Productivity – the value created per unit of resources deployed — is the primary driver of standard of living. In manufacturing, the “resources deployed” include raw materials, human talents, skills and efforts; and capital investment. Several times in the past, the availability and application of new technologies have occasioned marked improvements in productivity. These improvements have benefitted increasing numbers of people.
“Industry 4.0” refers to a group of digital technologies that, when employed in an interactive and integrated fashion, promise to initiate a fourth industrial revolution. In essence, Industry 4.0 extends the industrial “Internet of Things” beyond local manufacturing process condition sensing and analysis to automated decision making, integrated across entire value chains.
The Boston Consulting Group, (BGC) an international consulting firm, identifies nine key emerging digital technologies that comprise Industry 4.0: 
- The industrial Internet of Things
- Horizontal and vertical integration
- Digital simulation technology
- Autonomous robots
- Big data and analytics
- Augmented reality
- Additive manufacturing
- “The Cloud”
BGC does a good job of introducing these component technologies that can read and download. However, the point of this post isn’t the component technologies. The point is how those technologies might be employed to actually result in significant increases in productivity within manufacturing firms.
Goldratt’s Four Questions
Eliyahu Goldratt, author of The Goal, noticed that employment of new technologies in the past often resulted in large improvements for some firms, while many other forms experienced little, if any, improvement at all. Goldratt uses the logic of his Theory of Constraints to propose a series of four questions for those considering employment of Industry 4.0, or any other technology: 
Question #1 – What is the power of this technology?
In the case of Industry 4.0, massive employment of digital sensing, communication, evaluation and feedback promises to significantly improve productivity, primarily through increased throughput and reduction of wastes, across entire value chains.
Question #2 – What limitation does it alleviate?
Absent the technologies of Industry 4.0, many forms of waste across an entire value chain (e.g. raw materials variations, machine conditions or human errors) are not sensed, identified and acted upon quickly enough to prevent or alleviate them, or to prevent additional wastes.
Question #3 – What rules do we use to work around that limitation now?
Local methods for sensing and communicating conditions that create wastes are employed. Heuristics are often employed to guide remedial or corrective actions.
Question #4 – What new rules will be necessary with this new technology?
Industry 4.0, above all, requires a comprehensive systems approach to entire value chains. Such an approach will require redefinition of relationships among the components of entire value chains. It also entails significantly increased reliance on machines for making routine decisions and taking appropriate actions.
For Smaller Manufacturers
All manufacturers, large or small, must remain competitive with, literally, a world of competitors and potential competitors. To do so almost doubtlessly requires the employment and integration of new technologies as they become available. The logic behind Industry 4.0 provides a platform – a basis for thinking and acting – for the introduction of new technologies over time. The changes in thinking that Industry 4.0 requires are monumental.
As a beginning, smaller manufacturers should become increasingly aware of the emerging technologies that comprise Industry 4.0, and, even more importantly, how they fit together. Look for future posts to this blog on Industry 4.0, especially as a platform for systematic actions. Buckle your seat belts.
Thoughtful comments and experience reports are always appreciated.
… Chuck Harrington (Chuck@JeraSustainableDevelopment.com)
P.S: Contact me when your organization is serious about 21st century manufacturing … CH
This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. Blog posts are published weekly.
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 E. Goldratt, Beyond The Goal: Goldratt Speaks on Theory of Constraints, audible presentation, LLC Gildan Media (Presented on CDs, available from Amazon)