Industry 4.0: the fourth industrial revolution – guide to ‘Industrie 4.0’

Industry 4.0 and the fourth industrial revolution: definition, origins, benefits, challenges, components, cyber-physical systems, building blocks and evolutions – your guide to ‘Industrie 4.0’.

When Germany launched a project under the name ‘Industrie 4.0’ to digitalize manufacturing at the Hannover Messe in 2011, the government officials, industry leaders and academics who were working on the project probably had no idea that Industry 4.0  would become such a widely used term and concept.

Moreover, Industry 4.0 and the Industrial Internet are meeting in a global collaboration towards the digital transformation of manufacturing and other industries, with a leading role for the Industrial Internet of Things (more about these realities and their role in Industry 4.0 below).

The value created by Industry 4.0 vastly exceeds the low-single-digit cost savings that many manufacturers pursue today (Boston Consulting Group)

Despite the buzzword aspect, ‘Industrie 4.0’ or ‘Industry 4.0’, is a very real phenomenon, transforming manufacturing into connected and digital manufacturing with additional benefits and a range of technological evolutions and possibilities to move beyond the sheer manufacturing operation dimension towards the so-called fourth industrial revolution.

However, Industry 4.0 is far from a reality yet. Manufacturers in many ways still lag behind and the challenges are abundant. Before looking at the challenges, state and future of Industry 4.0 we need to look a bit deeper into what it is.
Industry 4.0 - the fourth industrial revolution - Industry 4.0 defined explained and visualized with evolutions and data

Table of Contents

Industry 4.0 definition – the digital transformation of industry and the fourth industrial revolution

We define Industry 4.0 as the digital transformation of manufacturing, leveraging third platform technologies, such as Big Data/Analytics and innovation accelerators, such as the (Industrial) Internet of Things; and requiring the convergence of IT (Information Technology) and OT (Operational Technology), robotics, data and manufacturing processes to realize connected factories, smart decentralized manufacturing and the digital supply chain in the information-driven cyber-physical environment of the fourth industrial revolution.

The initial goals in Industry 4.0 typically are automation, (manufacturing) process improvement and productivity/production optimization; the more mature goals are innovation and the transition to new business models and revenue sources with information and services as cornerstones. Industry 4.0 is also called ‘smart industry’ or ‘smart manufacturing’. In many senses it is related to the Industrial Internet and since 2016 the Industrial Internet Consortium and Industry 4.0 platform, “Plattform Industrie 4.0”, started collaborating.

This is probably not the shortest Industry 4.0 definition ever and it does contain some terms we might need to explain further such as the third platform and innovation accelerators as they exist in the DX (digital transformation) economy, as well as the integration of IT and OT, which is key in the cyber-physical context of Industry 4.0 as we’ll see.

A shorter definition of Industry 4.0: the information-intensive transformation of manufacturing in a connected environment of data, people, processes, services, systems and production assets with the generation, leverage and utilization of actionable information as a way and means to realize the smart factory and new manufacturing ecosystems.

Industry 4.0 - digital transformation of manufacturing in the fourth industrial revolution

The original definition of Industry 4.0 (or better: Industrie 4.0)

The definition of Industrie 4.0 as proposed in 2011 was pretty lengthy too. In a paper, entitled “Industrie 4.0 – Smart Manufacturing for the Future”, GTAI (Germany Trade and Invest) looked at the questions what is smart industry (a synonym of Industry 4.0) and what Industrie 4.0 means.

Industrie 4.0 - Smart Manufacturing for the Future by Germany Trade and Invest - an Industry 4.0 must-read - PDF opens
Industrie 4.0 – Smart Manufacturing for the Future by Germany Trade and Invest – an Industry 4.0 must-read (PDF opens)

An extract: Smart industry or “INDUSTRIE 4.0” refers to the technological evolution from embedded systems to cyber-physical systems…INDUSTRIE 4.0 represents the coming fourth industrial revolution on the way to an Internet of Things, Data and Services. Decentralized intelligence helps create intelligent object networking and independent process management, with the interaction of the real and virtual worlds representing a crucial new aspect of the manufacturing and production process”.

And it’s not done! More in the paper (PDF opens) and in our Industry 4.0 definitions list below.

What is Industry 4.0 (according to several sources)?

If you wonder what Industry 4.0 is in practice, you’ll find more on the various aspects and evolutions further below.

However, if you need a description Industry 4.0 and seek an Industry 4.0 definition, which you can use for whatever purpose, take a look at the Industry 4.0 definitions we gathered from various other sources which, in many cases, are also excellent starting points to learn more about the pretty broad reality of Industry 4.0, the fourth industrial revolution and all its aspects.

Obviously not all definition of Industry 4.0 are the same. It’s as Marijn ten Wolde of Bosch Siemens Home Appliances said in an interview: “Industry 4.0 has a different meaning or for each company. Even within Bosch there isn’t one definition of Industry 4.0. It’s dependent on the strategy for each factory. The most important principles for manufacturing are connectivity and operational excellence”.

Benefits, goals and excellence before definitions (but below are those definitions anyway).

The evolving reality of Industry 4.0

As mentioned, Industry 4.0 was originally a project in Germany with several components and workgroups.

