The fourth industrial revolution, also sometimes referred to as Industry 4.0, is a term used to describe the digitalisation that is occurring across entire value chain processes in many companies.
Industrial revolutions are defined by an underlying technology that enables major changes in society and business, with each subsequent industrial revolution being built on the foundations of the previous one. When looking at modern society it is possible to identify four distinct industrial revolutions:
1st industrial revolution: Steam Power – The first industrial revolution was driven by the steam engine and saw the introduction of mechanical processes into manufacturing plants.
2nd industrial revolution: Electricity – the second industrial revolution saw the introduction of mass production and assembly lines powered by electricity.
3rd industrial revolution: Computing – the third industrial revolution saw the first application of electronics and IT to aid production and automation.
4th industrial revolution: the IoT – the fourth industrial revolution has introduced the pervasive use of digital technology to manage, track and monitor every aspect of business processes.
The point of an industrial revolution, however, is that even though it is characterised by a certain technology, it is not the technology itself that brings about changes. It is how the technology is applied.
The fourth industrial revolution is underpinned by the increasingly pervasive use of the Internet of things (IoT) and big data to enable better, smarter and more efficient business processes.
This enables businesses to implement smart production systems and allows for horizontal integration across the entire value chain, through the networking of previously siloed business areas.
For businesses, the effects of industry 4.0 can be seen in greater automation, data gathering and exchange, and value chain digitisation. Some of the business implementations that identify industry 4.0 include: interoperability, virtualization, decentralization, real-time capability, service orientation and modularity.
Industry 4.0 is also characterised by increased integration of business partners and customers into internal processes, with new co-operation models of business being developed across countries and continents. It also allows for increasingly customer-specific models of production such as bespoke products, on-demand supply models and everything ‘as a Service’.
When utilised effectively, the tools provided by the fourth industrial revolution can uncover new opportunities for businesses that increase competitiveness and reduce risk. It is important for businesses to embrace these new technologies, or they run the risk of being left behind.