1. business and industrial
2. manufacturing

S
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H
G
I
S
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O
CO
BEYOND MAINSTREAM ING
RIN T
3 D P rative
in
Luc
es s
busin ic niche
dynamarkets
m
DREAM
FACTORY
Intelligent machines:
Yesterday's Hollywood
vision is today‘s reality
CYBERCRIME
Strategies to guard
against attacks
from the internet
INDUSTRY 4.0
BMW Board member and
CEO designate HARALD KRÜGER on
the potential of connectedness –
AND the hard facts about going digital
0
WHAT MAKES A COO
AND A COMPANY
SUCCESSFUL
IN THE CONTEXT OF
INDUSTRY 4.0?
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
Q & As
"TACTICAL
SAVVY!"
COVER PHOTO: THOMAS DASHUBER; ILLUSTRATIONS: BEN KIRCHNER
JEAN - CAMILLE URING
THE KEY TO SUCCESS in fiercely competitive markets lies in
products tailored to the individual customer, globalized value
chains, shorter product lifecycles, quality, flexibility and time to
market. Industry 4.0 makes all that possible.
We can all see that existing models and standard procedures
impose restrictions. Focusing on KPIs and strict reporting proce­
dures keeps our sights trained on the line between yesterday
and today – and leads us to neglect tomorrow. Yet the sheer
pace and complexity of change compels us to improve our inno­
vative capabilities.
Industry 4.0 tools clear the way to better process control.
They enhance quality and flexibility and reduce costs at the
same time. If we want to take this path, the critical issue is to
leverage the strengths of our highly educated people. We must
cultivate the skills we need to implement new techniques and
technologies. Multidisciplinary skills and the ability to integrate
specialized resources on the fly are vital if we are to be agile and
efficient in the future.
We have long since left a stable universe behind us. But
­Industry 4.0 may not be enough to make up for an unstable
business climate. What we also need is a new style of manage­
ment. A strategic vision and tactical savvy, the ability to act flex­
ibly in modular organizations and relational intelligence. That is
what makes a successful COO – and what will ultimately decide
whe­ther Industry 4.0 is to be or not to be. Small and medi­
um-sized enterprises (SMEs) are a good training ground, be­
cause their pragmatic approach already helps many of them to
operate very successfully in volatile, uncertain markets. If you
are targeting an ambitious career in management positions, you
should therefore definitely spend a few years as COO at an SME.
JEAN-CAMILLE URING is COO and member of the Executive Board of
French industrial engineering company FIVES CINETIC. He also serves
as President of CECIMO, the European Association of the Machine
Tool Industries.
BASED ON TALKS WITH MANAGEMENT and associations,
we know that companies are feverishly working on the hori­
zontal integration of their business processes. Only then does
the next step – vertical integration – drill down to the level of
the ma­chines. Industry 4.0, the comprehensive inter­connec­
tion of processes in production, logistics and services, is a
huge issue at practically every large manufacturer in Europe.
Yet not all companies have identified and tackled the resultant
opportunities.
We are dealing with a powerful innovation driver. Manage­
ment‘s creativity and its ability to think and act in an inter­­
connected way is what matters now. Although not everyone is
moving at the same speed, we see positive pressure on com­
panies in all industries. Because they want to continue being
among the best, the demand for business model inno­vations
is rising.
The COO thus has the chance to assume a decisive leader­
ship role. Leadership means clearly communicating the urgency
of this topic, standing up for a digital vision, grasping the overall
complexity and developing a roadmap that gives the company
focus and direction. Top managers need the courage to tread
new paths. Mental barriers and institutional hurdles need to be
overcome: employees who are worried about losing their jobs
and influence; customers who fail to recognize the potential;
proven facilities and steady-state processes. It will be crucial to
determine new KPIs, build a business case for digital innovation
and find allies in the network economy. Industry 4.0 is a huge
opportunity for the competitiveness of production "made in
Europe". The future has already begun.
"THE
COURAGE
TO LEAD!"
THOMAS RINN
THOMAS RINN is Senior Partner and – jointly with Max Blanchet –
Global Head of Operations Strategy, Roland Berger Strategy Consultants.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
3
8
Radical integration
A NS
HUM INE S?
C
A H
OL
OR M L L CON T R
I
W
S
'
O
W H M O RROW
N
TO
UC T IO
PROD
50
THINK ACT // COO INSIGHTS
CONTENT
24
INDUSTRY 4.0*
6
STATEMENTS
24
Is 4.0 fact or fiction?
Politicians and business
leaders have their say
8
19
4
INTERVIEW
37
How digitization is changing car
production: an interview with
Harald Krüger, Chief Production
Officer at BMW and CEO designate
COVER STORY
Industry 4.0: How fully digitized
production is revolutionizing
the value chain
32
PREQUEL
34
Dream factory: Hollywood
pioneers 4.0
"Leaner,
faster,
more stable"
Preparing a tour de force: China
wants to become a high-tech
supplier
40
KPIs
Where the really interesting
business models are springing up
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
CYBER-CRIME
How businesses can guard
­themselves against attacks
from cyberspace
Measuring the fourth industrial
revolution
3D PRINTING
EASTERN PROMISE
43
INTERVIEW
Airbus' Chief Technology Officer Jean
Botti on new security requirements
40
* A FACTORY
The invisible threat
UNTO ITSELF
INDUSTRIAL REVOLUTION
IN FOUR ACTS
43
"Greater vulnerability"
1.0
End of the 18th century: In England, a
STEAM ENGINE powers a loom for the first
time – the dawn of mechanical production.
