How to implement Industry 4.0

industry 4.0 how to navigate digitization of the manufacturing sector and industry 4.0 opportunities and challenges of the industrial internet, industry 4.0 standards
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Published Date:15-07-2017
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www.pwc.de/industry4.0 Industry 4.0 – Opportunities and Challenges of the Industrial Internet Our study shows how industrial companies can shape the digital transformation and unlock new opportunities for growth. A survey of five core industry sectors.Industry 4.0 – Opportunities and Challenges of the Industrial Internet The fourth industrial revolution – The digitization and interconnection characterised by the increasing of products and services (Internet of digitization and interconnection of Things/Services) is a second important products, value chains and business driver. It will contribute strongly to models – has arrived in the industrial ensuring competitiveness and promises sector. Our study, Industry 4.0 – additional revenues of 2% to 3% per Opportunities and Challenges of the year on average. When applied to the Industrial Internet, is based on a survey German industrial landscape as a of 235 German industrial companies whole, additional revenues reach up to and was conducted by the market €30 billion per year. For the European research institution TNS Emnid. It industry sector, additional revenues presents the essential attributes, amount to €110 billion annually. opportunities and challenges posed by this development. The surveyed A third major driver are the newly companies belong to the manufacturing emerging, often disruptive, digital and engineering, automotive and process business models that offer significant industries, as well as the electronics and additional value to customers through electrical systems and information and tailor-made solutions. These new communications industries. business models are characterised by a considerable increase of horizontal The respondents expect that the digital cooperation across the value chains, as transition will lead to a significant well as the integrated use and analysis of transformation of their companies that data. They are therefore capable of better will require considerable investment. fulfilling customer requirements. They estimate the share of investments in Industry 4.0 solutions will account The various opportunities, the large for more than 50% of planned capital extent of change and the elevated need investments for the next five years. for investments make the Industrial German industry will thus invest a total Internet one of the most important topics of €40 billion in Industry 4.0 every year for corporate management. However, the by 2020. Applying the same investment numerous challenges that the transition level to the European industrial sector, entails are also not to be underestimated. the annual investments will be as high as Besides the partly still unclear business €140 billion per annum. cases for the Industrial Internet at company level, industry standards The first significant driver for the have to be defined and agreed upon advance of Industrial Internet solutions and questions need to be answered, for lies in the opportunity to integrate and example, in the area of data protection. better manage horizontal and vertical The respondents also consider the value chains. Companies surveyed expect required qualification of employees at more than 18% higher productivity over increasingly digitized companies to be the next five years. While today only a major obstacle. Policy makers and one fifth of the industrial companies industrial associations can provide have digitized their key processes along significant support with these issues. the value chain; in five years’ time, 85% of companies will have implemented Industry 4.0 solutions in all important business divisions. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 7Industry 4.0 – Opportunities and Challenges of the Industrial Internet The fourth industrial revolution has for clearer differentiation in global begun and offers attractive opportunities competition. Our study is intended to for industrial companies. However, help identify major opportunities and the Industrial Internet is not an end in challenges and demonstrate solutions for itself. It is closely tied to clear economic successful implementation. The time to objectives and holds the potential act is now support them in developing further. In enterprise resource planning (ERP) Industry 4.0 – vision and this respect, the continuous digitization systems. The use of these software mission at the same time of the value chain is essential for the tools has led to a significant increase industry’s future. in quality improvement (reduction The essence of the Industry 4.0 from 550 to 12 defective steps out of a vision, the “Internet of Things”, is Examples of factories in which the million process steps in total) over the the ubiquitous connection of people, production processes are digitally past twenty years. Production volume things and machines. This connection supported throughout already exist – has increased many times over the same is intended to produce a variety of new however, these processes still have period of time, while staff numbers have goods and services. Products, means a low level of complexity. A “digital remained almost the same. of transport or tools are expected to company” with a continuous digital “negotiate” within a virtual marketplace value chain not only digitally integrates This study is intended to create regarding which production elements the shop floor, but also the development awareness of