Industry 4.0: Welcome to the smart factory

Industry 4.0 is the Internet of Things in production and networks the entire value chain. That means it connects machinery, products, people and systems so as to enable processes that are largely automated. Companies can produce goods more efficiently, flexibly and cheaply in a smart factory. However, that also changes the requirements on the labor market: Routine tasks are eliminated, making room for new and more demanding activities. People will continue to play a key role. Enterprises face many challenges, such as: How can older machines be made web-enabled and connected systems protected against hackers?

Robots move autonomously through the factory halls, transporting production materials from A to B. Products communicate with machines and initiate the next manufacturing steps themselves. And when devices identify that they need to be serviced, they automatically notify the technician. Welcome to the smart factory!

The Fourth Industrial Revolution (or Industry 4.0 for short) has begun. The steam engine, conveyor belt, electronics and IT are now being followed by smart, connected systems. They are fundamentally changing the way we produce things. In the future, it will be possible to automate most of the processes along the entire value chain. Machines will be able to communicate with each other and take decisions on their own. They will use sensors – their sensory organs – to collect data, which is then filtered before being passed on to a platform. The latter is the brain, as it were – the place where the machines’ data is pooled with information from other sources, such as enterprise resource planning (ERP) applications or the environment. The data is analyzed to allow actions to be derived from it.

Examples of Industry 4.0

Up to now, most companies have used Industry 4.0 technology to make their production operations faster and cheaper or to reduce scrap. They can identify sources of error, for example, by analyzing machine data. One instance of that: A European aircraft manufacturer was faced with the question of why such large tolerance deviations occurred when wings were assembled at its Hamburg plant. The answer was astonishing: The problems always occurred when the tide was falling. The manufacturer discovered that by correlating the machine data with environmental data using big data analytics. It was then able to adjust its production accordingly.

Many enterprises also use predictive maintenance. They constantly analyze machine data and compare it with past patterns. That allows them to identify the conditions under which problems usually occur and carry out servicing work before expensive downtimes are caused. One example is the BASF plant in Ludwigshafen: BASF has developed an early-warning system to enable better planning of maintenance for production plant, pumps, engines and heat exchangers. It analyzes real-time and historical data and can thus predict when maintenance work will be necessary. However, the principle of a smart factory can not only be applied locally, but machines at different locations all over the world can be connected to create one huge, virtual factory. At Infineon, for example, sites in Asia transfer their test results directly to the plant in Dresden, where they are incorporated in production.

Industry 4.0 in the automotive sector

The automotive sector is also already using Industry 4.0 successfully. Daimler, for instance, evaluates machine data to improve the quality of cylinder head production. The persons in charge can thus detect deviations and irregularities at an early stage in the manufacturing process and take action quickly. As a result, they reduce the error rate and make the production process more cost-effective. Volkswagen is pursuing another exciting approach: In an Industry 4.0 project, it uses RFID (radio frequency identification) technology to capture data from components in test vehicles faster. The components are already fitted with RFID chips by the suppliers. When the vehicles are tested, engineers can identify the installed prototype parts effortlessly and display detailed information they need for development. They thus have the right information at the right place and at the right time.

Industry 4.0 in logistics

In logistics, Industry 4.0 technologies help optimize transport routes, utilize storage capacities perfectly and plan ahead. The Port of Hamburg is one such example. 140 million tons of goods are transshipped there every year, a figure that will likely double by 2030. However, there’s not enough space at the port. The Hamburg Port Authority therefore faced the challenge of shifting the containers faster.

People, trucks, containers, ships, cranes and traffic management systems were connected with each other in an Industry 4.0 project. They all communicate with each other and supply business-related data. The upshot: Trucks reach their destination faster and the drivers know where they can unload their consignment more quickly. Shipmasters can plan their trips in advance. All that has simplified the processes, allowing the Port of Hamburg to transship goods more swiftly.

Connected production is not an option, but a must

Industry 4.0 doesn’t mean squeezing the most out of what’s technically feasible. Instead, enterprises have to fully digitize their production to survive on the market, since international competition is intense. Optimizing processes and cutting costs therefore become the supreme discipline. Smart, connected systems also enable companies to profitably produce smaller quantities tailored to customers’ individual wishes. That gives them the opportunity to stand out from cut-price vendors who pressurize the market with mass products.