2.0
End of the 19th century: ELECTRIFICATION enables mass production to be broken
down into specialized activities on the production line – in American abattoirs to begin
with, and later in the auto industry. Quality
improves, prices decline.
3.0
50 years ago: Aided by microelectronics and
IT, and in particular by programmable logic
controllers, the AUTOMATION of production gains ground. Machines take ever more
complex tasks out of human hands and raise
productivity.
19
More science than fiction
46
COO WORKSHOP
Opportunities spawned by
digitization: projects and
publications
50
FAMOUS LAST WORDS
Insights and prospects as seen by
futurologist Andreas Neef
51
34
Print-ready
SERVICE
Publishing information
Online publications
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
4.0
Today: Cyber-physical systems (CPS) are central to the DIGITIZATION of production.
Workpieces, tools, production plant and
­logistics components with embedded software are all talking to each other. Smart products know how they are made and what they
will be used for. Customized mass production
– in "segments of one" – is on the march on
affordable terms. Nor does the creation of
value still end at the factory gate. Smart,
­interconnected products that can stay in
touch with the manufacturer even after they
are sold open up the possibility of new services and business models. Producers are
offering value-added services to their customers. Companies no longer sell an engine:
They sell thrust – including preventive maintenance, for example. Trust in a secure and reliable technological infrastructure is allowing
deregulated and highly competitive markets
to emerge.
5
"4.0"
–
FACT
OR
FICTION?
THERE WON'T BE MANY
WHO BUILD GREENFIELD
INDUSTRY 4.0 FACTORIES.
FOR THIS REASON, ONE
OF THE KEY THEMES OF
INDUSTRY 4.0 WILL BE
RETROFITTING EXISTING
FACTORIES AT LOW COST.
Dr. Thomas Kaufmann,
Vice President Corporate Supply Chain,
Factory Integration, Infineon Technologies
(… AND WHERE DO WE GO FROM HERE?)
STATEMENTS
The internet of things
is a huge transformative
development.
David Cameron, British Prime Minister
THE COMPANIES — AND NATIONS
— THAT ACT NOW TO SEIZE ITS
PROMISE WILL THRIVE IN THE
21ST CENTURY. THOSE WHO ARE
DEVOTED TO INCREMENTAL
CHANGE AND FAIL TO ENGAGE IN
SMART MANUFACTURING WILL
RAPIDLY FALL BEHIND.
Sujeet Chand, Chief Technology Officer,
Rockwell Automation
LIKE ALL REVOLUTIONS, INDUSTRY
4.0 IS EFFECTING A REDISTRIBUTION
OF WEALTH.
Tom Comstock, Vice President of DELMIA Strategy & User Experience, Dassault Systèmes
6
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
STATEM
ENTS
INDUSTRY 4.0
We need not just
scientific excellence,
not just detailed
solutions here and
there, but ideas we
can earn money with.
IS LIKE AN INTERNATIONAL
RACE. TEAM GERMANY
HAS LINED UP, BUT JUST
BECAUSE YOU START FIRST
DOESN'T NECESSARILY MEAN
YOU'LL BE THE WINNER.
Prof. Dr.-Ing. Dr. h.c. Detlef Zühlke,
Scientific Director, German Research
Center for Artificial Intelligence
Prof. Dr. Dieter Wegener,
Head of Advanced Technologies and Standards, Siemens
WE NEED THE KIND OF START-UP
CULTURE YOU SEE IN AMERICA.
Eberhard Veit, Chairman of the Management Board, Festo
We must not let things get
to the stage where Google
manufactures products such
as cars and televisions and
European companies are left
to play the part of suppliers.
WHEN EVERYTHING AND EVERYONE
BECOMES CONNECTED, AND
COMPLEXITY IS FREE AND INNO­
VATION IS BOTH DIRT-CHEAP AND
CAN COME FROM ANYWHERE,
THE WORLD OF WORK CHANGES.
Günther Oettinger, EU Commissioner for
Digital Economy & Society
Thomas Friedman, author and journalist,
New York Times
Virtual factory,
real value.
In Industry 4.0, service isn't
about making repairs.
It's about the promise of
avoiding defects.
Arnold Stokking, Director Industrial Innovation,
TNO, Netherlands
Dr. Jochen Schlick, Head of
Cyber-Physical Systems, Wittenstein
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
7
STORY
C O V E R R Y 4.0
T
IN D U S
RADICAL INTEGRATION
Products and processes, data and services,
­factories and methods: INDUSTRY 4.0 means
­non-stop communication – on all levels.
That is revolutionizing the way value is added
and ­creating room for new business models.
8
ILLUSTRATION:
PETER KRÄMER
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
9
C
ould the concept of "Industry 4.0" – the
phrase coined by the German government
as part of its strategy to computerize the
manufacturing sector – become as popular and relevant as "Web 2.0"? It was
Dutch Professor Willem Jonker who first
threw this question into the ring. The
mathematician and information technology expert at the European Institute of
­Innovation and Technology (EIT) has been
commissioned by the European Union to
apply his mind to the computerization of
industry, the intelligent integration of research and business – and how a better
growth and innovation policy could help
Europe to become more competitive.
Jonker's conclusion? For now, Industry 4.0
is still seen as little more than a buzzword.
Like Web 2.0, however, it neatly encapsulates the sheer force with which digitization is permeating every aspect of manufacturing routine and turning the relationships between producers, suppliers and
customers on their head. This force has
the potential to raise companies – and
with them whole economies – to a new
­level of competitiveness.