Companies are implementing Industry 4.0 but in rather ad hoc and isolated ways

One component was and still is the smart factory of tomorrow, or as some call it the digital or connected factory. A factory that is not just making manufacturing faster, more flexible and more efficient but also is ‘intelligent’. Indeed, machine-to-machine communication and processes whereby machines and technologies can identify issues and take autonomous decisions, based on third platform technologies, an integrated IT/OT environments and the so-called Industrial Internet of Things. It’s clear that also security plays a big – and increasing – role here.

Among the several third platform technologies and their innovation accelerators in Industry 4.0: Big Data (Analytics), cloud computing (and, more recently fog computing) artificial intelligence and cognitive, robotics, AR/VR, advanced security, simulation methods such as digital twins and, as said, the Internet of Things (IoT). We take a close look at the Internet of Things in Industry 4.0 and compare it with a key building block of Industrie 4.0, the cyber-physical systems, below. However, it’s not just about IT; OT (Operational Technology) and the convergence of the many operational technologies and realities with IT as we know it, are at least as important. That will become clear if you read about architectural frameworks and the mentioned cyber-physical systems.

IoT is a key component in this whole equation, mainly from an industrial Internet of Everything perspective, which looks a bit more at the processes, data analysis and people picture than the Internet of Things does. Also the Internet of Robotic Things plays an increasing role in Industry 4.0.

The technologies in fact were a second component that was studied in the ‘Industrie 4.0’ workgroups, on top of the smart factory and the other dimensions such as (the future) of work, the economic context of the manufacturing industry and so forth. Other technological factors include network technologies, security, all the advanced mechanics and components of cyber-physical systems, the list goes on.

The principles and technologies of Industry 4.0 were connected to a concept of a fourth industrial revolution as is known (hence the 4).

Industry 4.0 and the fourth industrial revolution

The four stages of the Industrial revolution - source DKFI 2011 via SAP
The four stages of the Industrial revolution – source DKFI 2011 via SAP

As a reminder the classic view of these four industrial revolutions, as Industry 4.0 became increasingly popular, was:

  1. The first industrial revolution, which REALLY was a revolution, and, among others thanks to invention of steam machines, the usage of water and steam power and all sorts of other machines, would lead to the industrial transformation of society with trains, mechanization of manufacturing and loads of smog.
  2. The second industrial revolution is typically seen as the period where electricity and new manufacturing ‘inventions’ which it enabled, such as the assembly line, led to the area of mass production and to some extent to automation.
  3. The third industrial revolution had everything to do with the rise of computers, computer networks (WAN, LAN, MAN,…), the rise of robotics in manufacturing, connectivity and obviously the birth of the Internet, that big game changer in the ways information is handled and shared, and the evolutions to e-anything versions of previously brick and mortar environments only, with far more automation.
  4. In the fourth industrial revolution we move from ‘just’ the Internet and the client-server model to ubiquitous mobility, the bridging of digital and physical environments (in manufacturing referred to as Cyber Physical Systems), the convergence of IT and OT, and all the previously mentioned technologies (Internet of Things, Big Data, cloud, etc.) with additional accelerators such as advanced robotics and AI/cognitive which enable Industry 4.0 with automation and optimization in entirely new ways that lead to ample opportunities to innovate and truly fully automate and bring the industry to the next level.

Some also like to add the injection of technology and connectivity in the human/digital mind and body convergence to Industry 4.0.

The injection of AI, hyper-connectedness and data analysis into how things, machines, communicate, act and lead to actionable insights with an omnipresence of the Internet of Everything in virtually each piece/machine of the Industry 4.0 dream is one thing, the convergence of man and machine (or technological extension) is still a bit further away and it’s so complex and will lead to so many more debates (also ethical) that it’s already called the fourth platform by IDC.

Industry 4.0 - the convergence and application of industrial technologies as the Boston Consulting Group sees it - source
Industry 4.0 – the convergence and application of industrial technologies as the Boston Consulting Group sees it – source

In the view of the Boston Consulting Group (we tackle their Industry 4.0 research below) Industry 4.0 refers to the convergence and application of nine digital industrial technologies: advanced robotics, additive manufacturing, augmented reality, simulation, horizontal/vertical integration, Industrial Internet, the cloud, cybersecurity and Big Data and Analytics.

It’s clear that today some companies have invested in a few of these technologies; predominantly the traditional pillars of the third platform such as cloud and Big Data / Analytics and, increasingly in the Industrial Internet of Things from an integrated perspective and thus overlapping with several of these “technologies” or maybe better: sets of technologies and connected benefits.

Industry 4.0 and the Industrial Internet

Obviously, it wasn’t just in Germany (and Europe) that the digital transformation of manufacturing (and some related industries and processes) was occurring with industrial giants in the Industry 4.0 space (Bosch, Siemens, you name it).

The fourth Industrial Revolution and the third industrial innovation wave of the Industrial Internet

In the US, GE and a range of other industrial players (including non-American ones who are also members of the “Plattform Industrie 4.0”) launched the Industrial Internet Consortium.

By 2018, only 30 percent of manufacturers investing in digital transformation will be able to maximize the outcome; the rest are held back by outdated business models and technology (IDC)

The Industrial Internet, as we wrote previously a term coined by American industrial giant GE, looked pretty much like Industry 4.0., although in the Boston Consulting Group image above it is mentioned as one of the enabling industrial technologies in the network of machines and products and networked objects communications sphere of IIoT.