Demographic change also makes it necessary to optimize production. Our society is aging, while the percentage of people in employment is falling. This trend cannot be offset by migration, either. The German Federal Statistical Office has calculated that the number of people in Germany aged 67 and above will increase by 42 percent to at least 21.5 million by 2040. However, the number of 20- to 60-year-olds is expected to drop by 11 to 25 percent, depending on the rate of immigration. Experts therefore concur: If we want to preserve our prosperity, we must make the world of work more efficient and better deploy the available workforce.

Edge computing

Edge computing

Vast quantities of data are produced in Industry 4.0 projects and have to be analyzed – ideally in real time. Yet transferring all of it to a data center costs time, money and a lot of storage space. That’s why many companies analyze the data where it where it originates near to the connected system, in other words, “at the edge.” Unimportant information is deleted immediately in this process, leaving only relevant data to be fed to the data center. One example: If the conveyor belt is to stop as soon as the temperature is too high, the information “normal temperature” is not important. Only when the sensors measure deviations does such data need to be analyzed.

What impact will Industry 4.0 have on jobs?

But what happens to people when machines take over more and more tasks? Many employees are worried about their jobs. Jochen Hanebeck from Infineon’s Management Board is unruffled by this trend: “Half of all employees will definitely be affected by digitization. But we don’t see a net loss in jobs.” A prime example is Infineon’s semiconductor production operations in Dresden, where the company makes chips on 200-millimeter and 300-millimeter wafers. The 300-millimeter line was designed from the outset for fully automated production, whereas the older 200-millimeter one has been gradually automated and connected to a greater extent over the past years.

It now has a degree of automation of around 90 percent. As a result, the site has been able to increase its productivity by 70 percent since it was founded in the mid-1990s. At the same time, the headcount has remained constant at around 2,000 over the past ten years. Digitization and connectivity have preserved the Dresden plant’s competitiveness, ensured growth and made a key contribution to securing the site’s long-term future.

A study by the Boston Consulting Group also paints a rosy forecast: Industry 4.0 will contribute one percent per annum to Germany’s gross domestic product and create around 390,000 new jobs by 2025. That means there will be more demand in future for more highly complex tasks, especially in the fields of IT, data analytics and maintenance. There will, predominantly, be fewer simple routine tasks. And not everyone will mourn their loss, that’s for sure. After all, having robots lug around heavy crates means protecting the health of human workers, who will then also have more time to tend to more challenging things.

That trend means employees have to be willing to keep on developing their skills. One successful example is Uwe Häßler: A trained electrician, he began his career as a skilled worker at the mechanical engineering company Harting Applied Technologies in 1990 and moved on to PLC programming in 2001. He now develops Industry 4.0 systems and IT interfaces. “When I started on the research project three years ago, all the things mentioned at the time were visions I couldn’t even imagine,” says Uwe Häßler. “Back then I said it would never be possible. Now I’m one of those who say: Yes, it is possible. And I develop visions myself.”

Beware of hackers

And what about security? A legitimate question, given that every connected device offers new targets for hackers to attack. As long as production machines were separated from IT, it was relatively easy to shield them from outside. However, there are many potential means of infiltration in the connected world of Industry 4.0. Cybercriminals could seize control of production plants, manipulate machines or conduct industrial espionage. There’s already been a small foretaste of that: In May 2017, the cryptoworm Wannacry infested, among other things, computers of the UK’s National Health Service, the car maker Renault in France and Deutsche Bahn. The malware encrypted the systems, crippling them temporarily. The hackers wanted to use this to extort a ransom.

In order to protect themselves, companies must therefore take security into account from the outset in Industry 4.0 projects. That includes keeping systems state-of-the-art and installing security updates. A combination of software- and hardware-based security solutions can also ensure that connected machines and communication nodes are protected. Examples are Infineon’s OPTIGA TPM chips. They can be built into routers, industrial PCs or complex control units and used by communication partners as a means of verifying the identity of the devices in the network. They thus authenticate themselves in the network and protect data transfer.

M2M communication

M2M communication

A vital requirement for Industry 4.0 is that machines must be able to share information. However, this machine-to-machine communication (M2M) is only possible if the devices speak the same language. That’s not so easy, since there are many different protocols – in other words, languages – used in communicating sensor data. Experts are wrestling to define uniform standards. The OPC UA and MQTT protocols have largely become established in Europe, and DDS in the U.S.

