The Time for Industry 4.0 Is Now

The conversation I had with representatives from the German government and industry players during a partly virtual panel discussion at HM Digital Days 2020 showed that digitalization is top of mind for everyone at the moment. Its potential to mitigate the impact on production and supply chain has once again become obvious during the Corona crisis. The pandemic has brought to light that digitalization can be a strong catalyst for businesses to become more resilient and sustainable, and that there are still gaps that need to be filled.

Connecting the digital divide

Industry 4.0 plays a significant role in the future of industrial productivity. To make this vision a reality, it must be an integral part of corporate strategies since it touches many different functions of an enterprise. More precisely, Industry 4.0 can help companies connect the digital divide between organizations by not only connecting processes across functions within an enterprise, but also across the companies via business networks.

At SAP, we have designed the Industry 4.Now program to offer a consolidated approach to these technological and integration challenges. Today we have all the technology at hand to connect device and machine data with enterprise applications and fuel business processes with insights from data. This is basically the foundation for managing business processes end-to-end.

Just recently, we opened our new Intelligent Factory at our headquarters in Walldorf, which we built together with partners such as Krones, Beckhoff, Kuka, and Gebhardt.

Customers visiting our new model factory can experience an end-to-end Design-to-Operate process showing the value of SAP S/4HANA, Digital Manufacturing Suite, Intelligent Asset Management, and logistics solutions such as SAP Extended Warehouse Management, enabled by SAP Cloud Platform. In our intelligent factory, visitors can see how SAP applications manage engineering and design operations, how orders automatically trigger manufacturing processes, how machines interact with each other to initiate intra logistics operations as a result, and how to ensure product quality and asset performance.

The potential for companies is huge. According to IDC FutureScape: Worldwide Manufacturing 2020 Predictions, to decrease serious asset failures, “by 2024, 40% of manufacturers will use field asset IoT data to intelligently diagnose issues and resolve autonomously, improving unplanned downtime by 25%”.

According to IDC’s Senior Vice President for Enterprise Applications, Data Intelligence, Services, and Industry Research, Bob Parker, “Industry 4.0 is neither a technology trend nor a new market. It’s an evolutionary and transformational shift in manufacturing and supply chain. This shift not only underpins the growth from technological advances, but also the reinvention of business processes beyond company boundaries and the deep integration of production and business data.”

Laying the foundation for cross-company collaboration

Business and engineering processes are becoming more and more modular and highly flexible. Ultimately, this requires IT vendors to enable such modularity and flexibility for companies so that they can introduce new technologies, redefine their business processes, create new products, and enrich them with services.

In order to cover end-to-end processes with services, corporations must team up. No company alone can offer such highly integrated processes beyond their own company borders. Organizations from various industries, together with their customers, must collaborate to tackle these challenges. SAP contributes to various cross-industry and policy initiatives, such as Plattform Industrie 4.0 here in Germany, or the Open Industry 4.0 Alliance. These initiatives work on creating the semantic and interoperable foundation so that solutions from different players can be integrated, ensuring data sovereignty and governance.

Industry 4.0 requires not only interoperability, but also a new way of working and collaborating. Earlier this week, Siemens and SAP announced a new strategic partnership to bring together the industry expertise of both companies by combining our complementary software solutions for product lifecycle, supply chain, and asset management. We aim to deliver deeply integrated solutions and create a digital thread that enriches product or asset information with real-time business information, such as customer feedback from structured or unstructured data and product performance data over the entire lifecycle. Ultimately, this will help customers establish more sustainable and ethical business practices by identifying the impact of material or supplier related decisions.

Still a way to go

We see today that Industry 4.0 solutions need acceptance throughout the enterprise workforce. Infusing education with digital skills early on and throughout careers is the key to a sustainable and successful transformation. While digitalization will not be able to solve all our problems, it will certainly help reduce the impact of such disruptions for the economy and society.

Digitally enabled organizations can react to a changing environment faster and are more resilient in times of crisis. Businesses need to move away from a purely efficiency-driven approach towards more purpose-driven business practices to ensure long-term sustainable success for all of us.