutschland Research & Development in Sachen künstliche Intelligenz, Industrie 4.0, Neuromorphic und Quanten-Computing für die Zukunft abzeichnet. IMP Perspectives 6: Wachstum durch Differenzierung, Erscheinungstermin April [5] Fraunhofer-IAO Studien: content&view=article&id=205 denkwerkstatt 5
6 THE IMP THOUGHT FACTORY Unique knowledge networking IMP is an international thought factory that sets itself apart with a unique network and a wealth of strategically relevant expertise. Developing know-how Exchanging know-how Applying know-how This triumvirate accompanies us throughout our daily business, in which we see CONSULTING not as an isolated activity, but as something we actively enrich using new scientific discoveries and IMPULSES generated, among other ways, through our NETWORK OF EXCELLENCE. FOR OUR CUSTOMERS THIS MEANS With our connections to the best minds in business and science we have ensured ourselves access to the latest findings (DEVELOPING KNOW-HOW), which we then pass on in conceptual as well as in event format (EXCHANGING KNOW-HOW) or integrate into our real-time consulting projects (APPLYING KNOW-HOW). IMP 2015 IMP 6
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