Title: Industry 4.0: What does it represent, how will it affect us? Chapter 2 of 2


3.- Does Industry 4.0 create value?

4.- Why Industry 4.0?

3.- Does Industry 4.0 create value?

Industry 4.0 implies a major change of mindset. It is giving way, as in previous industrial revolutions, to the appearance of new processes, new products and new business models. And also, as in previous cases, will cause social, economic and technological changes.

This is not an issue that should be limited only to the functions of the CIO or IT area. This is a matter that even transcends the Steering Committee and the CEO and should occupy the first governing body, either the owner or the Board of Directors. Companies, no matter the size of these, who underestimate the phenomenon will probably find themselves in a situation of total lack of competitiveness, which will lead them to disappear, as has happened in the past.

In summary, the industry 4.0 causes an exponential jump in the improvement of the decision making. The best decisions will result in better costs, better products, better terms, better service and, ultimately, better customer and consumer experience, which obviously impacts on an increase in revenues and profits:

• Design, produce and sell products in less time.

• Create shorter and more profitable production series. Constant adaptability to demand.

•Reduce costs.

• Serving the client in a more personalized way.

• Provide an individualized one-to-one customer service with the customer.

• Add services to physical products.

• Use information for analysis, from multiple channels, for a cycle of continuous improvement in decision making.

Throughout history there have been several industrial revolutions that have meant not only changes in industrial processes but also social, economic and technological processes.

• The first Industrial Revolution, begun in the second half of the eighteenth century in the United Kingdom with the emergence of the steam engine, was the greatest economic, social and technological transformation since the Neolithic. Until then, the sources of energy that moved human productions were limited to fire, animal power (men, horses, mules, oxen and the like) and the wind. Let us remember the importance of sailing and windmills. The invention of the Scot James Watt, to achieve the real use of steam energy, marked the origin of the first industrial revolution. The workshops were transformed into large factories and the concepts of industrial workers and industrial engineering were born. The factories depended on continuous supplies of water and fuel and were therefore built preferentially in the river valleys. The incorporation of the machines to the productive processes allowed to produce faster, multiplying per capita income and GDP.

• New sources of energy such as gas, oil and mainly electricity and the electric motor as a new driving force gave rise to what was called the Second Industrial Revolution in the late nineteenth century. It was no longer necessary to build factories alongside the rivers, and productivity and industrial diversity increased markedly. It is the time of the chain production, new materials, new transport systems and new communication systems, with the appearance of the telephone and the radio. These developments led to a profound change in the economy, increasingly internationalized and globalized.

• The third industrial revolution is a more recent concept focused on the changes derived from the use of renewable energies, the automation and robotization of processes, the use of the Internet and Information and Communication Technologies (ICTs), giving rise to the Information society, the stage in which we are the majority of the developed countries.

4.- Why Industry 4.0?

The germ emerged in the German automotive industry. Germany is a producer of mass automobiles but, unlike the Asians, they are cars of greater value. And to compete and maintain that value had to be differentiated in some way. The market will only be willing to pay something more if it manages to satisfy its growing desire to have a product exactly tailor-made, with almost immediate delivery and a level of service totally individualized. This competitive positioning forces us to develop productive systems oriented to the short series, to the personalization. It is the tailor made manufacture totally individualized and adapted to the client.

But to be able to produce totally individualized products even with lower costs, shorter delivery time and greater service than mass-produced products in huge lots is, in the current theory of E Operations, a contradiction. Thus, the only way to reconcile these requirements is to escape from the current systems and create new ones totally disruptive. And that can only be achieved by supporting and using the state of the art technology in a massive and intensive way. The concept of Industry 4.0 (or digitization) is the introduction of digital technologies in companies. It is the digitalization of the productive, logistic and commercial processes by means of sensors and information systems to transform the productive processes and the total of the business processes and to make them more efficient, more efficient, reducing the costs, incorporating more flexibility and individualization and personalization of The products. The means of production must adapt to this new reality, involving the customers in the design process and adapting the final products to their demands and needs. This requires flexible design, manufacturing and logistics processes to adapt quickly to changes in demand. New technologies allow the development of these new production models, in which all elements of the chain must be interconnected and communicated each. Industry 4.0 represents the end-to-end integration of the value chain that goes from changes in the demand of the general public to the achievement of their satisfaction by intelligent factories.4.1- Why now? Industry 3.0, Or Third Industrial Revolution, is marked by the beginning of automation and industrial computing. Some of its milestones are the introduction of the first PLC or the first intelligent sensor manufactured by Honeywell. The evolution of this has gone through the following phases: 1. The evolution of physical devices at the field level (sensors, actuators …), responsible for capturing information. The evolution of devices at the control level (PLC) responsible for the automation of electromechanical processes. The evolution of systems at the supervisory level (SCADA), responsible for correcting processes and feedback. The evolution of tracking and productivity systems (EMS), responsible for monitoring the transformation of raw materials into finished products to optimize production.