The difference between Industry 4.0 and the Industrial Internet, however, is that, originally, the Industrial Internet was seen as the third industrial innovation wave. So, a third wave of innovation instead of a fourth revolution in the industry.

It only shows how relative revolutionary terms are as the three industrial Internet innovation waves respectively were:

  • The Industrial Revolution. The real one and more or less a combination of the first and second revolution in the Industry 4.0 view.
  • The Internet Revolution: ‘computing power and the rise of distributed information networks’.
  • The Industrial Internet: what is called the fourth industrial revolution in Industry 4.0.


The Industrial Internet - the third industrial innovation wave - based upon GE SlideShare - see below
In the Industrial Internet view Industry 4.0 is the third industrial innovation wave

Today the concept of four industrial revolutions, however, has gained widespread adoption and so has Industry 4.0.

Globalization, architectures and standardization: the collaboration between Industry 4.0 and the Industrial Internet Consortium

The Industrial Internet Consortium had a more cross-industry approach than German “Plattform Industrie 4.0” (the Industry 4.0 Platform), which was more focussed on manufacturing (although now it’s also used for logistics and more).

As both the Industrial Internet Consortium and Plattform Industrie 4.0 shared many efforts and views, and more and more companies became member of both platforms, both organizations started looking at similarities and collaboration. After all, we still do live in a globalized world, certainly in industrial production and related markets.

So, collaboration became obvious, even more so because both industry bodies were working on an architectural framework. In the context of Industry 4.0 and “Plattform Industrie 4.0” this framework is known as RAMI 4.0, short for the Reference Architecture Model for Industrie 4.0. The Industrial Internet Consortium’s framework is known as IIRA, short for the Industrial Internet Reference Architecture.

Early 2016 the Industrial Internet Consortium and Plattform Industrie 4.0 announced their collaboration, with a focus on standardization, the architecture for the “new” manufacturing, the business goals and the role of the Internet of Things in it all.

If you look at Industry 4.0 today you’ll notice that there is also an increasing attention for industries, other than manufacturing as already was the case in the Industrial Internet Consortium and that cyber-physical systems, which we’ll tackle next are seen beyond the scope of cyber-physical production systems but also as the enablers of, among others condition monitoring and remote possibilities, which in term don’t just enable and drive the smart factory but also smart logistics, smart cities, smart healthcare and beyond.

The state of Industry 4.0: how are manufacturing companies doing?

All revolutions and associations aside, the question is how far we are in Industry 4.0. Are manufacturing companies fully ready? And what means readiness in this industrial context to begin with?

The definition of a strategy is challenge number one in Industry 4.0 (Boston Consulting Group)

In other words: what are the characteristics, principles, technological maturity levels, (achieved and desired) benefits and realizations and where do we start with Industry 4.0 or the Industrial Internet? As you’ll notice the answers to these questions are very similar to those in digital transformation across any industry and as in any digital transformation strategy challenge. After all; in the end, regardless of the different technologies and market context in manufacturing, digital transformation is a universal given in any industry whereby similar capabilities and outcomes are sought.

Industry 4.0, which in more than one way as said is the digital transformation of manufacturing, today still is mainly focused on the first stages of transformation and ‘maturity’ from a benefit and potential perspective: enhancing productivity, automation and the optimization of operational processes, business processes and, the number one Internet of Things use case from an IoT spending perspective: manufacturing operations.

Industry 4.0 in 2017: the first stages of maturity

This is also what the Boston Consulting Group found in a December 2016 report: companies are implementing Industry 4.0 but in rather ad hoc and isolated ways.

This is exactly the same phenomenon we see in any industry that is in digital transformation – or revolution if you prefer. It’s that first stage in a broader ecosystem of possibilities as organizations move from more or less obvious goals to true innovation and even disruption. The illustration below from the Boston Consulting Group shows some aspects of this broader ecosystem of possibilities, beyond the enhance productivity dimension.

Enhanced productivity is just one piece of Industry 4.0 - source
Enhanced productivity is just one piece of Industry 4.0 – source

In other words: MOST manufacturing and industrial companies (there are plenty of exceptions and we mention several across this site) are still in that stage where the intention to transform exists and isolated efforts exist but there is often a lack of a bigger picture, a broader strategy or, as the Boston Consulting Group calls it in the Industry 4.0 context ‘a comprehensive program’.

Industry 4.0 ranks high on the agenda, yet in practice one or two isolated aspects of Industry 4.0 are implemented, the company says. Examples: big data and/or robotics.

This is really the first stage of maturity whereby there is also a focus on the mentioned optimization and automation goals and gains, which is perfectly normal but it shouldn’t stop there.

You can perfectly compare this with the findings of IDC regarding the gradual evolution from Internet of Things pilot projects to more scalable deployments, whereby IDC found that the sought benefits of these deployments are mainly focused on internal goals and on operations.

As the image below shows, enhancing productivity, reducing costs and the automation of internal processes dominate. It’s clear that in companies that are further from a benefit perspective and look at better customer service, new revenue streams, changes in business models and innovation, IoT deployments go many steps further.