Making old machines fit for the Internet

Apart from security, a fundamental challenge facing enterprises in their Industry 4.0 projects is: How do they make their machines Internet-ready in the first place? Although vendors are already offering new devices with integrated IoT modules, very few factories are built from scratch on a green field. They have a production line that has evolved over time and contains machines of different ages. This kind of equipment is expensive and can’t be replaced at a stroke. Whereas consumers like us to buy a new smartphone or PC every three years, industrial machinery is often in use for 20 years or longer.

In order to make these older machines fit for Industry 4.0, they have to be upgraded with sensors, software and an IoT-capable industrial controller. The market offers retrofitting solutions for that. For example, the IoT Gateway from Bosch Rexroth was even able to make a treadle-operated lathe dating from 1887 Internet-ready. A sensor monitors the lathe’s speed and transfers this data to a mediation device, the IoT Gateway, which in turn is connected with other systems at the company. The person operating the lathe can see the transferred data in real time on a monitor and thus know whether to pedal more quickly or slowly in order to maintain the ideal speed.

The future has begun

Only around one-fifth of German companies have implemented Industry 4.0 projects so far, according to the recent study “Industrie 4.0 – Wo steht Deutschland” (“Industry 4.0 – Where does Germany stand”) by IDG Research Services. However, two-thirds of those surveyed assume that Industry 4.0 will become an important or very important topic for them in the next three years. There’s a gold rush atmosphere among hardware and software vendors and IT service providers. The industry association Bitkom forecasts that revenue from Industry 4.0 solutions will grow by more than one-fifth to seven billion euros by 2018. Jochen Hanebeck from Infineon’s Management Board believes Germany is in very good shape: “Basically, we in Germany and Europe are excellently positioned for Industry 4.0. We have the complete value chains and the ability to make very complex products in top quality. In a nutshell: We’re good at making things.”

Industry 4.0 is the Internet of Things in production and connects the entire value chain. That’s why the term Industrial Internet of Things (IIoT) is also used. Smart machines exchange information with each other and organize themselves. Processes across the entire value chain are connected and can be automated. That makes production as a whole more efficient and agile. And it also entails far-reaching changes. The term Industry 4.0 is therefore short for the Fourth Industrial Revolution.

Around one-fifth of German companies have implemented initial Industry 4.0 projects at present. The forerunners are large companies with an IT budget of more than ten million euros. The semiconductor industry is especially active. The wood and furniture industry and mechanical engineering are already relying on Industry 4.0 projects. (Source: “Industrie 4.0 – Wo steht Deutschland” (“Industry 4.0 – Where does Germany stand”))

The first phase of the industrial revolution began with the invention of the mechanized loom in 1784. Mechanical production plants were driven by water or steam power. The second phase was heralded in at the end of the 19th century with the use of electricity to power machinery. The first conveyor belt in the Cincinnati slaughter houses in 1870 made division of labor possible. The third phase commenced with the use of IT and electronics in production in the 1970s. 1969 saw the first programmable logic controller (PLC), which enabled further automation. We are now at the start of the Fourth Industrial Revolution, in which connected, intelligent systems interact in a smart factory.

The term first cropped up at the 2011 Hanover Trade Fair. Industry associations, their member companies, and the German Federal Ministries of Education and Research (BMBF) and Economic Affairs and Energy (BMWi) joined forces to take the Fourth Industrial Revolution forward. In April 2013, they founded the Industry 4.0 Platform, which supports companies in digitization.

Industry 4.0 enables enterprises to optimize their production operations and compete internationally. Data analytics makes all process steps transparent. Manufacturing becomes more automated, more flexible and cheaper. Companies can also efficiently produce smaller quantities tailored to individual requirements. At the same time, Industry 4.0 and the IoT necessitate a high level of security, since a new potential means of infiltration for hackers is created with every connected device.

Digitization and Industry 4.0 are changing the labor market. Many routine tasks will be eliminated, but new jobs will be created in their place. There will be demand for employees who can handle more complex, challenging activities, such as in the fields of data analytics or maintenance. People will still play a key role. In Infineon’s semiconductor production operations in Dresden, for example, the headcount has remained around the same in the past years, despite a degree of automation of around 90 percent in 200-millimeter wafer production and virtually 100 percent in 300-millimeter wafer production. Automation preserves competitiveness and thus lays the foundation for growth and job security.

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