Demystifying industry 4.0 and the industrial internet of things

Heralding the shift from centralised to decentralised manufacturing, Industry 4.0 integrates IoT, data, and services, and creates networks where connected devices can talk to each other.

How IIoT is enabling Industry 4.0

There is tremendous interest in how the Internet of Things (IoT) is transforming processes within and across organisations. And while there are multiple definitions floating around, IoT is about making things smarter so that they can ‘talk’ to each other. This involves embedding sensors in the devices that then have the ability to collect and process the right data to generate useful insights about the end users and the value chain. IoT is fundamentally changing the definition of a product as it drives new business models that help companies better understand their end users and drive efficiencies across the value chain. Given its ability to impact both the top-line and bottom-line, IoT has rightfully caught the attention of the key executives of the industry.

Given the tremendous benefits anticipated by leveraging IoT, manufacturing organisations today have coined a variant to IoT that is specific to their universe. This is being termed the Industrial Internet-of-Things (IIoT) that encapsulates smart factories, extreme automation, industrial robots and more. It’s again a function of the potential that the manufacturing industry sees in IoT that IIoT has become an accepted term—it helps to differentiate it from the consumer IoT world, which is evolving as well. This new paradigm shift in leveraging IIoT is also called the fourth industrial revolution, known as Industrie 4.0 (German name for Industry 4.0), the term that the powerhouse of the manufacturing world Germany has coined.

But, what is IIoT and how does it tie into Industry 4.0? While many people assume that ‘Industry 4.0’ and ‘IIoT’ are the same, there are definitely nuances that need to be understood.

Revolutionising manufacturing

Industry 4.0 began as a high-tech strategic initiative from the German government to promote computerisation within manufacturing. Heralding the shift from centralised to decentralised manufacturing, Industry 4.0 integrates IoT, data, and services¹. Simply put, Industry 4.0 leverages cyber-physical systems to create networks where connected devices can talk to each other.

IIoT is the use of IoT technologies across industries. In the field of manufacturing, IIoT is fostering great leaps of innovation. For instance, Airbus, the European aircraft manufacturing giant, is using IIoT to create a cyber-physical system whereby workers can use a tablet or ‘smart’ glasses to scan an aircraft and determine certain specifications like what type of bolt needs to be installed. This information is then sent to robotic tools for execution². Smart factories, precision farming and proactive equipment monitoring are some other examples of IIoT at work.

Interestingly, innovation in IIoT is creating new fields such as telerobotics whereby semi-autonomous machines can be remotely controlled by humans using a virtual interface. IIoT-enabled manufacturers can use telerobots to execute tasks in dangerous environments such as inspecting underwater pipelines, conducting maintenance on power lines, decommissioning chemical plants, etc. With innovations such as these, predictions that by 2030, IIoT could generate $12 trillion towards the global GDP are not surprising.

Early adopters reap benefits

Industry 4.0 leverages IIoT technologies in manufacturing. By providing automation and data exchange, Industry 4.0 helps manufacturers decentralise decision-making, ensure information transparency, promote technical assistance between machines and humans, and create an environment of interoperability³. A 2016 study by Forbes shows that 86 percent of companies adopting Industry 4.0 expect higher profits from lower costs and increased revenue⁴.

Soon, Industry 4.0 will enable what McKinsey calls ‘Supply Chain 4.0’. In a recent report, McKinsey discusses how Supply Chain 4.0 in the consumer goods industry will enable automated factories where machines can provide information on production capacity, mobile portals for customers to change delivery location, predictive shipping, and drone deliveries⁵.

Thus, IIoT and Industry 4.0 are becoming key milestones for manufacturers in their journey to become digital enterprises. Early adopters who take the plunge and adopt IIoT and Industry 4.0 are already seeing the benefits of better productivity, reduced costs, higher customer satisfaction and a digitally-enabled workforce. The possibilities are endless with the only certainty being that manufacturing tomorrow will be definitely different—and smarter—than what it was yesterday.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)