The global battle to add value is intensifying – and that in markets that are growing ever more complex and less predictable. Companies must call their business
models into question, and then do it
again. The demands placed on speed and
the sheer diversity of product variants are
increasing, even though it is often not possible to accurately predict likely sales volumes. Flexibility is thus an imperative on
10
STORY
C O V E R R Y 4.0
T
IN D U S
every level – in product portfolios, in customer and supplier relationships, in process technologies, in IT systems and in
production locations. Distributed organizations with largely autonomous units are
the best way to stand up to so many different demands.
To put that another way: Industry 4.0 is
bringing fundamental change to competi­
tion in today's "VUCA" world of volatile,
uncertain, complex and ambiguous markets, because value chains are contracting. Two of the key aspects currently in
transition (see also page 17) are:
SPEED: Product development-to-­
market and order-to-shipment lead times
are growing shorter. Outages too are
­being reduced as remote monitoring and
predictive maintenance eradicate expensive downtime for machinery and industrial plant.
FLEXIBILITY: Digitization, connectedness and virtual tool planning open the
door to custom-tailored mass production. Very small series – batch sizes of
one, ultimately – can be produced and
sold at a profit.
The bottom line is that resources are
used more efficiently while people and
machinery work far more productively.
COSTS DOWN,
MARGINS UP
Tire manufacturer Pirelli has already taken
the plunge into integrated production. Tire
production is, essentially, high-volume
customization. Gregorio Borgo, General
Manager Operations, refers to the Italian
company's culture of innovation as "open
and cross-functional", stressing that Industry 4.0 is being driven from all quarters
within the group. "The Pirelli Group's factories are increasingly digitized in their functions, processes and machine maintenance." The higher the class of car, the
higher the demands placed on the tires.
"In this context, talking about manufacturing, we need a balanced organization,"
Borgo says, noting that part of the responTHINK ACT // COO INSIGHTS
INDUSTRY 4.0
sibility lies with IT in the form of integrated
manufacturing execution systems (MES)
and production machinery, electronic kanban systems, automated quality control
via RFID labels, data mining and so on.
"On the other hand, we concentrate on
giving our people a broad array of skills
with which to master ever-changing processes and technologies."
Pirelli sees the Modular Integrated
­Robotized System (MIRS) that enable it to
condense the 14 traditional phases of tire
production into just three as one aspect of
its next-generation IT landscape. The MIRS
robots deployed in Europe and the USA
produce tires seamlessly, without interruption. There is no need to add semi­
finished products, no interim stocks are
needed and less energy is consumed. The
average lead time from raw material to
­finished product has been cut in half.
­Every part of the process is controlled by
integrated software, from robot motion to
raw material replenishment, from tire size
selection to vulcanization and quality control. The Mini Cooper S was one of the first
cars to be fitted with tires made in this
way; the new Bentley was the most recent
model to follow suit. Pirelli's productivity
has jumped sharply.
Introducing Industry 4.0 has brought
similar success to motorcycle producer
Harley-Davidson. The venerable US company manufactures its 1200 Custom and
Street Bob models at a factory in York,
Pennsylvania, 100 miles north of Washington. Customers use the Bike Builder to
design their own customized machine online and then order it from a dealer. This
data is accessed not 21 days (as in the
past) but a mere six hours before production begins. That gives customers the flexibility to make changes – to the wheels,
seats, handlebars, position of the foot
rests, paintwork, optional safety features,
you name it – right up to the last minute.
Harley-Davidson has significantly
shortened its lead times with this strategy,
and production is completed in a single
day. On the automated production line,
A NEW WORLD THAT ADDS
(MORE ) VALUE
*
YESTERDAY'S SUPPLIER, TODAY'S
PARTNER*: THE CHANGING
ROLES OF INDUSTRY PLAYERS
2000
COMPONENT
PRODUCTION
Metalworking
Supplier: Brinks Metaal
Customer: Power-Packer
SUB-ASSEMBLY
Hydraulics
Supplier: Power-Packer
Customer: Edscha
SYSTEMS INTEGRATION
Complete sunroof system
Supplier: Edscha
Customer: BMW
Value chain
1980
EXAMPLE:
CAR INDUSTRY
From raw metals
to sunroofs
2020
Outsourcing
Research &
development
Design &
planning
Prototyping &
industrialization
Component
production
Systems
integration
Sales &
service
1980
Component
outsourcing
2000
Outsourcing of
links in value
2020
Integrated
supplier
TRADITIONAL
ROLE SPLIT TING:
Suppliers contribute
individual parts
to production.
CHANGING ROLES:
Supply chains become
more complex and
OEMs farm important
production steps out
to specialists.
THE FUTURE
IS NOW:
OEMs are "lean",
suppliers share
responsibility for
complex systems
and processes.
Sources:
Brainport Industries, Roland Berger
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
11
12
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
STORY
C O V E R R Y 4.0
T
IN D U S
humans and machines work hand in hand
(so to speak!), developing models in 3D,
planning and monitoring every step online,
visualizing work instructions on-screen.
The costs are going down, the margins are
going up.
Success stories such as these are putting wind in the sails of Industry 4.0, which
goes by a variety of names: "advanced
manufacturing" in the USA and the UK,
"les usines du futur" (the factories of the
future) in France, "made different – factories of the future" in Belgium, and "smart
industries" in the Netherlands. Former SAP
chief Henning Kagermann, one of the people who originally coined the term Industry
4.0, hopes Germany will lead the way. Angela Merkel allegedly sets great store by
retaining the original German spelling –
­"Industrie 4.0" – even in English publications to make sure everyone knows this
"brand" was made in Germany. The issue
at stake is nothing less than global innovation and market leadership.
