Every industrial revolution has brought with it a transformational change in the entire operation of many organizations. The first industrial revolution mechanized the workforce, reducing labor requirements in many industries and increasing the need for skilled workers that could attend to these new productive contraptions.

The second industrial revolution brought electricity and the internal combustion engine (the latter of which led to the automobile and the airplane), and long-distance communications such as the telegram and telegraph which combined to allow more companies to span and coordinate their operations.

The third industrial revolution saw the rise of microprocessors, heralding the beginning of automation and allowing for the development of lean manufacturing.

So, how will the fourth industrial revolution change the way that organizations operate?

Organizational Requirements

Boiled down, an organization must address three topics: Addressing market demands, managing its resources, and properly coordinating its operations. Every organization is influenced by the world around it, so properly measuring, forecasting, and addressing demand ensures that the organization is producing the right amount of the right product for the current market and is ready for what the market will do next.

Resource management ensures that the organization is maximizing the utility and the deployment of its resources (typically people, assets, processes, and technology). Not knowing the current capacity of the organization will lead to either shortages, or unnecessary capital spending. In terms of coordination, an organization may have everything else right, but if it cannot coordinate its operations, it will see inefficiencies, duplications of effort, and an inability to grow. Continuous improvement may happen, but it could end up being siloed, which will limit its impact. Environmental, Social and Governance (ESG) goals will be difficult to coordinate without information from all areas of the organization.

Lastly, while a company may be profitable, without being able to identify and implement improvements across the organization, the company may be leaving money on the table.

Data, Data Everywhere, But Not a Byte to Use

So, what is the fourth industrial revolution? It’s all about data, data, and more data. Not just the generation of mass amounts of data, but aggregation, manipulation, and analysis of it as well. The challenge isn’t generating data, but rather controlling and utilizing it best, often too much for companies to handle.

How much data is now being produced? Take the humble pH sensor. It used to provide a reading for pH, and many would provide a temperature reading as well, both via a standardized analog electrical signal. Now, many of these same sensors provide digital communications directly from the sensor, and can output pH, temperature, ORP/Redox, electrical resistance measurements, current estimated life remaining, serial number, etc. A minimum of ten times the amount of data is now being produced by a simple device.

Unfortunately, many of these devices are still tied to a transmitter that can only output standard 4-20mA signals, so only a select few parameters can be transmitted to a central control system. The switch to digital communication via networked transmitters and controllers is starting to liberate this data and open new possibilities. Even then, in a non-Industrial Internet of Things (IIoT) setup, the data will only reach so far. Maybe this will be the programmable logic controller (PLC), maybe the supervisory control and data acquisition (SCADA) system or a historian. Useful for production, but not a revolutionary use of data for the organization.

The core idea of Industry 4.0, the common name associated with the fourth industrial revolution and IIoT, is to unify the data sources of the organization. Not just manufacturing and operations, but also logistics, sales, procurement, and every other part of the value chain. However, unifying this data is only the first step in creating a “digital foundation” throughout an organization.

Data, much like other raw resources, can be useless to many other systems without refinement. In this case, the raw data is refined and molded into useful information. The Manufacturing Execution System (MES), for example, will not be able to use temperature data from a bearing, but it will be able to use the information that the machine is overheating and will need to come offline for maintenance immediately.

IIoT: The Catalyst for Operational Evolution

Most, but not all, companies will adopt IIoT, similar to how they adopted advanced manufacturing techniques like lean manufacturing and automation during the third industrial revolution. Those looking to remain smaller and niche may not need or want to make this change. However, those that are in a competitive market will not have the same choice.

At its base, IIoT offers data democracy and real-time analysis. Companies that adopt this will move faster, waste less, and coordinate better. They will find shortcuts that other companies will not. For instance, why use incoming order demand and stock levels to determine whether market demand can be met, when incoming lead level and website traffic can provide a leading indicator of demand and the Overall Equipment Effectiveness (OEE) calculation from the MES will indicate whether that potential can be met? Why purchase new equipment when predictive maintenance, addressing the top five issues with the current machines, and optimizing scheduling would provide an extra 10% capacity?

Connectivity and visibility throughout the organization is only the foundation of IIoT. The real impact will come from the creativity of what can be built upon its base, from advanced analytics to applications that improve operations, efficiency, and production. Virtual twins will allow companies to try new methods and manufacturing capabilities without the capital investment and use the real-time data coming in from across the organization to build the most accurate model. Machine learning (ML) and artificial intelligence (AI) takes the data generated by the manufacturing process to develop new control methods. Even cloud based (Anything as a Service, or XaaS) type transactions rely on continuous data flows to allow the provider and the customer to ensure that the contract is being carried out as agreed upon.

Companies will need to reevaluate their operations from the ground up to fully take advantage of these technologies or be faced with a new competitor that was built on these new principles. Aside from, “What do customers buy from us?”, many of the other questions surrounding operations can be solved. For example, how do we produce?; why do we own machinery?; and where is the best location?; should be considered open.

Fortunately, thanks to IIoT, the information needed to make these decisions is only a couple of clicks away.