Industry 4.0 -- The Connected Factory -- Part 1
By Georg Frey and Sepp Gmeiner
In 2011, the term “Industry 4.0” was coined for a government/industry initiative to accelerate the development and application of the connected factory in Europe to maintain an industrial leading edge and price competitiveness in high-wage environments against low-wage countries. Industry 4.0 can be viewed as the fourth industrial revolution

Technology exhibitors at recent industry trade shows, including IWF in Atlanta and Ligna in Germany, continued to embrace Industry 4.0, so-named the fourth industrial revolution. This article will try to put Industry 4.0  into proper context and provide a roadmap for companies to follow. Read Part 2 of this Series.

We have had three industrial revolutions in the past. The invention of the steam-powered engine led to the first industrial revolution. With the implementation of electrical power and assembly lines at the beginning of the 19th century, the second industrial revolution brought us mass production. Businessmen like Eli Whitney understood the importance of interchangeable parts for mass production. This method allowed him to revolutionize gun production. About hundred years later Henry Ford took mass production to new heights in innovative methodology, technology, and human resource.

This was followed in the late seventies by the third industrial revolution, the digital revolution. Mainframe computers, personal computers, CNC machines, and robots made their big entry into the manufacturing industry. Our woodworking industry was not the first user, but the early adopters in our industry did not wait long to apply this game-changing technology.

Now leading-edge technology is again undergoing a dramatic change. Commercial use of the internet since the mid-nineties opened new opportunities and eventually sparked the fourth industrial revolution.  In 2011, the term “Industry 4.0” was coined for a government/industry initiative to accelerate the development and application of this technology in Europe to maintain an industrial leading edge and price competitiveness in high-wage environments against low-wage countries.  

Already underway, this fourth industrial revolution has experts talking about a fast and disruptive change for most, while some industries like the woodworking industry might experience more of an evolutionary change.  One thing is certain: this major change will come and there is no going back!

It is projected that the physical environment will be seamlessly integrated with the information network. The internet is combining processes, systems and intelligent machines to form a sophisticated network. Common buzzword refer to this integration as the Internet of Things (IoT) and the Internet of Services (IoS).

Game changers
In a revolutionary change, current rules often no longer apply. Changes are fast and can be disruptive and even destructive. If you look into other industries, companies like Google or Apple have completely changed the game in the music and communication/phone industries, and we expect further changes in the entertainment/TV industry. Amazon completely changed the “brick & mortar” approach of the retail market. Uber is a complete game changer in the taxi industry. The woodworking, cabinet and furniture industry is just at the beginning of this (r)evolution. Once change gains traction with at least one company, the rules of the game will change quickly.

So where are we now?  Companies are implementing more sophisticated manufacturing software. The best in the class process their customer orders seamlessly to purchase orders and manufacturing orders. With a few clicks, automatically prepared purchase orders are released to suppliers and production orders are passed on the shop floor providing information in suitable machine language to retrieve material and feed a machine. The required cutting plan, nesting plans or other CNC programs are almost instantly available for machines. Suitable work instructions, printed or on screen, interface with the operator. Barcodes or RFID’s allow the software to collect feedback from the shop floor to update the software regarding the production process.

This is still considered “Third Industrial Revolution”!  And to be quite direct - a large number of North American companies have not yet mastered this level of sophistication. What is next is building on the changes brought by the 3rd Industrial Revolution. In order to enter the new technology, you first need to build strong foundations by implementing the above technology properly.  

In the near future, the machines communicate with each other. The workpieces talk to the machine and the system talks to the vendors. For example, if a customer delays an order (or wants to expedite the delivery) the system would optimize according to the new situation. It would check the availability of all required materials and parts, including the suppliers' systems. It would sideline current production orders to allow the now more urgent priorities to be manufactured first. If the optimization recognizes sufficient unused machine capacity it might advance an upcoming maintenance and service call on the machine, but not until the service technician and the required spare parts are confirmed. The system would then inform the worker or the management what the recommended course of action is.
Is this Utopia? Not anymore. The manufacturing industry is moving towards this competence.

Can we wait until this trend passes and life returns to normal?  Let us answer the question with a question: Could your business survive if you didn’t invest in the technology brought by the 3rd Industrial Revolution (computers, software, CNC machines…)? The answer to both questions is NO!  If we know we need to address Industry 4.0, the next question is how quickly we need to act? This depends on many factors.  Are you currently in a comfortable position with no market pressures? Do your competitors have no interest in modernizing their plants?  Do you foresee little or no competition from Europe, South America or Asia? Do you have strong competitors close by like in your state, in the USA or from your neighbor countries? No, well, in that case, you, have lots of time!
But that would be the real utopia.

How do you start?
We all need to start addressing this subject. This does not mean you need to stop buying machines and you need to “buy Industry 4.0.” First of all, you cannot buy a “plug and play” version which would fit your factory - you need to build it yourself!  You also need to complete your transition through the 3rd revolution.

Picture it this way:  You are not setting a new goal, your measurement bar has just gotten raised by a huge amount.

Lignum Consulting has identified 7 key areas that include all aspects of the business, and all need to be addressed simultaneously in order to get your company ready to adapt Industry 4.0.

The Orbit
If you are interested in pursuing this journey, a good start is a “fitness review”. How close are you in managing the “batch size of one”? Lignum Consulting has identified 7 key areas which include all aspects of the business, that all need to be addressed simultaneously in order to get your company ready.
 1  Strategy
 Does your market accept mass produced product with little variations or does the market demand high variety in short delivery?

2  Product
Are products complex and are variations the exceptions, or is there practically no difference between standard and special orders?

 3  Technology
Are you producing into a finished goods warehouse to ensure short lead times, or do you have flexible manufacturing to allow order specific production?

 4  Logistics
Is the material supply to assembly and shipping inconsistent, or do the organizations currently ensure consistently high levels of performance?

5  Data integration
Standard product has BOM’s, but do special orders need to be created manually? If the product does not arrive in the buffer on time, do we need to look for it, or is there sufficient monitoring to ensure effective controls?  

 6  Organization
Are machines repaired only when broken, or is systematic preventive and predictive maintenance fully implemented?

7  Human Resources
Do employees stay on the same workstation for a long time, or is systematic cross training implemented?

This is not a short-term project.  As you answer these questions a more realistic picture will emerge. It will show where the company needs to improve in order to achieve the batch size one capability, which will be prerequisite in most cases.  As you are facing a major transition, start the discussion in your company; IT, Manufacturing Engineering and Production need to learn the basics of Industry 4.0 and synchronize and align their approach on this subject. Currently, practically no company is ready for this change. Industry 4.0 is still too new. But if you do not start the discussion now, or if you don’t do your fitness test and if you don’t read up on the internet, you miss the opportunity and fall behind the companies who do.

This process makes it clear that this is not a short-term fix. This is a multi-year journey. Any good project starts with good planning. You need to have your company specific Industry 4.0 vision. This time-phased plan should outline your milestones, your approach, and your resources to do it. If you do not plan for it will not happen.

Over the next few months, we will continue to write about Industry 4.0 and will go in more details on the seven key areas of Industry 4.0 and the Connected Factory.

Georg Frey
Sepp Gmeiner

About the authors

Georg Frey is the president of Lignum Consulting. Sepp Gmeiner is a partner at Lignum Consulting.  They can be reached at [email protected].



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