What is “Industry 4.0?”

What is “Industry 4.0?”

For years, reports have been circulating about the manufacturing industry’s labor force concerns, which are often cited as being the foremost issue pressing companies. Intriguingly, there’s been a major shift over the last few months. Employers are beginning to focus their attention on other ways to get the job done. Production is getting much smarter, faster than ever before.

“In 2018, a record 58 percent of Hoosier manufacturers reported that investing in facilities, machinery, and related information technologies was their top concern, while the percentage of manufacturers ranking workforce development as their highest priority shrank to its lowest level in a decade,” according to data published in the 2018 Indiana Manufacturing Survey developed by Indianapolis-based Katz, Sapper & Miller.

If that’s the case, then the national trend that many are referring to as Industry 4.0 has definitely made its way to Indiana. The term refers to the rise in smarter factories and a greater incorporation of digital and analytical technologies into systems and processes.

The term refers to the various major phases of industrialization the world has experienced throughout history. Broadly speaking, Industry 1.0 would be the era of the first mechanizations that aided human labor such as steam-powered devices and other machines. The second era would be the increased use of electricity and the assembly line. The third would be the use of computers and early forms of automation. Now, today in the fourth era, automation has become much more integrated and intelligent. Robots work with computers that are equipped with learning algorithms, communicating with each other and operators.

41 percent of Indiana manufacturers recently said they perceive this fourth era of industry to be a positive investment for growth. Another 31 percent say that it will be necessary to use these types of systems to remain competitive.

Two particular innovations stand out as the ones at the forefront of this trend; data analytics and 3D printing (which is frequently referred to as additive manufacturing). 3D printing has demonstrated useful attributes for manufacturers, who most commonly use the technology to fabricate components and spare parts for their equipment. While on the other hand, data analytics is becoming a part of just about everything.

Indiana companies are using data analytics in product design, advertising and selling, planning and scheduling, inventory and materials, production management, supply chain management, and much more.

35% of Companies are Industry 4.0 Leaders

To form a picture of how proficient Hoosier companies are becoming at developing Industry 4.0-style methods, the report’s authors identified eight categories of the trend and scored companies based on their level of sophistication for each. Those categories were:

  • Traditional advanced manufacturing technologies (CNC machines)
  • Advanced manufacturing philosophies (LEAN)
  • Adaptive/flexible manufacturing systems (FMS)
  • Automated material handling (automated vehicles)
  • Novel materials (composites)
  • Additive manufacturing (3D printing)
  • Data analytics in planning and control
  • Data analytics in engineering and product design

After sorting and tallying the responses, the results showed that about 35 percent of Indiana manufacturers are considered leaders in Industry 4.0. These leaders “experienced much better performance in terms of not only their speed and reliability of deliveries but also their capacity utilization, productivity, and costs,” surveyors said.

How Will Industry 4.0 Affect Jobs?

Regarding how this trend may impact jobs, manufacturers said the impact will be divided based on the skill level of the employee. Roughly half of companies said they expect characteristics of Industry 4.0 to increase the demand for skilled workers but reduce demand for unskilled positions.

This marks a big jump from last year’s figures. In 2017, only about 35 percent of companies shared his opinion. 2018’s percentage climbed to 49 percent.

Only about 9 percent of companies expect increased automation to reduce both skilled and unskilled positions. It’s worth noting that about a quarter of companies expect the need for skilled individuals to rise while the number of unskilled positions gets retained at its current levels.

On the subject of jobs though, the report noted that an increasing number of employers feel its up to them to find the type of workers they need. The percentage of those who feel they must take responsibility for their own workforce development has increased to 61 percent in 2018, up from 51 percent in 2017.

Interesting Times We Live In

It’s interesting to witness what some are calling the fourth iteration of our world’s industrial progress. Indiana employers seem optimistic about the direction things are headed, and if the trend follows its projection more companies could be seeing lower costs and higher profits. It would seem that Industry 4.0 is now here to stay, and its implementation is only going to grow as we move forward.

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