the necessary path could best accomplish the next and sales departments from the office to digitization within the industry. production step. This would create a floor. Examples of this include the two Siemens products can support users in seamless link between the virtual world Siemens electronics plants belonging to successfully embracing their upcoming and the physical objects within the real Siemens in Amberg and Chengdu. transformation into a digital enterprise. world. Approximately 1,000 different products The sources of the major additional are manufactured in Amberg. In benefits of this vision for each respective order to produce them in a flexible case – and the resulting consequences – and efficient manner, the plant uses have yet to be defined. There are the latest software tools, such as NX already extremely optimised production and Teamcenter, Product Lifecycle processes which are executed serially Management (PLM) programmes, for in a well-defined sequence. These production development, as well as a production strategies will also be large number of SIMATIC controllers improved in the future and impede and SIMATIC IT, Manufacturing the introduction of new production Execution System (MES) software, for approaches. The objective of Siemens production processes. These products Prof Dr-Ing Dieter Wegener is to allow its customers to be more work together seamlessly and are Siemens AG, Digital Factory Division, competitive and to make every effort to connected through interfaces with the “Industry 4.0” Coordinator translated from German 8 Industry 4.0 – Opportunities and Challenges of the Industrial InternetKey findings of the survey B Key findings of the survey Industry 4.0 – Opportunities and Challenges of the Industrial Internet 9Key findings of the survey The Industrial Internet transforms the entire 1 company and must be part of the CEO agenda. By 2020, European industrial 2 companies will invest €140 billion annually in Industrial Internet applications. In five years, more than 3 80% of companies will have digitized their value chain. The Industrial Internet 4 creates better productivity and resource efficiency – an 18% increase in efficiency within five years. The integrated analysis and use of data are the 5 key capabilities for the Industrial Internet. 10 Industry 4.0 – Opportunities and Challenges of the Industrial InternetKey findings of the survey The Industrial Internet holds various challenges – 10 policy-makers and industrial associations can help. Horizontal co-operation 9 allows for improved satisfaction of customer requirements. The Industrial Internet 8 paves the way for new, 4.0 often disruptive digital business models. Digitized products and services generate 7 approximately €110 billion of additional revenues per year for the European industry. Digitization of the product and service portfolio is 6 the key to sustainable corporate success. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 11Key findings of the survey The results of the study are summarised in the following ten key findings: 1. T he Industrial Internet 3. I n five years, more than 80% of 5. The integrated analysis and use transforms the entire company companies will have digitized of data are the key capabilities and must be part of the CEO their value chains. for the Industrial Internet. agenda. One quarter of the companies surveyed Already today the efficient analysis and The Industrial Internet, also known as have already achieved a high degree use of data is of great significance for Industry 4.0, not only comprises the of digitization of their value chains. half of all companies surveyed. Moreover digitization of horizontal and vertical However, it is mostly only individual 90% of companies believe that the value chains but will also revolutionise units and isolated applications that ability to analyse data will be decisive the product and service portfolio of have been automated and digitized thus to their business model in five years. companies – with the ultimate goal far. The companies expect that 86% of These companies primarily focus on the of better satisfying customer needs. the horizontal and 80% of the vertical efficient exchange of data within their The potential uses of the Industrial value chains will have a high degree of own value chain, the digital labelling Internet go far beyond the optimisation digitization by 2020 and will therefore of the products and the use of real time of production technologies. However, be closely integrated. data to steer their production. exploiting these opportunities requires considerable investment. The topic 4. T he Industrial Internet 6. D igitization of the product and therefore inevitably occupies a leading increases productivity and service portfolio is the key to position on the agenda of directors and resource efficiency – an 18% sustainable corporate success. managers of industrial companies. increase in efficiency within Thirty percent of the companies five years. surveyed have already digitized their 2. B y 2020, European industrial The industrial sector is required to products to a great extent and expanded companies will invest €140 produce ever larger quantities using their portfolio to include connected and billion annually in Industrial fewer raw materials and less energy. automated services. A mechanically Internet applications. The Industrial Internet allows higher perfect product will no longer be enough Over the next five years, the industrial productivity and resource efficiency to successfully withstand international and thus creates the conditions for companies surveyed will invest, on competition. More than four out of five sustainable and efficient production. average, 