Industry 4.0: a whole of economy opportunity

Tuesday, 01 August 2017


    The next evolution in manufacturing must be taken seriously by boards, writes Dr Jens Goennemann.

    Industry 4.0 has become the latest buzzword in manufacturing. It comes up in many of my conversations, and it represents a shift in the way manufacturing is being envisioned.

    Manufacturing firms of all sizes and orientations are looking for ways to engage with this phenomenon of linking the physical with the cyber world to gain better outputs. Industry 4.0 promises to deliver smarter factories and jobs of higher value and income – something we all want for our economy, and the spill-over benefits extend well past manufacturing.

    Industry 4.0 is more far reaching than connecting our devices and machines via the internet, often referred to as the ‘Internet of Things’. Industry 4.0 marks a pivot in our economic and social progress. The term was coined in Germany, not by coincidence due to the country’s emphasis on its manufacturing sector which is three times bigger than ours.

    A look at industrial history shows that the first revolution came about with the introduction of steam powered machines in the 18th century. This was followed by the second revolution in the 19th century through methods of division of labour and mass production. By the late 20th century we saw the introduction of advances in personal computing and early automated processes. Now, in the 21st century, we are rapidly accelerating toward a business cycle that converges technology with products and services – not only in manufacturing, but across all our social and professional experiences.

    The impact on manufacturing is astonishing. I recently had the pleasure of visiting the largest industrial event held each year at the Hannover Messe, travelling as part of the Prime Minister’s Industry 4.0 Taskforce and being joined by many leaders across the Australian business, science and political landscape. Our unanimous agreement was that Australia’s role in this new world must be elevated. We signed an MoU between Australia and Germany with the Federal Minister for Economic Affairs and Energy, Minister Brigitte Zypries, to exchange knowledge and collaborate on joint projects. We now bring this challenge back to our shores to make Industry 4.0 more accessible for Australian firms.

    What I witnessed at the Hannover Messe, and to a large extent when visiting Australian manufacturers who are ahead on this curve, is a deep passion to deliver a superior product or distinct service to their customers. Industry 4.0 can start with as little as sticking a sensor on a piece of equipment so that one can monitor where it is or what it does. In the longer perspective though, it is about establishing a relationship with embedded intelligence across the entire manufacturing process from research and design through to the final customer engagement. If we get this right, then customer feedback loops back into the R&D process and starts the next iterative step in delivering high-quality outcomes and rich customer experiences.

    Big data, collaborative industry robots, computer-aided-manufacturing, smart process chains – all these are available elements of today’s manufacturing solutions. We look at how machines can make new machines. We think of the intricate trade-offs between pressure and precision when laying a composite on the latest wingtip of a global, yet locally operating civil aircraft manufacturer or defence jet fighter, something we should be proud of that this is done here in Australia. How can Industry 4.0 benefit your business which, on average, is probably smaller than your German counterparts? I would suggest we all need to keep abreast of fast technology transfer. It’s not always about being first, but being right. It’s certainly not each of us doing the same thing. In your business, as in ours, it’s about how we transfer innovation into application. It is to find a complementary approach across the supply chain of partners, vendors, service providers and dove-tail their expertise into your final product or service.

    Australia is a nation of only 24 million people. We are a small domestic market compared to the potential seven billion customers on the global market. Our competition and our opportunity is no longer next door, or in the next state, it is overseas, so we had better collaborate within sectors and across industries to be globally competitive.

    Our insight from research in manufacturing teaches us that when competing for a share of the global consumer’s wallet we must compete on value and not on cost. We asked a few dozen international purchasing managers responsible for billions in procurement why they would buy from Australia? More than 60 per cent said they buy from Australia because we offered a unique value they could not find anywhere else. This included our reputation for reliability and quality goods.

    I believe that Australian manufacturing insights can be adapted within boardrooms across the broad business spectrum. Lifting Australian competitiveness is delivering solutions, and Industry 4.0 enables us to connect with suppliers and customers beyond our own borders. Give them something they want, and they are prepared to pay a good price. I’d argue that each individual firm cannot meet this tall order alone, we must constantly review our partnerships and look for ways to tap into ideas that Industry 4.0 can make possible.

    Our research institutions and universities house incredible talent. Commercialising these ideas and providing pathways to connect industry with institutions is another way to leapfrog ahead of competition. An example is Swinburne University of Technology. They have recently opened the Factory of the Future and invite businesses – not only manufacturers – to come and explore how technology can improve performance and productivity. Allegedly, industry and research cooperation is not our strong suit, so here is a concrete go-to university welcoming you with open arms.

    You may not need a fully automated process or digital prototypes to enter the journey of your next development. However, you may wish to ask how you could integrate your vertical and horizontal systems of activities to create more seamless value chains and explore where automation is possible. You may wish to investigate virtual reality for training purposes to learn on the job with simulation technology. You could consider additive manufacturing, or 3D printing, as a way to create one-off products to test or deliver a customised solution.

    Then there is cloud computing and analytics which analyse large amounts of data to understand patterns of consumer behaviour.

    Industry 4.0 is an extraordinary promise for manufacturing. It offers new skills and attracts back to our industry the many smart jobs and exciting challenges we need to compete on value. We have many ‘moon shot’ opportunities coming our way with large radio telescope installations, submarine and surface shipbuilding, not to mention many other high-impact solutions.

    I’m inspired by what Industry 4.0 can offer Australia in terms of greater global competitiveness. This is manufacturing’s moment. Make it your moment as well.


    • We can all capture the benefits of a rapidly transforming business landscape through technology breakthroughs.
    • Industry 4.0 is more than a revolution in manufacturing. It represents a new way of smart integration across global supply chains and efficient information management systems that instantly feed data for quick decision making – by you or by machines.
    • We now have a game-changing opportunity, across all businesses, where our geographic distance is no longer a tyranny.
    • Embracing Industry 4.0 as a fast and flexible solution of automation and connectivity is a sure way for Australian firms to maintain a global presence and competitive position.

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