Industry 4.0

Industry 4.0 is the latest movement in the manufacturing industry. It refers to the shift from simple automated manufacturing to Artificial Intelligence (AI)-run automation, creating a “smart factory”. Also known as the Fourth Industrial Revolution, this movement relies mainly on four pillars: Cloud computing, the Internet of Things (IoT), big data analytics and machine learning systems (mechanisms controlled by digital algorithms).

In short, it is essentially the Internet of Things amplified to an Industrial scale, used to boost manufacturing efficiency, productivity and return on investment. 

In addition to a higher profit margin, we explore what else your SME can gain from getting ahead of the Industry 4.0 transition:

Boosted productivity

As a recent PwC survey discovered:

Primarily through data analysis, modern technology like Autodesk’s Fusion 360 allows creators to analyse the structural integrity of a product even before manufacturing, saving resources and time.

With a smart factory, materials and equipment can even diagnose themselves, using predictive maintanence technology. Digital sensors embedded in machinery can “collect data on vibration, lubrication, bearing temperatures, noise, and a host of other variables, information that can predict when components will fail or need repair or replacement.”ⁱⁱ This self-diagnosing machinery can thus even pre-order spare parts before they fail, saving time and money lost during downtime.

“For manufacturers, especially SMEs, this enhances cost predictability and reduces operational variability,”ⁱⁱⁱ making for a more reliable manufacturing process.

Cost Reduction

Cost predictability means less spent on wasted resources, and more profit gleaned.

Although it is in its earlier stages of development, research shows that businesses that are early to transition into Industry 4.0: 

More room for innovation

The automation will not only solve the manpower issue by replacing low-skill jobs, it will create opportunity for high-skilled jobs in programming, data analysis and more. A highly-skilled workforce including employees like user interface designers and digital innovation managers facilitates creativity, and could even produce disruptive solutions that boost your business’ competitive edge.

To fully encourage this, PwC recommends fostering an “inspiring, creative, and hierarchy-free working atmosphere where a trial-and-error culture is feasible.”

According to International Enterprise Singapore's Frankfurt centre director Wu Hongyi, Singapore SMEs should get a head start on Industry 4.0 to stay competitive. However, he says that most companies are "only at Industry 2.5, maybe 3.0,"^v and urges them to move forward.

Although moving into the next stage of manufacturing can be costly for SMEs, experts caution that

Fortunately, there are a growing number of options for SMEs to become part of Industry 4.0. Apart from government schemes like the Automation Support Package, the Agency for Science, Technology and Research (A*Star) is launching two model factories, fostering a learning environment for businesses to explore advanced manufacturing technologies.

International consultancies like McKinsey and the Boston Consulting Group have also introduced their own digital capability and innovation centres in Singapore, helping companies integrate Industry 4.0 technologies.

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ⁱ http://www.smeadvisor.com/featured/31728/

ⁱⁱ https://blogs.sap.com/2016/05/26/predictive-maintenance-keeps-industry-40-up-and-running/

ⁱⁱⁱ http://www.straitstimes.com/opinion/industry-40-and-singapore-manufacturing

^iv http://www.pwc.com/gx/en/industries/industries-4.0/landing-page/industry-4.0-building-your-digital-enterprise-april-2016.pdf

^v http://www.straitstimes.com/business/economy/firms-need-to-gear-up-to-benefit-from-industry-40

^vi http://www.businesstimes.com.sg/hub/swiss-state-visit/tapping-industry-40-for-smes-business-growth