Impact of Industry 4.0
in Global Manufacturing

The Fourth Industrial Revolution (generally referred to as Industry 4.0) is happening everywhere around us. The Industry 4.0 market was estimated to be valued USD 71.7 billion in 2019 and was expected to reach USD 156.6 billion by 2024, at a CAGR of 16.9% from 2019 to 2024 (by
Widespread adoption of Big Data analytics, edge computing, manufacturing automation systems, 3D printing, virtual simulation, IoT and other innovative technologies transform the business as we know it. Industry 4.0 provides the means for significant improvements in all aspects of manufacturing processes — from material acquisition, usage and supply chain management to product design, engineering and delivery, predictive maintenance of equipment and other assets, and real-time monitoring of all systems. The impact of Industry 4.0 can transform manufacturing businesses, and this is what we will explore today.

If you do business in manufacturing, you should have already heard quite a lot about Big Data implementation, manufacturing automation solutions, robots and cobots, IoT-based smart factories and other innovative technology. Perhaps you are even using some of it already or are exploring the possibilities to reap the benefits of Industry 4.0 Keep on reading to find out how to implement Industry 4.0 model for your business and use its potential for manufacturing.

What is Industry 4.0 in a nutshell

Industry 4.0 model was first devised by the German government and represents the implementation of Artificial Intelligence, Industrial Internet of Things, and Big Data analytics in the factories. In a nutshell, Industry 4.0 is a process of digitalization of all components of the manufacturing by replacing mechanical and analog controls that are obviously outdated in the 21st century. But what does the 4.0 mean?

  • The 1st industrial revolution is dated 1784 when steam-powered factories started replacing the manual-, water- and horse-powered manufactures. A man stopped being an engine for machines.

  • The 2nd industrial revolution took place around 1870 when the invention of reliable electric engines allowed building more compact and cost-effective equipment. A man stopped being a workforce for machines. 1 man per 1 unit of equipment.

  • The 3rd industrial revolution happened in the 1970-es with the introduction of programmable equipment like CNC machines and first industrial robots. A man stopped working the machines manually.

  • The 4th industrial revolution is happening now, powered by interconnectivity, automation, Machine Learning, IoT and real-time Big Data analytics used to minimize the effort needed to produce the goods. A man stops working the machines at all.
The industry 4.0 impact on business results in improved efficiencies, lower costs, increased output, customized offering, and, more significantly, the development of new revenue and business models. How can one achieve this? By using the following Industry 4.0 components.

The Nine Industry 4.0 components

Big Data Analytics

Machines run using manufacturing automation software generate tons of logs that can become a goldmine of data if correctly gathered, processed and analyzed using Big Data analytics solutions. Predictive maintenance, real-time anomaly detection, structuring and reduction of data volumes to reduce data storage costs — these are just a few of the benefits.


For half a century using robots in manufacturing ensured high quality and reliability of repetitive manufacturing operations — but they were able to perform a single operation only. Equipping modern robots with smart sensors and microprocessors enables quick reconfiguration of production lines to maximize the flexibility of operations. Industry 4.0 robots can communicate with each other using interconnectivity and operate safely next to humans. They work more efficiently than humans and are quite affordable.

Virtual simulation

Modern technology allows simulating all the manufacturing processes in virtual environments to save time and money, avoid making costly errors, and quickly test manufacturing models without investing in equipment. In short, you have an opportunity to test out product design, verify its integration with other products, experiment with machine settings, calibrate production processes and do any other customization on computers before rolling our such projects to the factory floors.

Horizontal & Vertical Integration As the Framework of Industry 4.0

Being a backbone on which the Smart Factory is built such solutions transform a disparate bundle of tools into a powerful manufacturing control system across the entire supply chain (horizontal) and business units (vertical) integration. Such integration provides several tangible results, including decreased production costs and improved ability to quickly manufacture small-ish customized product batches without compromising the highest quality standards.

Edge computing and the IoT

When your factories are equipped with networks of smart IoT sensors connected to a local computational center (an edge computing node), you gain immense capabilities to quickly capture all kinds of important data, process it on-site and take the needed action immediately, instead of doing so in the cloud and suffering the latency issues. From accident prevention and shipment tracking to production process optimization and predictive maintenance, the IoT can significantly improve the supply chain for your business.


When all your equipment has sensors connected to the edge computing node via WiFi or other means, the matter of protecting this cyber-physical network from malicious intrusion becomes paramount, as it gathers and stores valuable data, as well as providing access to your other mission-critical systems. 28% of manufacturers have reported a data breach attempt within the last year. The sharing of data outside the organization empowers production flexibility but also needs proper cybersecurity systems to resist the ever-evolving threat environment.

Cloud computing

Cloud computing ensures unlimited data storage capacities, increased data processing velocity, enables geographically distributed systems as well as providing vast resources required to train AI/ML models. Most importantly — this all is done cheaper than on-prem as you rent the resources, not buy them.
Additive manufacturing

Additive manufacturing technologies enable businesses to minimize R&D expenses through building cost-efficient and eco-friendly 3D models of working products to test out any hypotheses quickly. 3D printing can disrupt the whole manufacturing value chain and allow a shift from centralized to scattered production and from mass-produced goods to complete customization. More importantly, modern 3D printers enable manufacturing-as-a-service, leading to Industry 5.0, which will provide personalized products for every customer with little to none reconfiguration of the production lines.

