Industry 4.0 - In-depth Market Insights & Data Analysis

Industry 4.0 or the fourth industrial revolution is quite simply the use of digital technologies in the manufacturing process to produce higher-quality goods at reduced costs. Even though developments in electronics and information technology have resulted in the automation of manufacturing processes since the early 1960s, it is only the recent advances in digital technologies that are beginning to extend the scope of disruption. Companies are now experiencing major benefits in terms of lower costs, improved efficiencies, increased yield, mass customization, and most importantly, new revenue and business models.

Digital technologies are disrupting all elements of the value chain including product design, supply chain, manufacturing, and customer experience, while creating new business models. Global manufacturing giants such as Germany, France, the U.S., Japan, and Mainland China have all launched government-backed strategic initiatives to digitalize production across various industries. Even though there are many technologies currently playing a role in Industry 4.0 and the smart factory, for the purpose of this report, we have focused on five key ones: additive manufacturing, artificial intelligence (AI), robotics, internet of things (IoT), and augmented and virtual reality (AR/VR).

The digitalization of manufacturing across industries has resulted in the emergence of service-based revenue models to complement the already existing product-based models. Digital technologies have also begun to usher in an era of customization at a much lower cost in both the B2C and B2B segments. Over the last few years, global manufacturers such as Adidas and Nike have started moving their production centers away from low-cost countries, closer to the consumer. Further, emphasis is now being placed on creating an agile and flexible production process through the use of modularized systems that can be reconfigured in quick time.

Digital technologies are increasingly being customized to serve the needs across multiple industries with maximum application being witnessed in automotive, healthcare, aerospace and defense (A&D), chemicals, and consumer goods. In fact, the automotive industry was the leader across all sectors in terms of digital adoption rates in 2020 and benefited from reductions in both time to market (TTM) and costs.

The A&D industry also has one of the highest rates of digital adoption owing to the sheer complexity of its value chain. Digitalization in healthcare is centered around medical devices and pharmaceuticals. Even though the chemical and consumer goods industries are late bloomers, they are now not only transforming production but also creating smart supply chains and new business models.

A large part of leading start-ups are from the U.S. – a majority of them being based in California. Pivotal received the highest funding of US$1.7 billion. The company, which is primarily a provider of cloud computing services, is backed by key investors such as EMC, Ford Motor Company, GE, Microsoft, and Vmware. It got listed in New York Stock Exchange (NYSE) in April 2018. DataRobot is another key automation start-up that managed to secure approximately US$1bn in funding. Large manufacturing companies such as ABB, OMRON Corporation, Schneider Electric, Siemens, ST Engineering, Teradyne, and Tesla are acquiring smaller companies in order to leverage their technological expertise and decrease their learning curve.

Companies from various fields including information technology, automobile, heavy engineering, defense, chemical, sports and personal goods are using advanced digital automation technologies to further their business goals. Companies like Pivotal provides software applications in terms of big data, Internet of Things (IoT), robotics, and connected cars, whereas California-based Anaplan provides cloud planning platform to run planning and prediction iterations over the cloud. Automobile companies Audi and BMW are using digital manufacturing technologies such as 3D printing, assistant drones, Automated Guided Vehicles (AGVs), and autonomous tugger trains to reduce time taken for design, prototyping, and manufacturing. Tesla, the EV leader in the industry, is planning to further its digital transformation goals through its Gigafactory, slated for completion in 2022. The company is not only aiming to build a smart automobile, but also to use smart manufacturing methods as well. Other leading companies include Airbus, BASF, Carbon, Lockheed Martin, and Siemens.