Kagermann, now President of Aca­tech,
­ cience
Germany's National Academy of S
and Engineering, is much in demand as a
speaker, even beyond Germany's shores.
"The Chinese, eager to press ahead with
automation, came to us first," he says, "followed by the Dutch, who wanted to know
how to get so many different players together around one table. After them the
Americans and Britons wanted to increase
manufacturing's share of their economies."
Kagermann fully understands why interest
is so pronounced: "The vision of Industry
4.0 is simple but compelling."
ILLUSTRATION: PETER KRÄMER
STRIKING A NEW BALANCE
BETWEEN HUMANS
AND MACHINES
Industry 4.0 might sound like the latest
production software release, but it is so
much more than a straightforward update.
It creates a new and radically integrated
production system. Humans, machines
and resources communicate directly with
each other. Smart products know their
production process and where they will be
deployed in future. As a result, they actively support both production and documentation. This vision of seamless, connected
production is rooted in cyber-physical systems (CPS): workpieces, tools, production
plant and/or logistical components that
are hooked up to the internet via embedded (software) systems. They perceive and
influence the surrounding environment,
build distributed networks and optimize
themselves autonomously. Their virtual
model of the real world is thus constantly
being updated – in real time or near-real
time – with the aid of up-to-the-minute
data. At the same time, staff control the
production system via multimodal interfaces and augmented reality applications.
Cyber-physical systems usher in the next
level of decentralization: at the level of
­objects in the factory and organization.
Smart factories' interfaces to smart mobility, smart logistics and smart grids make
them a pivotal element in tomorrow's intelligent infrastructures. When two or more
firms are linked together by this kind of
information flow, that changes the way
players interact in the network economy.
People are already talking about the next
level of "coopetition" – of cooperative
competition in a context of maximized
specialization.
So is this the brave new world ahead
of us? Not everywhere. Not yet. Because
that would require companies to kiss
goodbye to the traditional tools of production management. One of these is Microsoft Excel, the most widespread piece of
software in manufacturing execution systems (MES) and hitherto an integral part
of both production and resource planning
and the evaluation of process data.
­Depending on firms' willingness to invest,
many experts believe that this situation
will change significantly between now and
2030. Industry 4.0 is a dynamic process
of evolution. Yet if revolutionary change is
the prize at the end of the evolutionary
path, now is the time for pioneers to take
the first bold steps. Notwithstanding,
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
SMART FACTORIES
ARE LIKE
SOCIAL NETWORKS
Humans, machines
and materials
communicate and
interact in real time.
Global production facilities
A network of global production facilities
is the beating heart of Industry 4.0. Intimate
interaction with partner firms boosts
profitability thanks to tighter coordination
cycles, for example, enabling production
processes to be constantly optimized
and adjusted.
Empowered machine operators
Augmented reality: This technology gives
the people who operate machines an
enhanced, virtual overview of production,
helping to accelerate maintenance and
repair work, for instance. Armed with
smartphones, tablets and data glasses,
workers become "augmented operators".
Social machines
Social machines are knowledge-based,
sensor-assisted and geographically
distributed elements of autonomous
production systems. They share newly
acquired information with other machines.
No additional configuration is needed.
Smart products
Smart products can be identified and
located at any time. All information
about the course of production is stored
in the product itself – in RFID chips,
for example. Smart products control
their own production processes.
Virtual production
A digital model of the real-world factory
links all the people, machines and materials
together and visualizes the processes
currently in progress. Within this virtual
production environment, data can be analyzed
and future statuses simulated in order to
optimize production.
13
STORY
C O V E R R Y 4.0
T
IN D U S
many companies are still hesitant, wanting to know what technologies are even
ready for market yet?
Jochen Schlick believes that is the
wrong question: "Industry 4.0 is not a new
technology," the man in charge of the forward-looking discipline of cyber-physical
systems at Wittenstein AG says. An engineer by trade, Schlick recently moved from
the German Research Center for ­Artificial
Intelligence (DFKI) to one of the world's
leading manufacturers of mecha­tronic
drive systems. The basic technologies behind the internet of things have been
around for some time, Schlick argues: automatic identification, embedded systems, broadband wireless networks, digital control and communication. He adds
that promising applications are now
emerging at the points where information
from the material world can be captured
efficiently and processed effectively in the
digital realm. To put that another way:
What used to be separate information
sources are now becoming compatible.
Making things compatible sounds
easy enough. Yet having seen many companies fall at precisely this hurdle, Schlick
recommends looking for "media discontinuities in routine manufacturing practice"
– the points at which inefficiency is tangible. Some time ago, that was the case at
Wittenstein's intralogistical set-up and
production planning, two areas in which
the masters of their craft were still working
out the fine details on paper.
INEFFICIENCY –
A THING OF THE PAST
The company manufactures products that
are used in aircraft engines, oil-drilling
platforms and pacemakers. The failure to
synchronize workpiece transportation processes with actual production used to
waste time and resources. The lack of a
digital model of production planning
meant that management didn't have
­access to order-, line- or machine-specific
data at any given time. Wittenstein has
14
now plugged the gaps in its data and communication streams with QR codes, smart
workpiece carriers, tablet PCs and digital
planning boards. Integrating the legacy
systems turned out to be the biggest challenge, but Wittenstein was clearly up to
the task. Its success was made possible
by a network of 22 external partners who
were responsible for mechanical aspects,
software, and integration in the cloud.
