Industry 4.0 | Economy in Digital Upheaval

After ten years of Industry 4.0, many German companies have achieved more in terms of networking and digitization than they think. Where is the journey going now?

Industry 4.0
Industry 4.0

Angela Merkel was immediately enthusiastic. Shortly before the Hanover Fair 2011, the President of the German Academy of Science and Engineering (acatech), Henning Kagermann, the Director of the German Research Center for Artificial Intelligence, Professor Wolfgang Wahlster, and the current State Secretary in the Federal Ministry of Education, Professor Wolf-Dieter Lukas, described the networking of machines via the Internet of Things (IoT) and the digitization of the processes running on them for the first time as Industry 4.0. The Chancellor found the concept so conclusive that she spontaneously used it in her opening speech at the industry show as proof of the performance of German technology providers.

Ten years later, in April 2021, a full 94 per cent of the companies surveyed by the digital association Bitkom on Industry 4.0 stated that they could only remain competitive by networking their processes. However, 65 per cent of the survey participants fear that they have missed the boat when it comes to digitizing their production or are laggards. “Medium-sized companies in particular answer the question of the status of Industry 4.0 in their companies with relentless honesty,” explains Dominik Rüchardt, Head of Business and Market Development in Central Europe at the provider of technologies for Industry 4.0, PTC. “They complain that they don’t have the IT know-how for the change and don’t know how to network and monitor their existing systems and machines.”
It’s different in larger industrial companies: Two out of three of the companies surveyed by Bitkom now use intelligent robots or systems for real-time communication between their machines. Four out of ten large companies also network their systems with IoT platforms on which they evaluate the data transmitted by the machines.

Today all future technologies of the year 2011 are in use

In addition, basically, all technologies have found their way into their production and development, their sales and purchasing, from cloud computing and augmented reality (AR) to digital twins, artificial intelligence (AI) and software solutions for product lifecycle management (PLM). held, with which acatech President Kagermann and his colleagues wanted to connect products and their manufacture in 2011 to so-called “cyber-physical systems”.
“The individual technologies interact with the physical product such as the nervous system, brain, memory and thinking abilities with the human body,” . The digital twin serves as a kind of brain. Because it reflects all the properties and behaviour of the product. “The IoT serves as a nervous system that connects it to the physical product, registers how it behaves and transmits signals between the analogue and the virtual world,” adds Rüchardt. With these impulses, the behaviour of the product can also be influenced.

AI is the mind of Industry 4.0

At the same time, AI and machine learning could correlate the received signals and recognize when changes in the behaviour of the product are necessary – for example, to achieve better manufacturing quality by adjusting the parameters of the process running on a machine. “So AI is, so to speak, the thinking ability of the cyber-physical system. As such, she recognizes at an early stage when repairs or the replacement of wearing parts will be necessary and thus helps to increase the availability of machines through predictive maintenance.
The PLM, in turn, remembers the findings of the AI. Similar to the human memory, it not only knows how the product should work but also how it has behaved and changed over time. The information it provides helps development engineers to optimize future product versions.
“Finally, augmented reality makes all this data usable and helps people to optimally influence devices and systems – for example, by providing a maintenance worker with the data needed to repair a machine on his tablet or showing him where with the help of AR glasses he has to lend a hand,” adds. This means that maintenance work can also be carried out by less experienced technicians. Machines fail for a shorter period of time if an employee from their manufacturer does not have to travel to repair them first.

The digital transformation of industry needs a reliable set of rules

“Anyone who wants to assess what German companies have achieved in the first ten years of Industry 4.0 must not only think technologically,” warns Rüchardt. In order for the smart networking of production, development and procurement processes to succeed, numerous participants must be integrated into a digital ecosystem – from the manufacturing company to its suppliers and clients to logistics service providers. “Industry 4.0 is therefore also a far-reaching structural change that changes the relationships between manufacturers, suppliers and customers and pushes new providers into established markets.
In order for this to be legally secure, a set of rules consisting of laws, contract models, reliable payment systems and active business relationships is needed that everyone involved can rely on. Only such a reliable framework for business relationships in Industry 4.0 allows new business models to be developed. According to the Bitkom survey, three out of four industrial companies are striving for this.

“Machine as a Service” – the supreme discipline of Industry 4.0

Above all, “as a service” business models are a profound disruption for providers. “A mechanical engineering company, for example, then no longer collects the price for its product when it is sold, but spread over many years. This puts a lot of stress on his balance sheet. In order to be able to survive economically, the manufacturer would need new partners, such as financial holdings or leasing companies, who buy their machines and rent them out as operators according to an “as a service” model.
To do this, they must be able to guarantee customers that the devices will perform as promised in the rental or leasing contract. This presupposes that operators continuously monitor the machines and know at all times what condition they are in, what quality they are producing and how their economic operation is. The machine builder’s new partners must also be able to maintain their devices and, in the event of a fault, repair them reliably and, if possible, without a time-consuming journey by a service technician.
The manufacturer of a machine can sell all these services in addition to the machine. Because their rental company must be able to access the technical expertise of the machine builder as well as the complete technology stack of Industry 4.0. Otherwise, his business model will fail. In order for the interaction between the manufacturer of the machine, its operator and its customers to work, all those involved also need a legal framework in which liability issues and the respective rights and obligations in their business relationships are reliably regulated. “Machine as a Service is thus becoming the supreme discipline of Industry 4.0,” summarizes Dominik Rüchardt.

Industry 4.0 in brownfield environments – individual solutions lead to chaos

Companies encounter similar problems when they want to network and monitor older machines and systems in order to increase their availability and performance. In order to be able to develop its potential, Industry 4.0 also needs a framework in such brownfield environments – in this case, however, a technological one.
“Older machines and systems were mostly developed in a downstream process and trimmed for operational excellence. This makes it very easy to monitor and optimize each machine individually. However, the approach is not sufficient to use the existing systems to react quickly and flexibly to changes in demand for the products manufactured with them.
To do this, the machines must be networked via an IT architecture that can extract meaningful information from the data supplied by the devices even if the data follows the logic of the operating systems from different manufacturers and is available in different formats.
“This requires clearly structured and comprehensible IT architecture concepts that can deal with the heterogeneity of brownfield environments. Otherwise, there will be a lot of individual solutions and thus chaos,”. Networking of manufacturers, their suppliers and customers are then hardly possible.

The digital platform economy is not far away

“However, the first corresponding sets of rules are now available – for example, the reference architecture model Industry 4.0, RAMI,” assures Rüchardt. At the same time, the first consortia would implement these frameworks in practical cooperation between companies from sectors such as mechanical engineering, the process industry or automotive production.
“If things continue to develop like this, in three to four years the economic interaction between companies and their partners will mainly take place on digital platforms.