3.3% of their annual revenues respondents – with the exception of the The companies surveyed anticipate an in Industrial Internet solutions. This process industry – therefore expect that average efficiency increase of 3.3% per is equivalent to nearly 50% of the they will have achieved a high degree of year across all industry sectors due to planned new capital investments and an digitization of their product and service the digitization of value chains. This annual sum of more than €140 billion portfolio within five years. amounts to a total of 18% in the next with regard to the European industrial five years. They expect annual savings of landscape. These investments will have 2.6% with respect to cost reduction. to be used along the entire value chain in order to achieve maximum success. Industry 4.0 will transform our entire value chain and allows us to develop innovative products and services. We must act now CEO, manufacturer of processing machines 12 Industry 4.0 – Opportunities and Challenges of the Industrial InternetKey findings of the survey 7. Digitized products and services 9. H orizontal co-operation allows generate approximately for improved satisfaction of €110 billion of additional customer needs. revenues per year for the About half of all companies surveyed European industry. are already convinced that closer co- Companies which have already digitized operation with value chain partners – their product portfolio to a great extent combined with increased horizontal have grown above average in the past interconnection – is of great significance. three years. Half of the companies The importance of this will further grow surveyed anticipate double-digit in the context of Industry 4.0 in light growth in the next five years due to of increased digitization – particularly the intensified digitization of their where new, digital business models product and service portfolio. One in five have to be established. More than 80% companies even expects sales to rise by of the companies surveyed believe that more than 20%. In total, this amounts to closer co-operation and a more vigorous an average, incremental sales increase horizontal connection of value chains of 2.5% per annum. Compared to all will play an important role in five years. industrial companies in the five core industry sectors, this is equivalent to an 10. T he Industrial Internet holds annual sales potential of more than €30 various challenges – policy- billion for Germany and reaches up to makers and industrial €110 billion of additional revenues for associations can help. the European industry in total. Companies have to master several challenges on the way to becoming a 8. T he Industrial Internet Digital 4.0 champion. The main focus paves the way for new, often is on high investment levels and often disruptive digital business unclear business cases for new Industrial models. Internet applications. Furthermore, The Industrial Internet will have a sufficient skills to meet the needs of lasting effect on existing business the digital world must be ensured. models and will particularly also Binding standards must also be defined generate new, digital – often disruptive – and tasks in the area of IT security business models. The focal point of this have to be solved. Policy-makers and trend comprises increasing customer industrial associations can help with benefits through a growing range of these latter challenges in particular, by value solutions (instead of products) and advocating uniform industrial standards increased networking with customers at a European or international level and partners. The special quality of and promoting efficient rules for data the digital change lies in the rapid security and data protection. acceleration of the speed of change. Disruptive innovations will also cause industry sectors like the information and communications industry to sustainably transform within a short period of time. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 13Survey results in detail C Survey results in detail 14 Industry 4.0 – Opportunities and Challenges of the Industrial InternetD n a o t a i t & a a r n o a b l y a t l i l c o s c 1 The Industrial Internet transforms the entire company and must be part of the CEO agenda. The Industrial Internet, also known as the product and service portfolios. The Industry 4.0, not only comprises the potential uses of the Industrial Internet 1 digitization of horizontal and vertical thus go far beyond the optimisation value chains but will also revolutionise of manufacturing techniques and company product and service portfolios its implementation also requires and lead to the implementation of new, considerable investment. The issue is often disruptive digital business models. therefore taking a key position at the The Industrial Internet promotes both top of the agenda for CEO’s, directors the transformation of all important and managers at leading industrial business processes and a realignment of companies. Fig. 1 I ndustry 4.0 comprises the networking of value chains, the digitization of products and new business models Framework for Industry 4.0 3 Innovative digital business models 2 1 Industry 4.0 Digitization Digitization & of product and integration of service offerings vertical & horizontal value chains Industry 4.0 means far more to us than just an end in itself. We associate it with clear economic aims and the opportunity for better differentiation in global competition. Plant manager at Digital Factory, an electronics group Industry 4.0 – Opportunities and Challenges of the Industrial Internet 15 a & s c n o o r i t e c c e a n p n o a C b i l i t ySurvey results in detail Our definition of the Industrial