Schlick's arguments are sober and
­rational, but his mindset is to challenge
customs. He acknowledges that companies everywhere have long been seeking
to optimize production. Nor have their
goals changed along the way: Everyone
wants punctual, accurate delivery, lower
costs and better quality. On a methodological level, the paradigms of lean production have proved useful, he says. Yet
he is adamant that the theoretical possibilities inherent in the process chain have
often not been realized. Eliminating these
inefficiencies, he says, is where comprehensive digitization of the value chain reveals its real potential. Industry 4.0 means
tackling the goals of maximizing cost and
resource efficiency in production in a different way: not with more automation or
better components, but with fewer interfaces to break up the data stream.
Schlick says the flow of information
that accompanies the movement of goods
delivers "recommendations for action by
well-informed decision makers" – rather
like SatNav systems do for drivers. Users
do not even have to fully understand every
aspect of this kind of driver assist system.
There is thus a very real possibility that the
knowledge needed to interpret data might
be beyond the core competency of the
­users: a new market for service providers
who support the management of corporate processes.
Bernd Häuser, Head of the Corporate
Department for Manufacturing Coordination at Bosch, believes that the question
of what exactly these services are will not
become relevant until further down the
line. His attention is focused squarely on
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
the here and now. The strands of 50 different pilot projects at the Bosch Group
come together in his hands. His response
to the question of services fits perfectly
with his basic credo: Industry, he says,
must rid itself of the notion that you can
know today exactly what sensors a machine will need in five years' time. Rather,
we must build a platform for developing
solutions that can adapt to the future.
Häuser says that, in individual projects
where the initial outlay exceeds immediate cost reductions or e­ fficiency gains,
commercial cost/benefit calculations are
often misleading. Far-­sighted managers
know enough to trust that data links will
one day yield benefits in unexpected
places, too.
But do lots of sensors mean lots of
benefits? No, the Bosch manager categorically refutes this argument. What companies do need, he says, is a vision of full
data transparency that looks beyond the
straitjacket of project accounting. Sensors
now cost only a few cents, and readers
won't break the bank either. Häuser has no
doubts: "Low-cost solutions will unleash
the full force of Industry 4.0."
TREND TOWARD
RETROFITTING
Market observers perceive a strong trend
toward retrofitting, with companies upgrading older equipment rather than rushing to splash out on brand-new 4.0 production plant. That helps them protect past
investments with lengthy depreciation periods. And this reasoning alone proves the
point: Industry 4.0 is not about radical,
overnight upheavals. Its technologies and
possible implementations are filtering
down into the economy only gradually.
The ABB Group, a manufacturer of energy and automation systems with a global
reach, expects the traditional automation
pyramid to essentially remain in place. A
4.0 network will merely be superimposed
on it, adding access to production at
­certain points. Read access – for data
analysis and troubleshooting purposes, for
example – will be granted at these communication nodes. Write authorizations in the
control system enable central calibration
and maintenance services to be made
available during live operation. Service
technicians do not have to wait until
­defects occur before they go hunting for
the causes: The plant recognizes its own
status, reports and analyzes imminent
damage and orders replacement parts.
This avoids expensive outages and yields
huge gains in efficiency. Like many other
companies, ABB already supplies hardware and software components for remote
diagnostics and predictive maintenance.
Weidmüller Interface GmbH & Co. KG,
a producer of control and connectivity
technology and measuring and monitoring
systems, is another Industry 4.0 system
supplier. The latter ensure that an injection
molding machine, for example, can beam
its oil pressure and operating temperature
data straight onto the internet. Machine
operators see the data in the browser on
their tablet or smartphone, use it to visualize issues, diagnose problems, quickly
spot anomalous patterns – and can thus
keep the machines running smoothly.
Markus Köster, an engineer at Weidmüller's technology development unit, is
matter-of-fact: "Monitoring is possible, but
there is not so much demand for automated readjustment. Not yet," he stresses.
Why is that so? Speaking from experience, Britta Hilt, Managing Director of
Saarbrücken-based IS Predict GmbH,
points out that "In many cases, people
simply want to sit in the middle and keep
control of things". IS Predict is a youthful,
20-strong part of the Scheer Group that
specializes in predictive analytics. Concepts and recommendations about optimal machine control position the company as one of myriad new players in a
growing market. Hilt is nevertheless well
aware of one of the biggest obstacles that
still stands in the way of Industry 4.0's
more widespread introduction. Despite
measurements taken from the plant and
GLOBAL
COMPETITION
How much governments
are forking out in the race
for the future of production.
UK
312 million euros have been channeled into
Britain's Advanced Manufacturing Supply Chain
initiative since 2011. The Department for
Business, Innovation and Skills launched an
additional 127 million euro fund in spring 2014.
The latter money is being used to advance
research and development in the automotive
and aviation sectors.
France
President François Hollande has announced
a 3.7 billion euro package for "La Nouvelle
France Industrielle". Selected industry projects
will be subsidized in 34 government-backed
plans of action, including "les usines du futur"
("the factories of the future"). France has only
35,000 production robots, compared to 65,000
in Italy and 150,000 in Germany.
Germany
Federal government is pumping 200 million
euros into "Plattform Industrie 4.0" within the
framework of its "Hightech-Strategie 2020"
action plan. The aim is to bundle the expertise of
research organizations, the leading mechanical
engineering associations and the ITC and
electrical/electronic engineering industries.
Europe
Between now and 2020, the European
Com­mission will invest 1.15 billion euros in
Factories of the Future (FoF), a private/public
partnership initiative. SMEs in particular are to
see their technological manufacturing base
strengthened by adaptable machines, innovative
materials and modern IT for production
environments.
USA
The Obama administration set aside around
1.6 billion euros (converted) for projects relating
to production research in 2013 alone. The
prospect of 500 million euros' worth of funding
for smart factory networking has been held out to
the Smart Manufacturing Leadership Coalition
(SMLC), a nationwide interest group with more
than 30 corporate members.
