Why the Promised Fourth Industrial Revolution Has Not Happened Yet
From: The Conversation
Published: February 27,
2023
It’s nearly a decade
since the term “fourth
industrial revolution” was coined, yet many
people won’t have heard of it, or know what it refers to.
Also known as industry
4.0, it’s a way of describing how connecting together different advanced
technologies could transform how we make things. An example of this could be
putting artificial intelligence (AI) into factory robots.
Although there’s no
formal agreement we are living through this new age, it’s a sign of the
importance with which many people regard these developments and their
potential. The previous industrial revolutions were: the rise of steam power in
the late 18th century, the use of
electricity to power machines at the end of the 19th century and
the shift to
digital electronics that started in the 1970s.
These were defined by
clear milestones. But many emerging technologies could claim to be part of
industry 4.0. These include virtual reality (VR) to simulate what’s going on in
an assembly line, and 3D printing. There are also lesser known developments
such as digital twins – virtual models that accurately reflect the behaviour of
physical objects such as wind turbines or aircraft engines.
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Any technology that is
“smart” or “cyber-physical” — where the lines between the digital and physical
worlds are blurred — can claim to be part of the fourth industrial revolution.
But many companies
appear to have been slow to take advantage of these developments. Here, we’ll
show why that could be and the changes that may be necessary to ensure that
transformative technologies live up to their potential.
A stalled revolution?
A supply chain
describes the entire system for producing a product, from raw materials to
delivering the finished article to a consumer. So it’s useful to look at the
impact industry 4.0 technologies have had on these chains.
It’s difficult to
measure how much of an effect specific technologies might be having on the
economy. However, one thing we can do is see what impact they have made on
decision makers in companies.
One of us (Ralf
Seifert) recently
published a survey of several hundred senior executives conducted. The
survey asked the executives their views on managing supply chains.
None of the top
priorities listed by the executives relate to industry 4.0. Headline-grabbing
technologies strongly associated with the fourth industrial revolution, such as
AI and machine learning, the internet of things, robotics and 3D printing are
in the bottom third of priorities.
A look at online trends
also reveals that searches for “industry 4.0” peaked in 2019, but have since
dropped to a significantly lower level.
There could be a number
of potential reasons for this disappointing embrace of industry 4.0 by
companies. In
2020, a survey by the accounting giant KPMG showed that, of all
industry 4.0 technologies, only cloud computing had reached an advanced —
though still incomplete — level of implementation.
For many businesses,
the benefits of other important technologies remain obscure. The daily
pressures of service and cost take precedent, so it takes effort to move away
from familiar solutions. This is consistent with the dip in searches for
industry 4.0 — even as global supply chains have been disrupted
by the coronavirus pandemic, the blockage
of the Suez Canal shipping lane in 2021, floods
hampering rail transport and a shortage of shipping containers.
The KPMG report from
2020 found that less than half of business leaders had a good understanding of
the term “fourth industrial revolution”.
High risk, high
scrutiny
A lack of awareness is
one hurdle for the adoption of industry 4.0 technologies. Another is the need
to build
the business case for expenditure on new technological solutions.
The more ambitious the
technology, the higher the risk and scrutiny. Not every company has leaders
ready to champion and sponsor innovation in the face of uncertain or less
tangible outcomes.
Industry 4.0
initiatives can also lead to resistance to change among workers. IT
departments, trained for years to seek out large enterprise solution providers,
hesitate to recommend niche solutions from small companies — especially for
technologies they’re not familiar with.
One way to address this
is to commit resources to building separate teams tasked with identifying and
prioritising industry 4.0 capabilities. Even then, however, there must be an
alignment with the broader business strategies of a company.
From crisis to
opportunity
The unprecedented
supply chain disruptions over the last two years have pushed executives to
consider reconfiguring their supply chains. More often than not, however, they
are opting to do this in a conventional manner.
Reshoring (returning
manufacturing to the company’s original country) and nearshoring (transferring
manufacturing to a closer-by, rather than more distant, country) have become
popular options for companies
looking to build the resilience of their supply chains.
Industry 4.0
technologies have a role to play in this transition. For example, the
rethinking of global supply chains came about through a need to reduce labour
costs.
Driverless forklifts,
or automated guided vehicles (AGVs), are one example of the way robotics can
mitigate rising costs elsewhere. Additive manufacturing — the industrial name
for 3D printing — can simplify and reduce the cost of production processes that
involve two or more costly steps.
For supply chains that
cross international borders, there will be an added incentive to use digital
platforms for improving the ability to track inventory — a term covering
everything from raw materials to finished products — and to help transport
goods. This will help companies identify unplanned disruptions more quickly and
react to them appropriately.
The very supply chain
dysfunctions that made headlines and arguably slowed the short-term progress of
industry 4.0 may yet prove to be the engine that finally delivers its promise.
Why
the promised fourth industrial revolution hasn't happened yet
(theconversation.com)
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