Internet 3. Introduction of innovative digital The basis of the Industrial Internet is or Industry 4.0 covers three aspects: business models the increased availability and integrated The higher level of integration and use of relevant data by connecting all 1. Digitization and increased the technological opportunities products, resources and companies integration of vertical and provided by the Industrial Internet involved in the value chain. It includes horizontal value chains will create new, digital business the ability to generate additional value Leading industrial companies are models. Integrated solutions or value- from available data and ultimately digitizing and connecting functions added services are characterised by to maximise customer benefits. This along the vertical value chain – significantly higher customer benefits requires a fundamental transformation from the digital order process, and will revolutionise existing of processes, the product and service customised product development and product portfolios and performance portfolio as well as the existing business the automated transfer of product relationships. They are often the models. In sum, it is a comprehensive data to connected planning and result of disruptive innovative process of change which can only be manufacturing systems and further processes. Integrated solutions offer successfully driven by top management. on to integrated customer service. new companies the opportunity Moreover, the horizontal integration to enter existing markets and of inventory and planning data is established customer relationships carried out with suppliers, customers since one effect of digitization is the and other value chain partners. reduction of traditional market entry barriers. 2. Digitization of product and service offerings Digital champions expand Definition Industry 4.0 their existing range of products with complete digital product “The term Industry 4.0 stands for the fourth industrial revolution. Best descriptions as well as intelligent understood as a new level of organisation and control over the entire and connected solutions (“embedded value chain of the life cycle of products, it is geared towards increasingly systems”/“Internet of Things”). These individualised customer requirements. This cycle begins at the product include online connection for the idea, covers the order placement and extends through to development and regular matching of performance manufacturing, all the way to the product delivery for the end customer, and wear data or the development and concludes with recycling, encompassing all resultant services. of customised products with a lot size of 1. The service portfolio will The basis for the fourth industrial revolution is the availability of all be further extended by connected, relevant information in real time by connecting all instances involved automated or data-based services. in the value chain. The ability to derive the optimal value-added flow at any time from the data is also vital. The connection of people, things and systems creates dynamic, self-organising, real-time optimised value- added connections within and across companies. These can be optimised according to different criteria such as costs, availability and consumption of resources.” Source: Platform Industry 4.0 (translated from German). 16 Industry 4.0 – Opportunities and Challenges of the Industrial Internet2 By 2020, European industrial companies will invest €140 billion annually in Industrial Internet applications. Over the next five years, the planned new capital investments and an 235 industrial companies surveyed will annual sum of more than €140 billion 2 invest on average 3.3% of their annual with regard to the European industrial revenues in Industrial Internet solutions. landscape. This is equivalent to nearly 50% of the Fig. 2 I n the next five years, the companies will invest 3.3% of their annual revenues in Industry 4.0 solutions Average annual investments in Industry 4.0 applications 40% Ø = 3.3% 25% 22% 6% 3% 0–1% 2–3% 4–6% 7–10% 10% Amount of investments in % of annual revenues Note: 4% of the companies surveyed provided no information on the amount of their investments. Only a quarter of the companies have Industrial Internet solutions enable not yet considered it necessary to efficiency improvements and reduce channel significant investments into costs along the entire value chain. Industrial Internet applications. By The study’s participants therefore contrast, one third of the respondents place an equally high priority on will take on opportunities to increase investments in the entire supply chain, efficiency and ensure competitiveness the digitization of product development as the most important investment and engineering, as well as in the challenge. These companies will invest automation of manufacturing. It is on average 7% – a major part of the only investments in the digitization budget – in Industry 4.0 applications of sales that are rated slightly lower. (this is equivalent to the average of the Investments cover the entire range, top three categories with investments from connections between operation ≥ 4%). materials, machines and logistics systems in the form of cyber-physical systems (CPS), through solutions of sensor technology to the exchange of data controlled in real time along the value chain. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 17 Percentage of companies surveyedSurvey results in detail Fig. 3 I nvestments in Industry 4.0 solutions are spread over all key areas along the value chain Industry 4.0 investments broken down by steps of the value chain Supply chain 57% 32% 11% Product development/ 56% 30% 14% engineering Planning 52% 35% 13% Extrapolating the planned investments of the companies surveyed to the five Production/ industry sectors represented in the 55% 30% 15% manufacturing study results in an annual investment of €140 billion by European industry. Service 56% 27% 17% The two industry sectors that will make above average investments in digital Distribution 30% 43% 27% enterprise solutions are the information and communications (3.9% per annum) Priority of the investment: and manufacturing and engineering High (4,5) Medium (3) Low (1,2) industries (3.5% per annum). Fig. 4 T he European industry will invest €140 billion annually in Industry 4.0 solutions until 2020 Annual investments in Industry 4.0 solutions through until 2020 2 Investment amount Investment volume (% of annual revenues) (€ billion per annum) Manufacturing and 3.5% 29 engineering 1 Automotive industry 2.9% 39 Process industry 2.7% 35 Electronics and 3.3% 21 electrical systems Information and 3.9% 16 communications Total 3.3% 140 1 Pr ojection for the entire automotive industry (economic sector 29: production of motor vehicles and motor vehicle parts). 2 Pr ojection on the basis of total revenues per industry sector in the EU-28. Companies from the information and their investments in manufacturing Overall, industrial companies across communications industry mainly automation, recording real time data all industry sectors have realised focus their investments on products along the supply chain as well as on the that they can only meet increasing and services for flexible real time expansion of manufacturing execution customer requirements with significant manufacturing planning and control. systems (MES). Planned investments investments in Industry 4.0 solutions. This sector also places importance on by the process industry in Industrial This is the only way for them to remain the optimisation of the logistics systems. Internet applications still lag behind competitive and to improve their own Companies in the machine building those in the other industry sectors. competitiveness on a long-term basis. industry, meanwhile, concentrate 18 Industry 4.0 – Opportunities and Challenges of the Industrial Internet3 3 I n five years, more than 80% of companies will have digitized their value chain. The Industrial Internet has now been current degree of digitization of their added to the agenda of the majority of value chain as high. In concrete terms, companies. Two-thirds of the companies this means that most of the companies surveyed are already actively working are already using or have implemented on digitizing and further connecting Industrial Internet solutions in various their value chains. One fourth of the divisions. respondents already classifies the Fig. 5 T he already considerable degree of digitization will increase with Industry 4.0 in the next years Degree of digitization of the value chain Share of companies with a high degree of digitization (4,5) Horizontal value chain Vertical value chain 86% 80% 24% 20% Today In 5 years Today In 5 years The study shows that the level of The Industrial Internet and the digitization of the value chains will rise digitization of value chains are rapidly in the future. It is estimated important prerequisites for all that 86% of the horizontal and 80% companies, irrespective of their size. of the vertical value chains will be They are necessary in order to maintain highly digitized in five years. This competitiveness and avoid falling kind of conscious investing in further behind the increasingly faster pace of digitization opportunities can be seen development across industry sectors. across all industry sectors. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 19Survey results in detail Fig. 6 T he digitization of value chains will significantly increase across all industry sectors 1 Degree of digitization of the value chain by industry sector Proportion of companies with a high degree of digitization (4,5) 89% 85% 84% 80% 77% Ø = 83% 27% 26% 21% 19% 19% Ø = 22% Manufacturing and Automotive suppliers Process industry Electronics and electrical Information and engineering systems communications Today In 5 years 1 Horizontal and vertical value chain. Fig. 7 T he digitization of value chains has top priority for all companies irrespective of size 1 Degree of digitization of the value chain according to the size of the company Proportion of companies with a high degree of digitization (4,5) 92% 85% 82% 82% 79% Ø = 83% 31% 27% 22% 20% 13% Ø = 22% €5 billion €1–5 billion €0.5–1 billion €100–500 million €100 million annual revenues annual revenues annual revenues annual revenues annual revenues Today In 5 years 1 Horizontal and vertical value chain. 20 Industry 4.0 – Opportunities and Challenges of the Industrial InternetVertical value chain Survey results in detail Fig. 8 Industry 4.0 requires comprehensive digitization of the horizontal and vertical value chains Horizontal value chain Vertical value chain Supplier Company Customer Company Sales Planning Network of Product development (R&D) suppliers Planning Network of customers Pur- Manufac- Purchasing Manufacturing Logistics Logistics chasi ng turing Cooperation Service partners IT, shared services Horizontal value chain/networking Finance, tax and legal Digitization is finding its way into connection of manufacturing systems, This produced notable increases in horizontal as well as vertical value chains the prevention of system failures and performance at the plant level and to an equal extent. The digitization of better analytical abilities. significantly reduced the error rate in the horizontal value chain integrates and manufacturing. optimises the flow of information and For example, a