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No, this is not a spelling mistake: “Industrie 4.0” is a denomination for a governmental founded initiative to strengthen and sustain Germany´s position as industrial location. The 4.0 is referring to 4th industrial revolution after 1st industrial revolution which was mechanization, 2nd industrial revolution which was introduction of electrical energy and 3rd industrial revolution which was introduction of automation and IT. 4th industrial revolution stands now for introduction of cyber-physical systems into manufacturing. Internet of Things and Machine-to-Machine communication might be more common terms referring for instance to smart meters and smart grids, cars telling the repair shop that a service is needed or exchanging information with each other about traffic conditions  so that they can assist the drivers to avoid traffic jams and keeping them informed about dangerous situations.

Other more manufacturing oriented examples for it are components “walking” through the plant and telling the working stations what to do (make me green, give me this or that shape), assets communicating their technical conditions and individualization of products (lot size 1). And while all these examples have one in common and that is that the examples refer to discrete manufacturers and Energy providers I was asked recently many times by both field colleagues and customers  – hey, what does it mean for the chemical industry and what is SAP´s strategy in regard to this?

Getting these questions I felt remembered at CIM (Computer Integrated Manufacturing) – a concept to introduce IT into manufacturing residing from the 80s. This concept was pretty much designed for the discrete industry too and we had to translate it into a concept for Process Industries which was called Computer Integrated Processing (CIP). So again I guess some translation have to be done of a concept making it speak chemicals. And I remembered another thing which is related to lot size 1 and individualization of products. Didn´t we thought in the 80s already about concepts for mass customization and haven´t we done that?

Having that in mind I wonder how new all of this really is. I have no doubt that cyber – physical systems represent a new level of automation and use of IT in manufacturing. But is that a 4th industrial revolution? I hope that I did not get too old now to be a revolutionist but before declaring something to be a revolution we should take a closer look. And for that purpose it is helpful to reduce this broad term “Industrie 4.0” to its essentials. And these are mainly two things, in my opinion: Firstly, all elements of a chemical company become smarter, and secondly they become connected – be it assets, employees, products, business partners or end customers. Here are some examples: Assets will be equipped with SIM-cards so that they can provide information about their condition. Maintenance workers get mobile devices which inform them about new work orders, including working instructions. Products get tagged with unified identifiers, which allow tracking and tracing them and knowing their history. Business partners can exchange information in social networks to drive open innovation or to exchange material data declarations to ensure product compliance. And last but not least, end customers can check eco-friendliness and origin of products via mobile devices.

The given examples show that we do not talk about manufacturing alone. We have to break down the barriers between the business functions like Manufacturing, R&D, Regulatory Affairs, Maintenance and Logistics. Combining analytics that allows to understand when an asset will have a breakdown since it is based on sensor data from technical equipment that is smart and connected  with production planning, helps to reduce asset downtimes and increase productivity. Tracking and tracing of goods shipments allows reduction of inventory, reducing working capital needed. At the same time you can avoid product counterfeiting and increase your service level at reduced cost. And last but not least, helping ensure that products are safe, compliant, and trustworthy, mitigates product compliance risks while increasing customer satisfaction. This is even more imperative for innovative products that are sustainably made and tailored to customer needs.

The cases described can help to turn product into service business and to increase energy and material productivity tremendously. I think that this is the real 4th industrial revolution – the outstanding increase of material and energy efficiency enabled by connecting different elements that become smarter.

How do you think about Internet of things and machine-2-machine communication in the Chemical industry? What potential and what uses cases do you see?

And do you want to know what all that has to do with SAP? Then go for the next part of this blog series where I list related use cases and building blocks that SAP has to make them happen.

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