Industry 4.0: the evolution of smart factories

Industry 4.0: the evolution of smart factories

The Internet of Things is becoming prevalent in industry, where it connects real and virtual worlds of production. The fusion of these two worlds via the Internet enables manufacturers to connect machines, products, and systems involved in the production process. This means that machines and products inter-communicate and they can independently control each other.

Industry 4.0 initiative involves a high-tech strategy which promotes the computerization of traditional industries and a shift from “centralized” to “decentralized” smart manufacturing.

Industry 1.0 was the first industrial revolution, driven by wide implementation of steam engines. Industry 2.0 incorporated mass production with use of the conveyor belt. Industry 3.0 was enabled by electronics and IT, with automation of production using computers, numerical control (NC), and programmable logic controllers (PLCs).


Industry 4.0, integrates cyber-physical production systems. Consumer input determines how and when manufacturers produce their products. Information and communication technology (ICT) and smart automation connect and enable the integration of embedded production systems and processes, creating intelligent, object-oriented (OO) networking, moving from centralized to decentralized models, and evolving into cyber-physical design and simulation by using models and intelligent software. Manufacturing needs to create information about production using customer data from the supply chain to make smarter decisions.


Industry 4.0 technologies have been heavily deployed in Germany’s energy sector, with smart grids allowing companies to shift from consumption-oriented generation to generation-optimized consumption, making it possible to optimally manage fluctuating renewable energy power generation and consumption. There have also been smart factory applications in the auto industry, with companies like Bosch Auto Parts using data, digitization, and the Internet to create a smoother production process.

Michelin is another example. Connectivity and smart devices enabled the tyre manufacturer to completely shift its business based not on selling tyres, but providing the mobility and safety of tyres as a service. With sensors and intelligence embedded in the tyres, their performance is monitored with a network of support available to ensure that problems can be addressed.

In most cases Mobile Network Operators and Service Providers such as Telstra, Vodafone Group, are heavily involved providing proper solutions to connect manage and monitor all these new SIM-enabled devices and equipment. Private cloud solutions, M2M business solutions, Telemetry are a few services offered in a smarter way to manage multiple business assets in the field.


The data security is a big concern within Industry 4.0 to guarantee a safe production. In some cases new internet standards need to be established with the Digital Industry 4.0.

There is a need to establish appropriate IT security mechanisms for the production environment as part of new enterprise security plan; since all these universally connected devices are sharing large amounts of data through the Internet or cloud-based technology. That is likely to be the potential for a security breach: a hacker or intruder could potentially paralyze a company’s logistics systems or get access to confidential customer orders and share them with competitors. Being proactive and updating security programs should ensure that data is secure protecting the weak spots.


Concluding, there is an opportunity for a developed European country to generate growth of more than $50B in several sectors such as chemical engineering, automotive, mechanical engineering, IT and communication, electrical engineering, and agriculture—by 2025, and that the average additional gross value from this growth could be more than 1.5 percent per year. Elias Aravantinos, Leading Analyst at ExelixisNet comments “We continue to delve into this new opportunity and market for MNOs, and IoT, M2M suppliers, for example, looking specifically at IoT in APAC during 2014, China contributed almost 50% of the total IoT spending in Asia Pacifi­c, followed by Japan, South Korea and Australia. The latter market is expecting to surpass $1B by 2017 boosted by new M2M and IoT solutions and platforms”.

Finally, more companies are expected to sell products as a service into this connected world supported by a fully digital value chain. The intelligent, connected products provide the information for new types of services, where data is harnessed to offer as-a-service products. Developing the capabilities to support them will be the priority.

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