leading manufacturer goods from the customer through their of electronics components has already The majority of the companies identified own company to the supplier and back. achieved a very advanced level of a clear added value in the digitization This process involves the integration digitization in some plants. This was of the value chain. Industry 4.0 or the and proactive controlling of all company realised by implementing various Industrial Internet is more than just internal departments (eg, purchasing, processes and value chain optimisations, hype. It will become reality in most of manufacturing, logistics and planning). including: the industrial companies in the next five It also includes all the external value • Vertical availability and integration of years. chain partners that are needed to all development, manufacturing and satisfy customer requirements and fulfil supply chain data requested services. • Effective data management and improved data analysis in real time Vertical digitization, on the other hand, • Individual IP addresses for all is associated with securing a consistent components and systems in the plant flow of information and data from • Automation of all important process Sales through Product development to steps in a one-piece flow Manufacturing and Logistics. Quality • Continuous measurement and and flexibility can be increased and optimisation of all process steps and costs reduced by means of optimal parameters We already today require extensive data and maximum transparency from our suppliers for seamless quality monitoring along the value chain. Vice President, manufacturer of automation technology Industry 4.0 – Opportunities and Challenges of the Industrial Internet 214 T he Industrial Internet creates higher manufacturing and resource efficiency – an 18% increase in efficiency within five years. The fourth industrial revolution plays Many improvements may result from 4 an important role in making long-term the digitization of processes and value manufacturing efficiency possible. The chains, for example: industrial sector is required to produce • Focussing on core areas in the ever larger quantities using fewer raw individual value chain materials and less energy. Industry 4.0 • Reduction of redundancies in will help companies create efficient processes manufacturing processes with increased • Minimising quality losses production, energy and resource • Making processes more flexible and efficiency. coherent Over the next five years, the companies In concrete terms, increased surveyed expect a noticeable transparency improves the utilisation quantitative benefit from the planned of machines and systems (eg, by investment in Industrial Internet optimising lot sizes). Digitization applications. They anticipate an average and greater connectivity in process efficiency increase of 18% through organisation may permit areas of digitized enterprises across all industry work to be rationalised and may yield sectors. This is equivalent to an annual gains in productivity. The intelligent efficiency increase of 3.3%. In fact, more analysis and integrated use of data for than one third of the companies actually controlling purposes also reduces the see even greater potential. rejection rate in production. Fig. 9 E xpectations concerning the benefit of Industry 4.0 solutions are high – especially with regard to increases in efficiency Expected quantitative benefit of Industry 4.0 applications Cumulative effect in 5 years (in relation to today)/Share of respondents Increase in efficiency Cost reduction 20% 37% 21% 11–20% 36 % 38% 0–10% 27% 41% Ø = 17.9% Ø = 13.8% (3.3% per (2.6% per annum) annum) Besides improvements in efficiency and cost savings, Industry 4.0 also makes it possible to save important resources. Head of Production, machine tool manufacturer 22 Industry 4.0 – Opportunities and Challenges of the Industrial InternetSurvey results in detail When asked about cost reduction, the Fig. 10 C ompanies expect far-reaching quality benefits of Industry 4.0 and surveyed companies anticipate Industry higher customer satisfaction 4.0 to yield additional annual savings in the amount of 2.6% on top of the usual Quality benefits of Industry 4.0 applications cost savings. The expectations of the Ø Better planning and process industry for a cost reduction of controlling (in manufac- 80% 15% 5 4.1 1.9% per year are considerably more turing and logistics) conservative than those of the discrete manufacturing industries. Higher customer 67% 27% 6 3.8 satisfaction Expected cost savings not only apply to intra-company increases of efficiency Greater flexibility 62% 27% 11% but are also the result of an increased 3.7 in manufacturing horizontal integration. A reduction of production costs in the amount of Faster time to market 3.5 54% 32% 14% 2.6% per year can only be achieved if all (in product development) partners along the entire supply chain are also able to achieve individual cost 3.4 Improved quality 49% 35% 16% reductions and pass them on. Measured against the cost reductions typical for industrial companies of 3% to 5% per Individualisation 46% 34% 20% 3.3 annum, the planned savings due to of products the Industrial Internet will make a decisive contribution to the sustainable Degree of the effect: increase of competitiveness of German High (4,5) Medium (3) Low (1,2) companies. Far-reaching qualitative benefits are expected in addition to a measurable, companies and represent important automotive or electronics industry, move quantitative benefit. The companies requirements for planned efficiency quality control further upstream in the surveyed have very high expectations increases. By contrast, increased vertical value