Industry 4.0

by Breenda Shah

What is Industry 4.0?

The (First) Industrial Revolution was defined by the steam engines of the late 1700s and early 1800s, which entirely transformed the textile industry and improved transportation. The Second Industrial Revolution saw the introduction of electricity, assembly lines, and mass production, allowing the mechanization of factories. The Third Industrial Revolution came with the development of computers and robotics, raising new questions about the role of human beings in the production process. Now, as we enter the Fourth Industrial Revolution (also known as Industry 4.0), humankind must consider the fusion of virtual and real worlds; in manufacturing, these concepts are seen in automation, digitalization, and robotics. With the help of the Internet of Things (IoT), cyber-physical systems, cloud computing, and other advanced technologies and processes that have normally been managed by people are being completely digitalized.{1} Industry 4.0 creates what have been referred to as “smart factories,” but there is more to the movement than just advanced technologies; Industry 4.0 is also about how businesses combine these technologies to drive operations and growth.

Why does Industry 4.0 matter?

The benefits of adapting to Industry 4.0 go beyond manufacturing and production to encompass customers and workers as well.

  1. Benefits to manufacturers:

In the manufacturing industry, the integration of physical and digital technologies enables businesses to improve their operations, increase growth opportunities, and enhance both internal and external collaborations. IoT is the widespread connection of physical devices to the Internet, creating cyber-physical systems which have the potential to increase necessary visibility (i.e., the ability to see all units of the production process in order to identify key issues and avoid operational and productivity challenges throughout the process). Cloud computing can help process, sort, and store massive amounts of data, allowing stakeholders to analyze information from different sources and make well-rounded decisions. It may also lead to new business models and enhance the collection of customer information. This improved interaction with customers can further help businesses provide customized products, improve quality, improve post-purchase services, and assess usage patterns. Moreover, Industry 4.0 can connect supply network and logistic capabilities, the planning and processing of inventory, and other capabilities, giving new insights. Although implementing Industry 4.0 methods requires a large initial investment, once adapted, these methods can reduce costs drastically, opening doors for growth and enabling businesses to serve larger markets (both nationally and internationally) with higher-margin products.

  1. Benefits to workers:

As Industry 4.0 technologies are incorporated in day-to-day production processes, the increased data availability will allow workers to utilize complex machinery and perform tasks with a more complete understanding of the data. There will be new training opportunities for employees and a chance to showcase their full potential. Companies will benefit from these gains as more motivated workers take on greater challenges and work more efficiently. There is also a possibility of creating new roles as well as new innovated products. Another final important advantage is that Industry 4.0 creates a safer workplace.

  1. Benefits to customers:

In addition to gaining more innovative products with improved quality and customization, customers can enjoy a deeper understanding of the products as broader data collection enhances their customer experience. Their interactions with companies will help customers learn more about their usage patterns, and assist in predicting their future product requirements.

Where does Canada stand?

The Business Development Bank of Canada (BDC) surveyed 960 Canadian small and mid-sized manufacturers, 384 of them from Ontario. The survey results, released in May 2017, indicate that that 39 per cent of Canadian small and mid-sized manufacturers have implemented Industry 4.0 projects, 3 per cent have fully digitalized their production processes, and 17 per cent are in the process of doing so. The study also reported that 50 per cent of these businesses said their operating costs decreased, 42 per cent said their product quality improved, and 13 per cent said they had more capabilities to innovate. Siemens was cited as an example of a company that had successfully implemented Industry 4.0 in Ontario. Though these numbers are positive, Canada’s manufacturing industry still has a long way to go towards maximizing the benefits of the Fourth Industrial Revolution.

Graph 1: Percentage of businesses adapting to Industry 4.0 in different sectors

According to the BDC survey, on average, 41 per cent of the surveyed manufacturers invested less than $50,000 in Industry 4.0-related projects, and only 5 per cent of them invested over a $1 million. To encourage more investment in advanced technologies, the federal and provincial governments provide support through grants and policies to businesses. Recently, the federal government and the Province of Ontario announced grants of up to $100 million to Linamar Corporation to develop its advanced manufacturing technologies. The Canadian government also provided funding to support research and development projects at eight Ontario auto parts manufacturers.

Adopting to new technologies and processes can be extremely challenging for manufacturers. Common challenges to implementing Industry 4.0 include costs, cyber-security, technology complexity, data analysis, and integration. However, according to the BDC study, 42 per cent of manufacturers said that the main challenge they face is a lack of qualified employees to adapt to this new industrial revolution. The industry of advanced manufacturing must be supported by a highly skilled, educated workforce; without it, advanced manufacturing cannot proceed.

Graph 2: Barriers to implementing Industry 4.0

How can educational institutions contribute?

Educational institutions are key to the development of a skilled workforce. As the rest of the world moves quickly towards the implementation of increasingly advanced technologies, educational institutions must ensure that they are updating their curricula to better reflect future labour demands. A report released in June 2013 by the Conference Board of Canada estimated that each year, Ontario’s skills gap cost its economy around $24.3 billion in foregone gross domestic product, as well as $4.4 billion in federal tax revenues and $3.7 billion in provincial tax revenues. Since these findings were released, there have been many initiatives aimed at reducing this gap. For example, Seneca College and Siemens Canada joined to open Ontario’s first Mechatronics Simulation and Demonstration Centre. (Mechatronics is the combination of mechanical, electrical, and computer technologies used in production and manufacturing.) The college now offers a training ground for students to pursue the Siemens Mechatronics Systems Certification Program.

However, skills gaps persist. Businesses want individuals who are emotionally, intellectually, and physically balanced, as well as flexible across a range of business operations. Accordingly, educational institutions should do the following:

  1. Continuously collaborate with businesses and make necessary changes to their existing programs, as well as introduce new ones, to ensure that students acquire the right skills and knowledge needed to implement Industry 4.0 (e.g., analytical and critical thinking, complex problem solving skills, communication and leadership skills, and familiarity with robotics and new computer software).
  1. Make internships, mentoring, and collaboration projects compulsory for each program to provide students with practical experience and show them how to apply their knowledge outside the classroom.
  1. Host industry events where students can see the kind of skills required by businesses and make the right choices when choosing their programs and courses. Similarly, host more events where students can meet different business recruiters.
  1. Invest heavily in research related to Industry 4.0 and help students attain the knowledge required to land jobs in this field.
  2. Make learning an interesting and more involved experience for students, rather than simply increasing the pressure to achieve high academic results.

References:

  1. Forbes. “What must everyone know about industry 4.0” 2016
  1. strategy + business. “A strategist’s guide to industry 4.0” 2016.
  1. The Conference Board of Canada. “The cost of Ontario’s skills gap.” 2013.
  1. Siemens. “Enabling the future of advanced manufacturing.” 2016.
  1. BDC – “Industry 4.0: The new industrial revolution”. 2017.
  1. CBC News: Business. 2015. “Canada manufacturing: Ottawa invests $41M to support research projects at 11 Canadian auto parts firms.” 2018.
  1. Deloitte insights. “Forces of change: Industry 4.0” 2017.
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