Is Industry 4.0 Missing a Trick?

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What’s all the fuss? Industry_4.0 has been around for a while and brands itself as the “next industrial revolution”. I think the revolution will be very real and we will see it come in various stages over the next 25 years. My 7 year old son will have very different work and leisure expectations on the basis of the social changes that will happen.

Industry40 1It had been defined as ‘a collective term for technologies and concepts of value chain organization’ which draws together Cyber-Physical Systems, the Internet of Things and the Internet of Services, and seems broadly reasonable as a definition.  This diagram by Christoph Roser suggests a context by which we could understand that magnitude of change based on the last 3 industrial revolutions.

The large consultancies, such as Deloitte , PWC, Accenture and SAP are getting on board with it and PWC has been performing surveys of attitudes in this area for a while, the most recent results are being released at the Hanover Messe this week at the “Industry 4.0: Building the Digital Enterprise” conference.

From their 2014 survey results, the focus is very much on supply chain and efficiency improvements in the manufacturing sector, but from a data point of view manufacturers seem to be expecting this to happen by implementing ERP or enterprise data warehouse systems. It seems the implication is that we should just throw data into an IT system and then manufacturing improvements will just happen! The survey results talk through data analytics, but it is implied that the analytics are of a descriptive or perhaps predictive nature. SAP reinforce the lack of engagement with data analytics, as only mentioning it once in its white paper.

I would contend that prescriptive analytics will be the factor that cause the step change in manufacturing, and indeed in society.

The ‘Industry 4.0’ reports talk around analytics in a very general way, but in the Business Intelligence and Analytics Platforms quadrant in which Consolidata sits as a niche player, analytics is divided into three areas:-

  • Descriptive and diagnostic analytics, describes the operation of a process that has already occurs comparing month-on-month, stores, sales person, but all from a historic perspective. ‘What happened and why did it happen?’
  • Predictive analytics by comparison looks at predicting the future based on past actions. ‘What will happen?’
  • Prescriptive analytics is concerned with the question ‘what should I do?’ Building analytical models that will make choices about what to do in a given situation.

Analytics

We recently produced a prescriptive algorithm for a large electronics wholesale business that wanted to better manage its inventory levels. Apart from the premier-tier items, which the stock levels were decided by hand and experience, the project was to have all other product lines to become automatically subject to this model which would actually set the stock levels automatically. This is expected to have the effect of savings in stock storage and capital utility.

It is this last area of analytics is that is not mentioned by the Industry 4.0 reports, yet really will enable process automation to take steps that will remove humans from the equation, thus speeding up process efficiency and response and enabling better utility.

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