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These 3 shifts in manufacturing are driving Industry 4.0

Jul 27, 2021

Manufacturers who hear more and more about Industry 4.0 may be wondering, where’s it coming from?

When you look at the overall picture, Industry 4.0 is a natural extension of how power, machinery and business have evolved. But there are also clear shifts that have shaped its particular direction.

Let’s take a look at the shifts in manufacturing that are driving the need for Industry 4.0.

Why is Industry 4.0 growing more important?

As a continually evolving industry, manufacturing has undergone a lot of change in the past 200 years. The manufacturing that has stayed in the U.S. has had to contend with customers demanding lower prices, faster delivery and greater flexibility. They don’t want to sit on inventory, but they want to be able to pivot faster.

Industry 4.0 lets you satisfy customer demands by reducing costs, becoming more efficient, automating processes, making decisions off real-time data and insights, and leveraging other important ways to get leaner and more productive. Manufacturers who can’t do this start to fall behind others.

Then you have the growing shortage of skilled workers. Baby boomers continue to retire, and newer generations have less and less of an interest in manufacturing jobs. This is unlikely to change, so preparing for an even worse labor shortage means shifting from a reliance on institutional knowledge to standardized processes. It means automating as many processes as possible, using robotics and leveraging your employees for the work machines can’t do. It means following Industry 4.0 principles.

And the last big driver of Industry 4.0 is simply growing adoption. Industry 4.0 is not a new concept, and while there were big early adopters, it’s continuing to gain momentum and be adopted by mid-sized and smaller manufacturers. Industry 4.0 has been here for a while, it’s viable and beneficial, and it’s increasingly critical to have.

As your competitors, suppliers and customers all begin to adopt more and more pieces of Industry 4.0, it will then become your business imperative to adopt it. You gain a competitive advantage, you’re able to better communicate with customer and suppliers and you improve top- and bottom-line revenue. The benefits of Industry 4.0 are already clear. Why not start experiencing them now?

The fourth industrial revolution

Industry 4.0 — also called the fourth industrial revolution — has been a long time coming. Every leap forward we make in manufacturing is significant and builds off the previous leap.

Just look at the graphic below. In less than 250 years, we’ve gone from harnessing steam to connecting the physical and virtual worlds together.

Industry 1.0-4.0 timeline

Source: Aberdeen

Once we leveraged steam power and mechanized production, we were able to transition from steam to electricity and move forward toward mass production. With electricity and increasingly complex machinery added to the foundation, we developed electronics and computers, and we continued to find ways to automate production, like with CNC machinery. We saw lean processes gain popularity in the 1980s and 90s. Businesses began to look for ways to incorporate data into their decision-making, to streamline processes and to use more technology to do so. That led the third industrial revolution to evolve in the fourth. Now, with the world as digital as it’s become, everything has the potential to become highly connected, to talk to each other, and to work without human interference.

Each industrial revolution was driven by a changing environment and business imperatives. It’s generally accepted that the first industrial revolution began around 1760, the second in 1870, the third in the 1960s and the fourth within the past decade. The timespan between revolutions gets shorter and shorter. Now we’re only 50 years removed from Industry 3.0.

Technology continues to evolve rapidly. There are so many options out there, and it can be easy to create silos. But every year, it gets easier to connect technology together. The cloud, IoT, AI, blockchain — all this can connect to create significant benefits. You gain visibility into your performance, adjust your quoting process, identify variances, reduce setup times, create greater capacity, and more.

You just have to get started. And that’s what we’re going to focus on in our next Industry 4.0 piece — how planning a unique Industry 4.0 journey and optimizing data can set manufacturers up for success.

At Wipfli, we’re experienced in helping manufacturers get started with Industry 4.0, including creating a comprehensive plan based on your specific needs. If you’d like to learn more about Wipfli’s Industry 4.0 process, click here.

Or continue reading on:

What is Industry 4.0, and why does it matter?

How crises cause industry disruption and innovation

6 predictions: What manufacturing could look like after COVID-19


Jake R. Rohrer
Senior Consultant
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Anirudh Nadkarni
Solutions Manager, BI and Analytics
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Joe Girard
Sr. Business Developer
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