IoT in organizations - IDC reports organizations start moving towards scalable IoT projects and surveys IoT decision makers - state of IoT solution deployment, top perceived IoT benefits and major IoT concerns - source
Internal goals and productivity improvement dominate most IoT deployments in the current maturity stage

Industry 4.0 – the next maturity stages

Where the Boston Consulting Groups says that the vast majority of respondents see Industry 4.0 as an opportunity to improve productivity – and analyzes how this is done in practice- the parallels are crystal clear. So, what does it take to move to those next maturity stages?

Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things and cloud computing. Industry 4.0 creates what has been called a “smart factory”. (Wikipedia)

Not for the sake of maturity but for the sake of moving beyond that enhanced productivity towards higher agility, real-time opportunities, the development of an innovative capability and true innovation, identifying new information-driven and service-oriented sources of revenue and many more goals?

The answers are again the same as in all digital transformations, as are the challenges. Developing new competencies, finding new opportunities in the equation of intelligence, people, processes and innovation, and creating competitive benefits and services which can have an important impact on the business model and even the industry as a whole, requires more than projects and more than productivity.

Industry 4.0 challenges and risks

And it’s here that also in Industry 4.0 we find those eternal hurdles. The Boston Consulting Group, among others, identified:

  • The definition of a strategy (for Industry 4.0), challenge number one.
  • The rethinking of the organization and processes to maximise outcomes.
  • Understanding the business case.
  • Conducting successful pilots.
  • Making the organization realize action is needed.
  • Change management, so often overlooked.
  • Company culture.
  • A true interconnection of departments.
  • Talent….

They are all challenges we’ve seen in so many other areas and there are at least two we want to add (there are more):

  1. Information management excellence as it’s all about actionable intelligence and connected information and process excellence in a context of relevance, innovation and timely availability for any desired business, employee AND obviously customer goal.
  2. (Cyber)security (and privacy). The increasing number of attacks in the Industrial Internet of Things are a fact as IT and OT converge. Moreover, one of the main reasons which hold IIoT initiatives back are concerns regarding security and IIoT is, as said a key component of Industry 4.0.

On top of these challenges there are several others, practical, technological and ecosystem-related:

  • The challenges regarding the integration of IT and OT.
  • Data compliance questions.
  • Managing risk and lowering costs in uncertain times.
  • Dealing with the complexity of the connected supply chain.
  • A better understanding of IT and OT technologies and, more importantly, how they can be leveraged.
  • Altering customer and industrial partner demands.
  • Competition and the fact that Industry 4.0 champions gain a competitive benefit fast.
  • The eternal and extremely important human challenge (talent, future of work, employment,…..).

While leading manufacturers are overcoming the mentioned challenges and some already have, others will need to step up their pace. It’s not a coincidence that the Boston Consulting Group report is entitled ‘Sprinting to Value in Industry 4.0’.

Is fear of others taking the lead a good advisor? No? Do you need to start somewhere? Yes, and you can. Is it, even if fear is a bad advisor, time to sprint to value in Industry 4.0 in a world where digital transformation is a marathon with several sprints? Looking at what the best in class are doing we would say yes.

Moreover, there are some predictions you might want to look at, such as this first one from an IDC article with 10 predictions for the manufacturing industry, as summarized end 2016: By 2018, only 30 percent of manufacturers investing in digital transformation will be able to maximize the outcome; the rest are held back by outdated business models and technology.

More about the steps to move further in Industry 4.0 on this site (e.g. in industry cases), in examples across industries, in future contributions and in the presentation of the Boston Consulting Group and the accompanying article (among many other sources).


Benefits of Industry 4.0

Whether it’s Industry 4.0, Smart Industry or the Industrial Internet, there are ample benefits for manufacturers to transform the way they work.

We’ve mentioned some benefits, risks and challenges earlier in this overview but let’s look a bit closer at some of the main advantages. Several of them are also explored more in depth in other articles on this site.

The essential goal of Industry 4.0 is to make manufacturing – and related industries such as logistics – faster, more efficient and more customer-centric, while at the same time going beyond automation and optimization and detect new business opportunities and models.

Most of the benefits of Industry 4.0 are – obviously – similar to the benefits of the digital transformation of manufacturing, the usage of the Internet of Things in manufacturing, operational and business process optimization, information-powered ecosystems of value, digital transformation overall, the Industrial Internet and many other topics on our website. However, let’s summarize a few of the key benefits of Industry 4.0.

Enhanced productivity through optimization and automation

As mentioned in the section on the state of Industry 4.0, optimization of processes and of productivity is the first benefit that manufacturers see.

It’s also one of the first goals of Industry 4.0 projects. In other words: saving costs, increasing profitability, reducing waste, automating to prevent errors and delays, speeding up production to work more in real-time and in function of the overall value chain, where speed is crucial for everyone, digitizing paper-based flows, being able to intervene faster in case of production issues and so forth.

It’s the low hanging fruit, yet important. On top of the research from BCG we mentioned earlier, the signs that investments are done in these areas first are clear. Again, it’s not a coincidence that, from a spending perspective, the number one use case in which manufacturers invest their Internet of Things (IoT) budgets is manufacturing operations (a whopping $102.5 billion on a total of IoT $178 billion across all manufacturing use cases in 2016). Industry 4.0 offers various solutions to optimize, from optimized asset utilization and smoother production processes to better logistics and inventory management.