chain. They expect full information with regard to better planning and integration allows for greater flexibility from their suppliers in order to monitor control in manufacturing or in logistics. of manufacturing and a reduction of the the entire life cycle of a product. Only In addition, they expect Industry 4.0 to time to market. when taking all traceability data into provide higher customer satisfaction and account, increasing the use of sensors greater flexibility in manufacturing. The Industrial Internet also offers the and actuators in manufacturing and opportunity to satisfy the requirements collecting all – instead of only select – Better planning and control are of customers in terms of traceability data (big data), the constantly rising closely connected with the integration of material, product and process data. requirements can be fulfilled without of horizontal value chains across Many companies, for example, in the disregarding profitability. Industry 4.0 – Opportunities and Challenges of the Industrial Internet 235 T he integrated analysis and use of data are the key capabilities of the Industrial Internet. The analysis and use of data play a The analysis and use of data are major role in the Industrial Internet. already highly important for half of 5 The rapidly growing number of sensors, all companies surveyed. The electrical embedded systems and connected engineering and electronics industry devices (“Internet of Things”) as well as places a particular emphasis on this the increasing horizontal and vertical capability due to the data intensity of networking of value chains result in a the products and solutions in the sector. huge continuous data flow. While these Ninety percent of the companies from gigantic amounts of data are collected all five industry sectors are convinced along the entire value chain, they that the ability to efficiently analyse have in many cases not been used in a and effectively use large data volumes structured and sufficient manner. will be of vital importance for the future success of their business model. This evaluation also applies to those industries in which the analysis and use of data are not yet a top priority. We are sitting on a pile of data today – but we are not able to use the data in an integrated and structured way for the optimal control of production. Head of Production, machine tool manufacturer Fig. 11 T he importance of data varies depending on the industry sector, but overall it is increasing significantly Importance of the analysis and use of data for the business model Proportion of companies with a great importance of data (4,5) 98% 91% Ø = 90% 88% 87% 87% 65% 57% Ø = 49% 47% 40% 39% Manufacturing and Automotive suppliers Process industry Electronics and electrical Information and engineering systems communications 24 Industry 4.0 – Opportunities and Challenges of the Industrial InternetSurvey results in detail The integrated analysis of data makes each company and lowers redundancies manufactured in which lot sizes. A big it possible, among other aspects, to within the entire supply chain. This data solution accelerates the highly examine processes in an integrated can lead to considerable increases of complex simulation calculations manner and to optimise them on efficiency and thus to clear competitive required for this by a factor of 50 and the basis of the findings made. An advantages. helps to achieve a considerable increase automotive supplier provides an of profitability. example of the use of modern data and In addition, the analysis and use of analysis procedures in manufacturing. data are decisive requirements for the Today, the companies’ focus is primarily In order to further increase the quality development of new, digital business on the safeguarding of an efficient and reliability of the delivered products, models, the optimisation of customer exchange of data within the own value a big data solution was recently interaction as well as the increase chain, the clear labelling of products implemented which connects and of a company’s profitability. A large (eg, with a bar bode, RFID or NFC) as processes huge amounts of different company from the process industry well as on the use of real time data to sensor data on the basis of complex provides a relevant example. In order control the production. Although many analyses (800 billion entries, or to maximise profitability, a highly companies already have large quantities 50 terabyte data per year when fully complex optimisation problem must be of data, they cannot use them in an configured). In doing so, defective solved continuously. Current demand, integrated manner or access them at parts can be identified and disqualified availability of machines, current raw company level. The companies surveyed early in the manufacturing process. material prices and other process only mentioned the use and exchange of Furthermore, increased transparency parameters are taken into account data with cooperation partners in fourth improves the decision-making basis for to decide which products are to be place. Fig. 12 T he efficient exchange of data along the own value chain becomes particularly important Significance of data and analysis competences in the context of Industry 4.0 Efficient exchange of data along the own 90% 8% value chain Clear labels (bar code, 79% 13% 8% RFID, NFC) Use of real time data 70% 21% 9% to manage products Use/exchange of data with cooperation 72% 20% 8% partners Analysis of large data 59% 30% 11% amounts in real time Generating additional data (eg, with enhanced 55% 25% 20% sensor technology) High (4,5) Medium (3) Low (1,2) Industry 4.0 – Opportunities and Challenges of the Industrial Internet 25