Industry 4.0: The next manufacturing stage

18 May 2017

Industry 4.0 is the latest movement in the manufacturing industry. It refers to the shift from simple automated manufacturing to Artificial Intelligence (AI)-run automation, creating a “smart factory”. Also known as the Fourth Industrial Revolution, this movement relies mainly on four pillars: Cloud computing, the Internet of Things (IoT), big data analytics and machine learning systems (mechanisms controlled by digital algorithms).

In short, it is essentially the Internet of Things amplified to an Industrial scale, used to boost manufacturing efficiency, productivity and return on investment. 


In addition to a higher profit margin, we explore what else your SME can gain from getting ahead of the Industry 4.0 transition:

Boosted productivity


As a recent PwC survey discovered:

Businesses taking measures to “implement Industry 4.0 solutions expected more than 18% higher productivity over the next five years”. i

Primarily through data analysis, modern technology like Autodesk’s Fusion 360 allows creators to analyse the structural integrity of a product even before manufacturing, saving resources and time.

With a smart factory, materials and equipment can even diagnose themselves, using predictive maintanence technology. Digital sensors embedded in machinery can “collect data on vibration, lubrication, bearing temperatures, noise, and a host of other variables, information that can predict when components will fail or need repair or replacement.”ii This self-diagnosing machinery can thus even pre-order spare parts before they fail, saving time and money lost during downtime.

“For manufacturers, especially SMEs, this enhances cost predictability and reduces operational variability,”iii making for a more reliable manufacturing process.


Cost Reduction


Cost predictability means less spent on wasted resources, and more profit gleaned.

Although it is in its earlier stages of development, research shows that businesses that are early to transition into Industry 4.0: 

“expect to gain significant benefits from their more advanced digital capabilities and greater levels of investment,” with revenue gains and cost reduction both hitting up to 30%. iv

More room for innovation


The automation will not only solve the manpower issue by replacing low-skill jobs, it will create opportunity for high-skilled jobs in programming, data analysis and more. A highly-skilled workforce including employees like user interface designers and digital innovation managers facilitates creativity, and could even produce disruptive solutions that boost your business’ competitive edge.


To fully encourage this, PwC recommends fostering an “inspiring, creative, and hierarchy-free working atmosphere where a trial-and-error culture is feasible.”


According to International Enterprise Singapore's Frankfurt centre director Wu Hongyi, Singapore SMEs should get a head start on Industry 4.0 to stay competitive. However, he says that most companies are "only at Industry 2.5, maybe 3.0,"v and urges them to move forward.


Although moving into the next stage of manufacturing can be costly for SMEs, experts caution that


“Whoever doesn't get on board with the fourth industrial revolution will be left behind.” vi

Fortunately, there are a growing number of options for SMEs to become part of Industry 4.0. Apart from government schemes like the Automation Support Package, the Agency for Science, Technology and Research (A*Star) is launching two model factories, fostering a learning environment for businesses to explore advanced manufacturing technologies.


International consultancies like McKinsey and the Boston Consulting Group have also introduced their own digital capability and innovation centres in Singapore, helping companies integrate Industry 4.0 technologies.


Follow StarHub Business on Linkedin for the latest business updates.

3 most profitable businesses to start in Singapore

Put those hipster café plans on hold.

Read more
SME Risk Management for sudden emergencies.

Internet downtime alone costs SMEs up to $100,000.

Read more
Sparking creativity in entrepreneurship

Thinking outside the box is old news

Read more