China
By 2017, Beijing wants to invest some 1.2 trillion
euros to modernize and transform its industry,
though not all of this sum will have a bearing
on Industry 4.0. The goal? To transform "made
in China" into "created in China".
Sources: EU, GTAI, db research, Roland Berger, etc.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
machinery itself, she says, roughly half of
all companies have no really useful data
as a valid basis for value-added services.
What data they do have is not collected
often enough, is not stored or cannot be
converted. Like in the good old days, the
only solution is ­often a brisk walk to the
nearest printer.
That is why Europe is working flat out
to craft a harmonized data structure and
shared standards that will vastly simplify
machine-to-machine communication.
"Plattform Industrie 4.0", a German organization that brings industry associations,
companies and research institutes together, is currently plotting a "standardization
roadmap". In the USA, the Smart Manufacturing Leadership Coalition is tackling
the same issues. New standards will open
new markets.
Industry 4.0 will stand or fall by these
efforts at standardization. Once an open
system is up and running, every entrepreneur can join in the game. Metcalfe's law
should probably then apply. This law states
that the value of a communication system
grows in proportion to the square of the
number of connected users. The more production becomes interconnected, the
more the entire value chain will be worth.
Fifty billion "intelligent objects" could be
communicating with each other as early as
2020 – ten times as many as today. Originally a forecast aired in its own interests by
network equipment provider Cisco, this
number is now widely held to be plausible.
FAST GAME,
NEW RULES
The unrestrained pace of growth is itself
changing the rules of the game. "We must
master the standards very quickly,"
­explains Professor Wolfgang Wahlster, the
head of DFKI and an advisor to the German Chancellor. "This is a genuine power
play." Wahlster believes Europe in general
and Germany in particular are well placed,
even though it is often said that America's
software giants could have an advantage
15
STORY
C O V E R R Y 4.0
T
IN D U S
if value creation is in future controlled by
those who possess the data. But who
does the data actually belong to in each
case? How do you dice and slice it into a
workable business model – not to mention
all the security issues (see page 40).
GOOGLE BUYS ROBOTICS
FIRMS BY THE DOZEN
At its factory in Michigan, US auto maker
Ford runs Siemens software that delivers
virtual navigation throughout the production environment. The aim is to improve
international collaboration across the
company's plants. The Google Earth infrastructure lets users take 3D walks through
Ford's worldwide production facilities,
down to the level of the individual workspace. Customers certainly benefit as a
result. The question is, who ends up with
the better deal? Siemens, the supplier
with a similar background that already employs 17,500 software engineers and has
long seen itself as a digitizer? Or maybe it
is new giant Google, which is just lurking in
wait to pounce on so much lucrative business with so much data?
Google's most powerful information
collection point is the Android operating
system, which is installed on 80 percent of
the world's smartphones and 60 percent
of all tablets. One aspect of connectivity is
that, at some point, it becomes impossible
for both the users and providers of rival
systems to resist established standards.
And Google never rests – witness its Project Tango, in which developers are trying to
implant a human-scale understanding of
three-dimensional space and motion in
smartphones and tablets. Universities,
­research organizations and industrial partners from nine countries around the world
– including Bosch, Infineon, ETH Zurich,
the George Washington University and the
Open Robotics Foundation – are involved.
The prototype hardware and software
­records motion and creates a model of
the environment in 3D. Using Android, of
course. With sensors supporting more
16
than 250,000 measurements per second,
the position and orientation of the device
is constantly updated in real time. For the
time being, Tango is targeting consumer
applications. Yet its potential in industry is
obvious: Smarter navigation, driverless
­vehicles, drone control, augmented reality
apps and the control of workpieces and
machines are just a few of the possibilities
that spring to mind. To date, the project
has gone largely under the public and business media radar. As soon as that changes, however, it will only add to the palpa­ble
sense of unrest that began to permeate
the manufacturing industry when Google
snapped up eight robotics firms in 2013
and commissioned Android inventor Andy
Rubin to build a robot development line
that is expected to grow fast.
The fragmentation of existing industrial
IT systems has so far protected European
machinery and plant engineering. How­
ever, Bosch's Bernd Häuser is not alone in
his view that US software companies could
soon roll up the market. Long production
plant lifecycles have kept many IT giants
from cultivating an interest in this market,
he says. But their reluctance is now softening. "We machine makers have long underestimated the threat."
EUROPEAN IT STANDS UP
TO THE USA
Europe's companies are now sitting up
and taking notice. As market leaders for
embedded systems, they are focusing on
their strengths, such as excellence in sensor technology. Germany's front-runners in
this race are the likes of Continental and
Sick, Infineon and SAP. In the Netherlands, a country replete with sophisticated
industry suppliers, NXP Semiconductors –
formerly Philips – stands out from the
crowd. Switzerland boasts a world-class
machinery and plant engineering sector,
while northern Italy is home to technology
transfer researchers and companies.
France is currently pulling out all the stops
to make up a two- to three-year deficit.
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INDUSTRY 4.0
Diversity, not size, is what matters, according to Wolfgang Wahlster: "Intel is
­gigantic, but it has stayed away from the
table." Europe holds a few trump cards in
big data mining, too: the Hana databases
from SAP, Software AG's Terracotta and
the Berlin-born big data analysis tool
Stratosphere, which was only accepted as
an Apache incubator project in April of this
year. "We have the edge in technology. The
Americans are better at networking and
business model innovations," says Wahlster, the other progenitor of the term
­Industry 4.0. "We will reach agreement."
