Are you ready for Industry 4.0? Part 2.

PwC conducted a study of 60 large Swedish manufacturing companies, with 91% of them stating that digital development will be crucial to the Swedish manufacturing industry’s competitiveness within 5 years. Sweden usually ranks high in terms of competitiveness and innovation but there are indications that we are losing our head start. For example, on the World Economic Forum’s Global Competitiveness Index, Sweden was ranked as the second must competitive country in the world in 2011, falling to ninth place in the 2015 ranking.

What changes does the Industry 4.0 involve?

While digitization has been driving Swedish economic development since the 1990s, it has primarily been limited to the IT and communication sectors. This needs to be broadened to other areas, such as industry.

Digital content transforms suppliers into service providers

When it comes to products and services, digital content is becoming increasingly important and is often what we value the most when we use them. One example is Uber, which provides taxi services, without owning a single car. It is the digital content of the service, not the transportation itself, that makes Uber’s product unique.

Today, product ranges are expanded by adding different digital content on the same scale and product lifecycles are shortened by encoding a large part of the changes into the software rather than in the physical product. This gives rise to new business models, through which suppliers can take a step up in the value chain and become service providers, rather than just delivering a gadget. An example is the internet-based retailer Amazon, which started as an online bookstore, and now is the world’s largest provider of cloud infrastructure services.

Virtual manufacturing technologies are needed

Digitization’s entry into the production process opens the door for shorter series and customized solutions. Virtual models of factories are created, through which processes can be simulated and optimized on an ongoing basis in an effort to utilize resources as efficiently as possible, while maintaining the flexibility of short series manufacturing.

Manufacturing systems therefore need to be aligned with a greater use of virtual manufacturing technologies and simulation, automation and smart communication between humans and machines. Ultimately, it will be the virtual model of the factory that will control real-time operations, thus setting the boundaries.

Data analysis is a crucial part

The importance of understanding needs and requirements here is crucial, and development is moving fast. The ability to collect and process large amounts of data, creates infinite opportunities for sharing information and creating a basis for decision making. To succeed, a company must be able to analyse all available data, be able to draw the right conclusions and see systematic patterns.

/Olof