Real-time data for a real-time supply chain in a real-time economy

While we just mentioned speed in a context of optimization, automation and enhanced productivity, it is a benefit in many other ways as well.

A lot of the productivity improvement benefits are rather about the internal goals of costs and process optimization. Yet, at the same time several also fit in a perspective of enhanced customer-centricity.

Industry 4.0 is about the entire life cycle of products and manufacturing obviously doesn’t stand on its own. If you look at the entire value chain and ecosystem within which manufacturing operations reside there are many stakeholders involved. These are all customers. And customers also want enhanced productivity, regardless of where they sit in the supply chain. If the final customer wants good products fast and has increased expectations regarding customer experience, quality, service and products that are delivered on the exact time they want, this impacts the whole supply chain, all the way up to manufacturing and beyond. Speed is not just a competitive advantage and customer expectation in an increasingly real-time economy, it’s also a matter of alignment, costs and value creation. Moreover, customers simply expect it.

Once again the crucial role of data and information surfaces.

Industry 4.0, smart factories, supply chains, informed customers, alignment: it’s all about data, from the actual operations to the delivery of a product to an end customer and beyond.

The more data you gather early on and the more timely this data gets where it matters when it matters, the more value down the supply chain. In fact, this is the essence of one of the three dimensions of RAMI 4.0, the Reference Architecture Model Industry 4.0, which we tackle below.

Higher business continuity through advanced maintenance and monitoring possibilities

When an industrial asset gets broken it needs to be fixed. That costs time, money and very often a lot of moving around by support people and engineers.

When a key industrial asset, such as an industrial robot in a car manufacturing plant gives up, it’s not just the robot that’s broken. Production is affected, costing loads of money and unhappy customers, and sometimes production can be fully disrupted. It’s everyone’s worst nightmare as business continuity is an extremely high concern.

On top of all the replacement/fixing work, resources and costs, reputation can be damaged, orders can be cancelled and with each hour that passes money is thrown away. If industrial assets are connected and can be monitored (health status monitoring, for instance) through the Internet of Things and issues are tackled before they even happen the benefits are huge. Alerts can be set up, assets can be proactively maintained, real-time monitoring and diagnosis becomes possible, engineers can fix issues, if they do occur from a distance, the list goes on. Moreover, patterns and insights are gained to optimize in areas where things seem to have issues more often and a world of new maintenance services opens up as we’ll see. No wonder that asset management and maintenance are the second largest area of IoT investments in manufacturing.

Better quality products: real-time monitoring, IoT-enabled quality improvement and cobots

We mentioned that customers want speed. However, that doesn’t mean they are ready trade quality for speed, well on the contrary.

If you have everything in your production system and its broader environment hooked up with sensors, software, IoT technologies, systems of insight AND the customer, you can also enhance quality of your products. Automation definitely plays a big role here and so do the typical components of cyber-physical systems (more below) and the Internet of Things whereby quality aspects can be monitored in real-time and robots reduce errors.

On the flip side and one of the risks and challenges to tackle, as mentioned earlier: the more you automate, the less work for people, in theory. And the same goes for other mentioned benefits such as maintenance (the less you need engineers for support, the less support engineers you need). It’s a dilemma and known issue which we’ll cover later. In the meantime do know that robots are not going to take all human jobs over soon. Ample companies have increased the usage of robots and at the same time hired more. The reason we mention it in the context of quality is that this is certainly one area where you see cobots popping up (cobots is a fancy term for advanced collaborative robots or put more simply: robots that fit a collaboration between man and machine).

Better working conditions and sustainability

Talking about people, the human (and social) dimension is ubiquitous in Industry 4.0. Moreover, if we look at the possibilities and benefits, that human, social and even environmental aspect is key in the goals of Industry 4.0.

Improving working conditions based on real-time temperature, humidity and other data in the plant or warehouse, quick detection and enhanced protection in case of incidents, detection of presence of gasses, radiation and so forth, better communication and collaboration possibilities, a focus on ergonomics, clean air and clean factory initiatives (certainly in Industry 4.0 as the EU wants to be leading in clean air and clean anything technologies), the list goes on.

Personalization and customization for the ‘new’ consumer

We all know it: consumer behavior and preferences have changed. Digital tools have changed the ways we work, shop and live.

People have also become more demanding, among others with regards to fast responses and timely information/deliveries as mentioned earlier. On top of that consumers also like a degree of personalization, depending on the context. Take sports shoes, for instance. Once a few colors of the same shoe were enough, know we want the ability to customize them in whatever way.

On top of that another phenomenon is taking place and it does disrupt traditional supply chains. Consumers increasingly get (and want) possibilities to have a direct interaction with a brand and its manufacturing capability. Digital platforms to customize products as mentioned, shortened routes between production and delivery, possibilities to co-create and so on. In many manufacturing environments these things already happen. And it’s not just in a consumer environment. We increasingly see customization in a B2B context as well, even if it’s just to stick a label, add a custom feature or adapt any characteristic of the product whatsoever.

If you want to offer these services at scale and even turn them into a competitive advantage, automation and several technologies and processes in industry 4.0 become a necessity. A real-life example without disclosing the details: a large bank wanting specific office equipment to use across all its branches (customer-facing context) with its own look, feel and features as part of a rebranding. There are plenty more examples.