Endress+Hauser, a Swiss measurement and control technology firm, reckons
that businesses can already ­afford horizontal digital integration, by which it means
measuring instrumentation and communication systems to capture and transfer the
data. These systems automatically track
orders, storage, delivery and inventories.
The company is also convinced that vertical integration is realistic. It involves forging digital links between the layers of the
automation pyramid, i.e. ­factory and business processes, interconnectivity between
enterprise resource planning (ERP) and the
production process. Endress+Hauser nevertheless frankly admit that talk of end-toend digital engineering is still premature:
You still can't go out and buy "4.0 as a
package". Like Wittenstein, however, that is
where Endress+Hauser want the connected road to lead them.
Don't hang around. Get going! Martin
Marx advises manufacturing companies to
quickly start out along the road to Industry
4.0. Marx is Sales Director at the Harting
Technology Group, a company that earns
500 million euros a year with its plugs, cables and electromechanical connectors –
and that wants to make a name for itself as
a digital system supplier. "We are starting
small," Marx says. "We need to build trust,
establish the first networks and, step by
step, show customers the benefits of 4.0."
Demand must be cultivated gradually.
Harting is one of more than 30 industry
partners that have teamed up to form the
4 POWERFUL
ARGUMENTS
BENEFITS
OF
INDUSTRY
4.0
Proximity
to the market
Flexibility
and closer customer
relationships thanks to
new business models
and services
Quality
thanks to process
transparency and
reproducibility
in terms of batch
sizes and variants:
customized mass
production
Speed
ILLUSTRATION: PETER KRÄMER
thanks to shorter
lead times and
less outages
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INDUSTRY 4.0
17
STORY
C O V E R R Y 4.0
T
IN D U S
WORKABLE
BUSINESS MODELS
Industry 4.0-centric business models are
taking root everywhere – at Bosch in Homburg, for example. Production of hydraulic
butterfly valves for tractors – 2,200 variants in small quantities – began here,
close to Germany's borders with France
and Luxembourg, in June 2014. Customers send their orders straight to the
­production plant, which configures itself
autonomously, picks the parts it needs
and constantly analyzes data about the
production status. "The investment in the
new production line pays for itself very
quickly," says Bosch manager Häuser.
­Machines are more productive because
they no longer need to be converted or
­refitted. Employee productivity improves,
too, because staff no longer have to waste
time typing in individual orders.
Dortmund-based drinks bottler KHS
has likewise shortened its value chain.
Thanks to its award-winning digital technology Innoprint, KHS can now print thousands upon thousands of PET bottles in
18
parallel, all with no labels. That guarantees
maximum flexibility, reduces the time to
market and paves the way to very small
batch sizes. The ink is removed again
when the bottles are recycled, all of which
saves time, money and tons of waste.
The digitization of business processes
has now also birthed a very special variety
of customized mass production: contract
manufacturing. Take 247TailorSteel, for
­example, a web-based procurement portal
for contract manufacturing services relating to sheet steel and tubes. The company
expanded from the Netherlands into Germany some years ago. Every workflow from
the drawing board to CAD is optimized to
meet customers' individual requirements.
Quotations are generated in minutes at the
click of a mouse and guarantee "top quality that is reproducible at any time", in the
company's own words. As far as the technology is concerned, the claim is certainly
credible, with production of the workpieces
handled by laser cutters from Trumpf. This
is how digitization is giving firms such as
247TailorSteel a satisfied customer base.
CUSTOMERS LEAVE
COMPANIES NO CHOICE
Do our highly advanced economies even
have a choice? No, asserts Professor
Thomas Bauernhansl, because customers
and markets – not technologies – are the
drivers of modularization and greater
­flexibility. Bauernhansl oversees the IFF
Institute for Industrial Production and Factory Operations at the University of Stuttgart, as well as heading the Fraunhofer
Institute for Manufacturing Engineering
and Automation (IPA). His reasoning is
simple: A large share of manufacturing
these days equates to significant progress
and dynamic growth. Between 2000 and
2010, productivity rose by 30 percent in
German industry – twice as fast as the
­increase in the service sector. In 2010,
manufacturing accounted for nearly 90
percent of R&D spending. For Bauernhansl, it is therefore only right and proper
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
that the EU wants to raise manufacturing's
share of gross value added from 16 percent today to 20 percent by 2020.
Reorganizing the value chain opens up
vast stores of economic potential, although the conditions in place across Europe vary very considerably: France currently has only 35,000 production robots,
compared to 65,000 in Italy and 150,000
in Germany. These figures come from the
French govern­ment, which has announced
its intention to invest in the EU-backed
Factories of the Future (FoF). The question
is whether industry will seize the associated opportunities. Jean-Camille Uring, COO
of Fives Cinetic and President of CECIMO,
the European Association of the Machine
Tool Industries (see page 3), speaks of a
divide in the French economy. In his capacity as Fives manager, he knows what it
means to design and ship plant and machinery for the world's biggest industrial
groups in indus­tries from aluminum and
aerospace to ­sugar and steel. And in his
capacity as ­advisor to the government, he
helped draft organizational and financial
aspects of the vision of the "usines du
futur", together with plans for individual
industries. Uring is aware of the lack of
competitive edge among small and medium-sized enterprises in France. New machines alone, he notes, are not the solution
for global markets.
Europe must therefore build on its
strengths. Many see Germany as the front-­
runner in digitizing the economy. Yet that is
only ever a momentary snapshot. In the
fiercely competitive Industry 4.0 environment, there is no time for complacency.