The evolution of business process management systems (ERP), responsible for the comprehensive management of business processes. PastedGraphic.png The exponentially increasing capacity to store, process and exchange data is precisely one of the keys to the industry 4.0. These technological capabilities have made it possible for us to access more and more information, being able to process and share it at a tremendous speed. This has transformed the way in which we consume and the way in which we interact, creating large networks of data exchange that renew our idea of ​​the individual and the collective.

These trends do not only imply an increase of the automation of the production (Something that has been happening since the 1970s with the development of electronics and information technologies), but a totally disruptive approach to the way we produce and understand the whole value chain. Industry 4.0 therefore , Is a concept that unites the technologies that gave way to the third industrial revolution (automation processes and new production technologies) with the technologies of the information age, such as the storage, processing and massive transmission of data at enormous speeds .

5.- Is Industry 4.0 “only” for the industry? And services? PastedGraphic_1.pngpastedGraphic_2.png Today, Spanish industry accounts for 13% of the country’s added value and employs 11% of the employed population, being the main contributor to the positive trade balance.pastedGraphic_3.pngIf it is While 87% of the Spanish economy is based on services, it is also true that there is a growing outsourcing of the industry. Industrial companies increasingly produce goods and services.

They have ceased to offer exclusively industrial products, to provide associated services (eg, machine and maintenance). 37% of EU industrial employment is linked to occupations related to services. The boundaries between industry and services are increasingly blurred. Likewise, companies outsource more and more jobs to service companies, favoring employment in the services sector to the detriment of the industrial sector. For example, cleaning, surveillance, and security personnel have gone from being the template of the industrial enterprise (and therefore computing as industrial employment) to being a staff of a service company.

“As a Service” strategies, that is, a multitude of tasks, which Have been integrated into industrial processes, are now outsourced “As a Service”, causing greater efficiencies (“shoemaker’s shoes”), changing the structure of costs from fixed to variable and focusing on the skills and abilities of management and Total of the organization at the heart of its activity.6.- How much does all this cost? First of all, we must not confuse price with value. In any case, the design of the program should not only contain a series of projects consistent with our activity and our competitive positioning, but also have to be profitable. In my opinion, we must be very careful with those projects “that are not profitable because Are strategic “(in fact, usually all projects that are not profitable call them strategic).

The goal of Industry 4.0 is to increase the competitiveness of our companies and that is to improve (or at least not lose) their profitability, sooner or later, yes or yes. Although the company is not an NGO and although we understand that its first priority is not to earn money, but to ensure its own existence to continue generating wealth in the form of employment, GDP, social welfare improvement, etc., that can not be achieved (or should not ) Without making money. We have to be profitable. Although we have the diagnosis and the Industry Program 4.0 perfectly defined and we are convinced of its total pertinence, coherence and profitability, it can happen (very usual) that we do not have the necessary economic and financial means to tackle it.

With the intention of helping companies in improving competitiveness through Industry 4.0, the Government, through the SETSI (Secretariat of State for Telecommunications and for the Information Society) and AEESD (Strategic Action in Economics and Sociedad Digital) has implemented financing programs accessible to the total of the industry. The characteristics of these programs allow to finance a high part of the Industry Program 4.0 and the derived projects, with zero financial costs, years of lack and high amortization periods .

Industry 4.0: What does it represent, how will it affect us? Chapter 2 of 2

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