Improved agility

Now that we speak about competitive benefits and customization we also need to tackle agility, scalability and flexibility.

The same scalability and agility which we expect from supporting IT services and technologies, such as the cloud, are expected in manufacturing. This is partially related with the previous topic of customization but mainly is about leveraging technologies, Big Data, AI, robots and cyber-physical systems to predict and meet seasonal demand, fluctuations in production, the possibility to downscale or upscale; in other words: all the adjustments that are sometimes more or less predictable, can be made more predictable or are not predictable but can be handled thanks to increased visibility, flexibility and a possibility to leverage assets in function of optimal production requirements from a perspective of time and scale.

The development of innovative capabilities and new revenue models

Digital transformation, as you can read in our digital transformation strategy overview, is a matter of many levels, steps and capabilities.

You can transform processes, specific functions, customer service, experiences and skillsets but in the end true value is generated by tapping into new, often information-intensive, revenue sources and ecosystems, enabling innovative capabilities, for instance in deploying an as-a-service-capacity for customers, advanced maintenance services and so on.

In the end, Industry 4.0 is also about that. It’s a topic we wrote about very often. You can read more about it in our article on the digital transformation of manufacturing.

The building blocks of Industry 4.0: cyber-physical systems

Cyber-physical systems (CPS) are building blocks in Industry 4.0 on one hand and part of the Industry 4.0 vision on the other.

Cyber-physical systems are combinations of intelligent physical components, objects and systems with embedded computing and storage possibilities, which get connected through networks and are the enablers of the smart factory concept of Industry 4.0 in an Internet of Things, Data and Services scope, with a focus on processes.

Simply put, as the term indicates, cyber-physical systems refers to the bridging of digital (cyber) and physical in an industrial context.

Cyber-physical systems (CPS) in the Industry 4.0 vision

This might still seem complex but, then again, cyber-physical systems are complex. Moreover, the term isn’t new and is better known in an engineering and industry context.

It fits more in the Operational Technology (OT) side of the converging IT/OT world which is typical in Industry 4.0 and the Industrial Internet. So, if you want to understand Industry 4.0 or the Industrial Internet, you’ll need an understanding of some essential operational, production and mechanics terms.

Cyber-physical systems in the Industry 4.0 view are based on the latest control systems, embedded software systems and also an IP address (the link with the Internet of Things becomes clearer, although strictly both are not the same but they certainly are twins as we see in the next ‘chapter’.

In the Industry 4.0 context of mechanics, engineering and so forth, cyber-physical systems are seen as a next stage in an evolution of an ongoing improvement of enhancement and functions integration.

Industry 4.0 and cyber-physical systems - CPS as an evolution in OT and mechanics and an enabler of capabilities which drive smart manufacturing and smart logistics in the Industrie 4.0

Looking at Industry 4.0 as the next new stage in the organization and control of the value chain across the lifecycle of products, this ongoing improvement in which CPS fits started from mechanical systems, moved to mechatronics (where we use controllers, sensors and actuators, more terms that are familiar in IoT) and adaptronics, and is now entering this stage of the rise of cyber-physical systems.

Cyber-physical systems essentially enable us to make industrial systems capable to communicate and network them, which then adds to existing manufacturing possibilities.

They result to new possibilities in areas such as structural health monitoring, track and trace, remote diagnosis, remote services, remote control, condition monitoring, systems health monitoring and so forth.

And it’s with these possibilities, enabled by networked and communicating cyber-physical modules and systems, that realities such as the connected or smart factory, smart health, smart cities, smart logistics etc. are possible as mentioned previously.

Cyber-physical systems before Industry 4.0

In the original definitions, going back over a decade, IP addresses where not specifically mentioned in cyber-physical systems.

In 2008, Professor Edward A. Lee from the University of California, Berkeley, defined Cyber-Physical Systems as follows: “Cyber-Physical Systems (CPS) are integrations of computation and physical processes. Embedded computers and networks monitor and control the physical processes, usually with feedback loops where physical processes affect computations and vice versa”.

On his page on the Berkeley website, Professor Lee links to where you find his definition and a CPS concept map in the form of a mind map where you can click the various components to read more. For the German Industrie 4.0 academia and industry people, CPS (and that bridging of cyber/digital and physical) was key in Industry 4.0.

Cyber-physical systems also include dimensions of simulation and twin models, smart analytics, self-awareness (self-configuration) and more . We’ve  tackled some of these topics, including digital twins, previously.

Hopefully, the essence of the concept, context and reality of the evolution towards cyber-physical systems has become a bit clearer now. Note: there is a difference between cyber-physical systems and cyber-physical manufacturing systems or cyber-physical production systems (CPSS) where we move from the technological component to the far more important process and application dimension.

Cyber-physical systems: summary of the key characteristics

Next, we take a deeper look into the Internet of Things and its place in Industry 4.0. You’ll notice that both are virtually twins.

