Saving $30B with Industry 4.0: Getting The Most Out of the Movement



  • Data can be gathered all throughout the product life cycle, which can be analyzed to develop the product exponentially.

  • Intelligent machines can be installed within the manufacturing process which increases feedback control.

  • Smart sensors can gather real-time data and artificial intelligence can provide an in-depth analysis based on the data.

  • Industries can save up to $30B by increasing the operational efficiency by 1% through the use of Industry 4.0 innovations.

  • Consumers and equipment manufacturers can gather $500B of savings from adopting these advancements.

In 2011, the term “Industry 4.0” was coined in a research done by the German Federal Ministry of Education. The team sought that Industry 4.0 would create innovations that will not just shed new light to the manufacturing sector but also everyone’s overall lifestyle. In context, previous industrial revolutions have given us access to basic human rights which were once privileges such as education, sanitation, electricity, and the internet.


Industry 4.0 provides data all throughout the product life cycle and generates an in-depth analysis that can be integrated towards intelligent machines which produce said product.



Data is Collected all throughout the Life Cycle.


Most people are starting to believe that data is the new currency. The more data about the product and target audience is collected, the higher chances that the target market lean towards their product. With Industry 4.0, data is recorded in the entire product lifecycle, from the design of the product up until the disposal. Different types of data can be recorded, from the specifications of the product to how the customer interacts with the product.

With the vast amounts of data, it is important to determine the digital twins - virtual replicas of a certain entity. For example, Under Armor has a facility in their innovation lab where it consists of a 3D body scanner. Inside that facility, a test subject wears the products of Under Armor such as a shoe or guard and then performs the typical physical activity that their customers do while using the product. The scanner tracks how the Under Armor products interact with the user and vice versa.


Another example of a digital twin are CAD (Computer-Aided Design) programs. Not only can these multiple CAD programs provide a visual replica of products and equipment, these programs can also provide simulations. Some even optimize the design of the product when the thresholds are defined and set. As a result, different designs can be tested out without wasting any physical material. A whole factory can also be simulated in order to test out ways to optimize the manufacturing process.




Data is just half of the story.


Data can be integrated into the machines in the manufacturing plant. For example, data obtained from the manufacturing process itself can provide valuable feedback control. As a result, errors from previous products can be recorded and the system will automatically adjust to in order to create less errors. However, data integrated into the machines can come from outside the machines such as designs from the product development or even customer feedback. Since data is gathered from all aspects of the product life cycle, machines that create the products can adjust accordingly which is exponentially more efficient. This also provides more customization for businesses that have customers with a preference for or interest in unique products. In the near future, companies can produce clothing based on the design their customer wants.


Intelligent machines not only tackle precision and variability, but also solve issues with troubleshooting and communication. Smart sensors can be installed to analyze and monitor the machines’ health. Other than determining the current issues of the machine, these smart sensors can also predict faults that may occur within the machine. Once it predicts or determines a fault, these sensors can communicate with the company itself as well ascertain entities that affect their supply chain. This real time communication cuts a lot of time and effort especially on the part of the manufacturer, and results in producing a precise number of products needed from suppliers in a short amount of time.



How does it all come together?


With all of these accumulated benefits, how does this change the manufacturing industry? It is important to note that miniscule differences can accumulate and lead to huge amounts of savings. According to GE, if oil and gas industries are able to reduce their capital expenditures by 1% and provide the same quality and service, then these types of industries can save around 90 billion USD. GE calls this the power of 1%; and this does not exclusively apply to the oil and gas industry. Commercial aviation can accumulate 30 billion USD and system-wide healthcare can save $63 billion if they can reduce their inefficiencies by 1%. Industry 4.0 is capable of increasing efficiency and effectivity in most business sectors. In fact, Daniela Costa, head of the European Capital Goods Equity Research team in Goldman Sachs Research, states that consumers and equipment manufacturers can gather half a trillion dollars of savings from adopting these advancements. Especially with the pandemic-related challenges the world faces today, Industry 4.0 is quickly becoming a vision that every business, big or small, is looking towards. The question now is - who will be able to successfully implement these systems and get the most out of them, and who will be left out?