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Today, manufacturers face pressure on several fronts. They must achieve sustainable growth as rapid changes in customer buying behavior and geographies increase market volatility. At the same time, they must adapt to new business models – from embedded services to increased partnering – that are challenging the fundamental way they create and deliver their products.

In addition, distributed manufacturing operations require agile and responsive supply networks that help companies “design everywhere – produce everywhere.” Manufacturers also face greater risk due to new regulations and increased logistics complexity.

To meet these challenges, manufacturers need an “intelligent” and “connected” shop floor based on a completely new model (Industry 4.0) that both empowers production workers and increases manufacturing responsiveness.

Industry 4.0

In the so-called Fourth Industrial Revolution, classical manufacturing converges with Internet technologies (the Internet of Things, or IoT) and the increasing intelligence of devices (M2M). With Industry 4.0, cyberphysical systems create a new manufacturing landscape that will be transformative for even the most traditional manufacturers.

This is no longer about isolated smart devices. It’s more than machines and devices remotely monitoring and communicating with other machines and devices all over the world. Industry 4.0 is about the integration of business processes in manufacturing. A transaction at a machine on the shop floor can create action from your extended supply network to help you orchestrate, control, and manage your operational processes. But while smart devices can optimize manufacturing, they can also make it far more complex.

To handle this complexity and make the most of the transformation underway, manufacturers must carefully analyze their business processes to determine the most efficient way to incorporate the added capabilities into production. There are supply chain logistics to consider, compatibility details to work out, and system control questions to answer – including how best to access increasing data volumes in real time and make intelligent decisions based on this information.

Revolutionary solutions

To thrive in the new environment, manufacturers need solutions that use in-memory computing to harness the power of Big Data and advanced analytics to help them draw insights from – and make them more and responsive to – the needs of digitally connected customers. Manufacturers also need solutions that enable vertical integration from the shop floor to the rest of the enterprise and help them work more efficiently with cyberphysical systems. In addition, they need solutions based on mobile and cloud computing that enhance collaboration and make it easier to deploy new functionality.

As Industry 4.0 unfolds, there will be both new business opportunities for manufacturers and a dramatic increase in manufacturing complexity. Organizations that start thinking now about how to incorporate innovation into manufacturing will have a distinct competitive advantage in the new Industrial Revolution.

This article was origionally published in SAP Business innovations.

It is written by Mike Lackey who is Vice President of Solution Management for Line of Business Manufacturing at SAP.

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