Industry 4.0 – Where are you in the progress?

Industrial digitalization radically transforms the internal operation and business model of the companies and generates substantial changes in the economy.

Gábor Nick, Ádám Szaller

Info-communication technologies, industrial automation and their integration are in the focal point of Industry 4.0 definition that aims for new products and services to get onto the market, and consequently, induces the appearance of the new business models and manufacturing methods.

Besides the central role of the human individual, Industry 4.0’s core issues are horizontal and vertical integration and smart products:

  • Horizontal integration is about the processes of the smart factory, where each individual process is executed on its own and these processes are affecting those of the factory’s suppliers and partners.
  • Vertical integration is in place when inside the factory the employees, computers, manufacturing machines are linked with each other, communicate automatically with each other, and their interaction exists not only in the real world but also in the virtual reality, in the model of the entire system.   
  • A major characteristic of the smart products is that they collect data not only on their production itself but also on their usage cycle, which data are to be utilized by the manufacturer. 

Preludes to the fourth industrial revolution

In the period of manufactories, there existed products of many types on the market, a woodworker for instance, in the lack of standards, produced personalized products of numerous types. Just its opposite happened when Henry Ford optimized the assembly line while greatly reducing the number of product variants. (His famous saying was: “Buyers may demand cars of whatever colour as long as their choice is a black one.”)    

By today, this attitude has changed again: we all would like to buy products meeting our personal needs and requirements. Simultaneously, we face many new dilemmas, like for example the extraordinary proliferation of data, their occasional unauthorized or illegitimate usage – but the antagonism of global and local values, too. The challenges and problems to be resolved include the increasing unemployment due to automation and deployment of robots, or the tension between the cooperation and competition among the companies. Meanwhile, the main problem of industrial companies is how to intensify productivity and competitiveness: where the answer of the technical-industrial sector to the questions raised by economists was the introduction of the Industry 4.0 paradigm. 

Regarding the (mega)trends, one encounters the issues of globalization, individualization, application of new materials, 3D printing and Artificial Intelligence. All comprise an endeavour for integration that means that cooperation comes ever more into the forefront, and the different areas intermingle evermore.

Despite the strong industrialization tendency, it is not appropriate to restrict the interpretation of Industry 4.0 exclusively to the industry and technologies. Indeed, it is desirable to adopt an approach of ecosystem perspective: economic trends, the educational and institutional systems as well as the society all have a role to contribute to the way industry as a whole will operate in the future.           

The position of Industry 4.0 in Hungary

When the Industry 4.0 National Technology Platform was established, one of its first tasks was to perform the assessment of Hungary’s development in terms of Industry 4.0. The survey carried out covered both the company level and that of the national economy. Among the respondents there were micro, small and medium-sized entities, large corporations, research institutes, universities, and professional organizations. 

With respect to the vision about the technological future, the question was raised, to what extent are the mapping of the physical environment, the digitalization of the processes, the application of big data present? The common characteristic of all these issues is that a substantial move is perceived between present and future, i.e. the demand for developments is great at the companies.

Data utilization is an important factor, the great part of the Hungarian companies do collect data on production and product usage but in many cases evaluation thereof is not carried out. Consequently, decisions on production and manufacturing are not always based on the analysis of collected data and thus, companies cannot harness the data generated during product usage for the product development process. 

In the area of Research+Development+Innovation, the survey’s finding was that about 50% of the respondents didn’t make any innovation whatsoever in the past 5 years. The picture is not very encouraging and, what is worse, they don’t have any processes to foster innovation either. The need for continuous innovation has not become part of the company culture. 

In the area of Industry 4.0, the greatest impeding factors are the lack of strategy and the problem of human resources. More than 72% of the respondents think that although there won’t be fewer jobs due to digitalization, they will always be replaced by new ones. The conclusion of the survey concerning competitiveness and strategy is that nearly 80% of the companies have no Industry 4.0 strategy at all.

Without a strategy and partners Industry 4.0 doesn’t work. Ready to cooperate?

As a summary we may say that a kind of duality can be discerned regarding the companies in Hungary. There are frontrunners and followers. The former are those who develop, improve their effectiveness and competitive position. Innovation, cooperation, the inclusion of universities and research institutes are common for them. They know their own micro and macro environment, are aware of their strengths and weaknesses and most importantly, they do have a digitalization strategy for the future.

Many of us have already participated in the development of a strategy. The steps are seemingly simple. One has to analyze the current state, determine the targeted future and develop action plans to bridge the gaps between the two. Obviously, the key lies in the details, and if we accept the principle of adopting an ecosystem-focused Industry 4.0 approach then that applies to the company strategy, too. The Industry 4.0 readiness level is influenced by the company goals and visions, the products and production process, the available workforce and finally, the role in the value chain. In the assessment of these, in developing the strategy, planning the scope and contents of the projects to be launched or even in designing the necessary training, InnoLabs may be of great assistance by having adapted successful German and Austrian methodologies.

According to our experiences, in a successful industrial digitalization project if a tailored industry 4.0 strategy of high professional quality is aimed for, then working together for 2-6 months may result in a reliable appraisal of the present state and a customized action plan. The process leading to this, its required resources, anticipated results and benefits will be presented in the next article.