Before doing so we summarize some key characteristics of cyber-physical systems as they are related with the Internet of Things:

  • Cyber-physical systems are seen as a next evolution in manufacturing, mechanics and engineering. The essential dimensions are the bridging of digital and physical, which is possibly thanks to Internet technology, and the bridging/convergence of Information Technology and Operational Technology.
  • Cyber-physical systems can communicate. They have intelligent control systems, embedded software and communication capabilities as they can be connected in a network of cyber-physical systems.
  • Cyber-physical systems can be uniquely identified. They dispose of an IP (Internet Protocol) address which means that they use Internet technology and are part of an Internet of Everything in which they can be uniquely addressed (each system has an identifier).
  • Cyber-physical systems have controllers, sensors and actuators. This was already the case in previous stages before cyber-physical systems (mechatronics and adaptronics); however as we’ll see with the Internet of Things it plays an important role.
  • Cyber-physical systems are the basic building blocks of Industry 4.0 and the enablers of additional capabilities in manufacturing (and beyond) such as track and trace and remote control (more about these capabilities in the next section on CPS and the Internet of Things).
  • The capabilities which are possibly thanks to cyber-physical systems enable smart factories, smart logistics and other smart areas of applications, among others in energy, oil and gas, and logistics.

Industry 4.0 building blocks: the (Industrial) Internet of Things

As promised, time for the Internet of Things. The Internet of Things (IoT) is omnipresent in Industry 4.0 and its international counterparts, as mentioned previously.

As you can read on our page on the Industrial Internet of Things (IIoT) and deduct from the graphic above on cyber-physical systems, CPS essentially is mainly about the Industrial Internet of Things.

Internet of Things and cyber-physical systems: similar characteristics

The presence of an IP address by definition means that cyber-physical systems, as objects, are connected to the Internet (of Things). An IP address also means that the cyber-physical system can be uniquely identified within the network. This is a key characteristic of the Internet of Things as well.

The main Internet of Things use case in manfacturing, from a spending perspective, concerns manufacturing operations

Cyber-physical systems are also equipped with sensors, actuators and all the other elements which are part of the Internet of Things. Cyber-physical systems, just like the Internet of Things need connectivity. The exact connectivity technologies which are needed depend on the context (in both).

The Internet of Things consists of objects with embedded or attached technologies that enable them to sense data, collect them and send them for a specific purpose. Depending on the object and goal this could be capturing data regarding movement, location, presence of gasses, temperature, ‘health’ conditions of devices, the list is endless. This data as such is just the beginning, the real value starts when analyzing and acting upon them, in the scope of the IoT project goal.

IoT devices can also receive data and instructions, again depending on the ‘use case’. All this applies to cyber-physical systems as well, which are essentially connected objects. There are more similar characteristics but you see how much there is in common already.

CPS-enabled capabilities and Internet of Things use cases

Moreover, the new capabilities which are enabled by cyber-physical systems, such as structural health monitoring, track and trace and so forth are essentially what we call Internet of Things use cases.

In other words: what you can do with the Internet of Things. Some of them are used in a cross-industry way, beyond manufacturing.

Below are two examples of CPS-enabled capabilities we tackled previously and how they really are IoT uses cases.

Track and trace possibilities in practice lead to multiple IoT use cases in, among others, healthcare, logistics, warehousing, shipping, mining and even in consumer-oriented Internet of Things use cases. There are ample applications of the latter with numerous solutions and technologies. You can track and trace your skateboard, your pets, anything really, using IoT.

Structural health monitoring is also omnipresent, mainly across industries such as engineering, building maintenance, facility management, etc. With the right sensors and systems you can monitor the structural health of all kinds of objects, from bridges and objects in buildings to the production assets and cyber-physical assets in manufacturing and Industry 4.0.

Smart factories, smart plants and smart applications

The new capabilities, of which we just mentioned two and which are possible thanks to CPS in the Industry 4.0 view, in turn enable smart plants, smart factories and anything smart.

What is a core enabler of smart logistics and so forth? Indeed, the (Industrial) Internet of Things, beyond its simple aspects of sensors, actuators, communication capabilities and data collection/analytics. You can perfectly compare this with the Internet of Everything view of connected objects, people, processes and data as the building blocks of smart applications.

It is another key similarity between the CPS view of industry 4.0 and the reality of the Internet of Things, which is key in Industry 4.0.

To conclude: in fact, you can call cyber-physical systems the (albeit advanced) things in the Industrial Internet of Things in manufacturing. So, CPS and IoT are de facto more than twins.

The Reference Architectural Model Industrie 4.0 (RAMI 4.0)

While, as mentioned the Industrial Internet Consortium has a framework, called IIRA (Industrial Internet Reference Architecture), German ‘Plattform Industrie 4.0’ developed the so-called Reference Architectural Model Industrie 4.0 (RAMI 4.0).

Industry 4.0 and RAMI 4.0: international expansion

RAMI 4.0, although originating from Germany, just as Industrie 4.0, is playing an increasing role in other countries as well, certainly in the EU. As a matter of fact, ‘Platfform Industrie 4.0’ is seeking alignment at European levels and with other countries across the globe.

Even if some EU countries use different terms such as intelligent factory, future industry, digital production or smart manufacturing, the European Commission (EC) is also intervening.

The 3-dimensional RAMI 4.0 model shows that the production object must be tracked across its entire life cycle (video ZVEI, see below)

Early 2017, a forum was held in the scope of the EC’s ‘Digitizing European Industry’ project. Industry 4.0 and RAMI 4.0 are also clearly mentioned within various programs on the website of the EC (and a PDF with the essence of the Reference Architectural Model Industrie 4.0 is available on it, not without reason).