Augmented reality (AR)

The widespread adoption of AR revolutionizes the way we plan and design our real estate and production facilities. It enables us to quickly prototype the structural plans, visualize the equipment locations and adjust a variety of parameters to experiment with. Such workflow optimization enables the manufacturing businesses to reduce the time spent on facility planning, equipment installation and workflow configuration, allowing them to save millions in investment and reach shorter time-to-value.
Another important aspect is virtualized training, where the workers can train to use various machinery in virtual environments anywhere, like learning all the systems of an oil rig in a training center ashore. They can learn the ropes using the virtual representation to minimize the time needed to onboard the installation.

Aside from these crucial aspects of Industry 4.0 technologies, businesses can benefit from automated manufacturing execution systems, enterprise resource planning (ERP) and material and resource planning (MRP) tools, location and movement detection tech, data communication and network topology, developments in mobile and wearable tech and so on.

Industry 4.0 benefits for business

How all of the components mentioned above align and what benefits do they provide for business? Let's take a look at that.

Productivity increase

Industry 4.0-based solutions leverage smart devices, interconnected sensors and data processing/analytics systems to improve operational efficiency. As the MIT research shows, production automation helps cut employee downtime by 85% and increase your average productivity rates by 11% immediately. PWC study on the Industry 4.0 impact on business forecasts a 18% increase in average productivity within 5 years of mass implementation of this approach in the manufacturing industry due to the ability to predict and minimize equipment downtime, thus optimizing the operational efficiency.

Revenue growth

Innovative technologies will work best if your company is ready and able to adopt them and transform accordingly. This requires significant investments and reorganizations, but the German manufacturing industry is expected to generate €30 billion in additional revenues YoY.
Costs reduction

According to Deloitte report, by using predictive maintenance, real-time production line reconfiguration and other ERP/MRP/PLM features, the plants can decrease the time needed to plan and execute the asset maintenance by up to 50%, which results in 20% longer equipment uptime and up to 10% lower asset and total expenses, which can save millions in the long run. Using 3D printers one can achieve faster prototyping, reducing the cost of engineering and accelerating time-to-market

Product quality improvement

Automated production lines can be reconfigured quite fast to adjust the product specs; virtual simulation reduces the product development time and costs; additive manufacturing enables you to 3D print pilot models or ready products quickly to speed up prototyping. Real-time quality control enables you to insert data entry points to every step of your production cycle. This will help you check how changing conditions affect the quality of your products. All these Industry 4.0 aspects contribute to better product quality and shorter time to value.

Extra revenues due to innovations

The aforementioned PWC report highlights that innovative companies from European manufacturing industries are already earning around €110 in extra revenues every year. 13% of Industry 4.0 adopters have already experienced a greater capacity to innovate due to this new technology.

Competitive edge

Industry 4.0 is not only about competing in terms of technical efficiency or product design; it is more about using the data in the most cost-efficient and lucrative way. The companies that can gather bigger volumes of relevant data and get more business insights out of them will be able to deliver digital services that will surpass anything the competition has to offer. They will know what their customers want will be able to forecast the demand and adapt to any changes proactively.

Risk reduction

The MIT research we discussed above also states that automating various hazardous operations through innovative technology helps greatly boost the productivity of your workforce while reducing the risks related to the human factors, warehouse storage, logistics, etc.

Industry 4.0 potential

In the years to come, Industry 4.0 companies will establish decentralized networks of edge computing nodes covering their production facilities, warehousing and logistic operations, able to operate autonomously and control each other. These smart cyber-physical networks comprised of multiple interconnected components will totally transform the supply chain along with providing multiple other benefits:

  • Supply chain redefined—fully-automated smart factories will be much more cost-efficient. According to the PWC report from 2019, 79% of manufacturers are already investing heavily in technologies needed to achieve this.

  • New markets and business models—Manufacturing-as-a-Service is a new reality, where a customer can order a unique batch of 3D-printed products to be produced on a sub-contractors equipment, effectually avoiding the need to invest in such assets (3DHub and Xometry do this already). On-demand production allows moving from mass-production to personalized contracts for specific customers (like 3D Systems or Fictiv).

  • Innovative product development and services—smart infrastructure and AI-controlled production will enable your business to develop and deliver top-of-the-line products cost-efficiently and surpass your competitors.

  • New ways of customer interactions—Industry 4.0 provides the ways for the manufacturer to interact directly with the consumer and forecast consumer demand. Using Big Data analytics you can predict the trends and act accordingly. Use mobile apps, ads and pop-ups, geolocation features and personalized offers to grab potential customer's attention and secure new contracts.

  • Business revitalization—instead of having to deal with a constant turnover of the low-skilled workforce, implementation of Industry 4.0 technologies allows employing talented IT engineers and designers who provide much more value.

  • Better usage of AI and ML—as industrial AI and ML solutions continue to evolve, they help explore all the possible configurations of any solution quickly, optimize inventory control, staffing, energy consumption, raw materials, and make better financial decisions regarding the company's strategy. Preventive maintenance and supply chain optimization allow cutting production risks and expenses significantly, so using them becomes a must.

To wrap it up, Industry 4.0 is here to stay and you'd better be ready to adapt or risk being swept aside by more tech-savvy competitors, who will be the first to build and control Industry 4.0 platforms. These platforms will be innovative software hubs syndicating various devices, information systems and services, on top of which other companies will build their value-added offerings. Globalluxsoft can help you build such platforms, as we have the specific expertise in Industry 4.0-related domains. Contact us if you want to leverage our expertise and gain a competitive edge for the years to come!
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