At the mentioned forum, the so-called ‘Stakeholder Forum’, held early 2017, international collaboration around Industry 4.0 was one of the topics. ‘Plattform Industrie 4.0’ used the occasion to further expand bilateral relationships with, among others the French Industry of the Future Alliance (Alliance Industrie du Futur) and Italy’s Intelligent Factory project (Fabbrica Intelligente). Outside of the EU, partners include the mentioned IIC (Industrial Internet Consortium) and Japan’s Robot Revolution Initiative (meanwhile, Japan announced its all-encompassing Society 5.0 initiative at the CeBIT 2017 tradeshow).

If you are looking for some examples of Industry 4.0 cases in practice, it’s probably interesting to know that you can watch a map, translated in English by ‘Platfform Industrie 4.0’, right before the forum.

Click on a place on the map and read more about the specific case (for now only German examples).

Key elements of RAMI 4.0 (and Industry 4.0 components)

What are some of the key aspects you need to know about RAMI 4.0 (the architectural model overviewis embedded below)?

First, know that there are two documents which laid out the foundations of Industry 4.0 and RAMI 4.0.

The Industrie 4.0 workgroup findings report

In 2013, the so-called “Umzetsungsempfehlungen” document was published. It’s essentially the report of the ‘Industrie 4.0’ workgroup that, among others covered principles and foundations, including:

  • Horizontal integration across value-added networks.
  • Vertical integration and networked/connected production systems
  • The technologies for CPPS (cyber-physical production systems)
  • The consistency of engineering across the entire value chain.
  • The new social infrastructures of labor/work.

We mention these topics of that first document as we’ll tackle them more in depth.

The Industrie 4.0 strategic implementation document: where RAMI 4.0 comes in

The second document, the “Umsetzungsstrategie”, a document with the recommendations for the strategic translation and implementation of Industry 4.0, was published in 2015 and contains the RAMI 4.0 model, the Industry 4.0 components and a research roadmap for implementation.

It’s this document and more specifically, RAMI 4.0 AND the Industry 4.0 components which we tackle here.

The 3 dimensions of RAMI 4.0

The RAMI 4.0 architecture reference model is explained using 3 dimensions:

  1. The first dimension consists of the hierarchy levels.
  2. The second dimension covers the life cycle and value stream.
  3. The third and final dimension covers the so-called RAMI (architecture) layers.

The hierarchy level

The hierarchy dimension consists of 7 aggregation levels, being 1) the connected world, 2) the enterprise, 3) work centers, 4) stations (or machines), 5) control devices, 6) field devices (sensor and actuators) and 7) products.

Important to note: while traditionally these levels are seen as a “real hierarchy” and depicted as a pyramid, in Industry 4.0 they are more conceived and depicted as a mesh in a reality of ubiquitous connectivity of everything, including processes, devices, products, organizations, ecosystems and so forth. In the pyramid that shows Industry 3.0 there are only 6 levels with the enterprise at the top. While it’s true that the connected world is far more connected from a technology and business perspective, we must point out that there is such a thing as the extended enterprise with its ecosystems since long before anyone even talked about Industry 4.0.

The hierarchy dimension is what we covered several times in our articles on ubiquitous connectivity and digital transformation but in a different scope of hierarchy with smart products and smart factories as part of this connected world.

It also about technologies (where we similar decentralizations all across the board) (IT and especially OT) and about the ubiquitous interaction of participants across hierarchy levels, whereby the product is seen as part of the network.

The life cycle and value stream dimension

The life cycle and value stream dimension, as the term already describes, covers the various data mapping stages across relevant life cycles in RAMI 4.0 and across the entire value chain and the various processes (and stakeholders).

Industry 4.0 - RAMI 4.0 model - The life cycle and value stream dimension
Industry 4.0 – RAMI 4.0 model – The life cycle and value stream dimension

We’ll cover this more in depth later as it’s key in the data part, starting from the pre-production development product data model, starting at the idea and development (data on, among others, , all the way across further stages downstream, including actual production and the various processes until the production object is end of life and gets recycled or trashed). The idea: the more data early on, the more value later on.

The architectural layer

The third dimension, the architecture layers, consists of 6 components: business, functional, information(a), communication, integration and asset.

Essentially we’re talking about 1) the enterprise and its business processes, 2) the functions of assets, 3) the required data, 4) communication as access to information, 5) integration as, quote, ‘transition from real to digital world and 6) assets as physical things in the real world.

Bring all three dimensions together and, on top of a nice visual, you have a 3D service-oriented architecture. More in the video from German ZVEI (the German Electrical and Electronic Manufacturers’ Association) below. It is by far the best RAMI 4.0 explainer you’ll find in English in a video format.

Additional resources on RAMI 4.0 and the Industry 4.0 components

Below is a list with more resources in case you want to dive deeper into the reference architecture model and the components of Industry 4.0. There is also a paper regarding the interoperability of the frameworks of the Industrial Internet Consortium and the Industry 4.0 Platform.




Top image: Shutterstock – Copyright: MNBB Studio – All other images are the property of their respective mentioned owners. – Images used for first infographic – copyright: respectively elenabsl and Maxfarruh All other images are the property of their respective mentioned owners.