ILLUSTRATION: PETER KRÄMER
non-profit Smart Factory KL e.V. organization, a vendor-independent platform that
seeks to integrate mature information
technologies in factory automation.
Companies in the network use test
modules to demonstrate how even competitors can use harmonized interfaces
to share the task of specialized production. Each module recognizes its neighbors and can be swapped or replaced at
any time. "Technologically, our system
was already more advanced in 2013,"
says Professor Detlef Zühlke, the chairman of and driving force behind the technology initiative. ­"Today, we are more
concerned with workable business models than what is technically feasible."
Zühlke mentions contact with renowned
customers who, for the first time, seriously want to buy something: a component
manufacturer from the aircraft industry,
an auto maker, a plant monitoring firm.
EL
NOT AT ALL
PREQU
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
19
HOLLYWOOD PIONEERS 4.0: THE DREAM FACTORY REPEATEDLY CHURNS OUT FILM
­M ATERIAL THAT PAVES THE WAY TO NEW AND VERY REAL BUSINESS MODELS.
SOBER VISIONS AND BOLD REALITIES – SNAPSHOTS OF A JOURNEY THROUGH TIME.
SCIENCE FICTION
PHOTO: ISTOCKPHOTO BY GET T Y IMAGES
PHOTOS: ACTION PRESS; PARROT SA
THE DARK KNIGHT RISES
Batman tested
drones in "The Dark Knight
­Rises" in 2012 – before even Amazon
and DHL showed an interest. Today, civil
drones inspect high-voltage power lines and
photograph every millimeter of dams to produce 3D models that are detailed and precise. ­At the Volkswagen plant in Germany's
­Baunatal valley, they whizz around the
spacious production halls to spot
compressed air leaks high
up in the rafters.
20
PHOTOS: PICTURE-ALLIANCE; ULTRA GLOBAL
TOTAL RECALL
Back in
1990, we thought
boarding a self-drive "robotaxi"
was the exclusive preserve of Arnold
Schwarzenegger in "Total Recall". Far from it:
Fully automated driverless vehicles are already
in service at London's Heathrow Airport, whose
Personal Rapid Transit system ferries passengers
around the airport on demand, following dedicated
guideways and with no stops along the way. Meanwhile, US companies are already considering the
next step: having Google's self-driving car
travel on public highways and cope with
the traffic autonomously.
21
PHOTOS: ACTION PRESS; BMW GROUP
In the
2012 comic strip
film "The Avengers", superhero
Robert Downey Jr. taps videos with
his fingertip, swipes his hand across
screens and operates control sliders on holographic displays. "Ironman" remotely controls
all kinds of systems – excelling as a pioneer of
preventive maintenance. Today, autos can
project their current speed and direction
­arrows onto the windscreen for navigation purposes. For the time being,
­pedestrians make do with
­Google Glass.
THE AVENGERS
22
PHOTOS: ACTION PRESS; GOOGLE
PROMETHEUS
23
In "Prometheus" in
2012, film director Ridley Scott
picks up where he left off in his 1979
megahit "Alien". When the spaceship enters
an alien cave, hovering spheres are sent out to
survey the terrain. They record everything they
see to produce a holographic map. Right now,
Google Tango is emerging as a real-life analogy.
Smartphones are being fitted with sensors that
let them piece together a 3D picture of their
environment, opening the door to a completely new kind of navigation – in
museums, in factories and
even at home.
AT ITS US PLANT IN SPARTANBURG, SOUTH CAROLINA, BMW USES
COLLABORATIVE ROBOTS IN DOOR ASSEMBLY. THE Y HELP THE HUMAN WORKERS –
PRECISELY, QUICKLY AND AS OF TEN AS NECESSARY.
"LEANER,
FASTER, MORE
STABLE"
HARALD KRÜGER, Chief Production Officer at the BMW Group,
talks about the promise of Industry 4.0, possible shifts in the value chain
and future interaction between humans and machines.
Interview: Jochen Gleisberg, Philipp Grosse Kielmann and Thomas Reinhold
Mr. Krüger, some see Industry 4.0 as a
buzzword. How do you at BMW define
the term? As the link between the digital
world and the real world – as connected
smart production and connected systems.
That is how we have defined it to date.
Sounds fairly mainstream. What do you
see as special about this topic? The
BMW Group always puts people at the
center of its production systems, and
­Industry 4.0 must support those people.
24
That is absolutely fundamental. Industry
4.0 won't replace people. It is different to
past developments such as computer-integrated manufacturing, which conjured
up visions of deserted factories devoid of
all human agency. I am convinced that
human beings, their skills and their competencies will remain the pivotal success
factor. They will be flanked by Industry
4.0, which will improve the ergonomic aspects of certain things, make processes
THINK ACT // COO INSIGHTS
IndustrY 4.0
more robust and provide information that
has not been available hitherto. So we
are not talking about pure automation.
Does that mean the evolution of or a
revolution in production? For me, it is
not a revolution that involves some huge
digital leap forward. It is not as if what is
valid today suddenly no longer applies.
But one thing will change significantly:
BMW, like other companies, needs people with a keen interest in a knowledge of
Photo: BMW Group
PHOTOS: Thomas Dashuber
PHoto: Thomas Dashuber
iew
Interv rüger
K
Harald
THINK ACT // COO INSIGHTS
IndustrY 4.0
25
iew
Interv rüger
K
Harald
systems. We will learn to focus more on
systems and to think along integrated
lines. We will see the whole system, not
just individual work and process steps.
To keep things in perspective: Do you
believe Industry 4.0 is over-hyped or underestimated? I believe every company
must look for the potential inherent in it.
Industry 4.0 is not a panacea. But it is
­another opportunity to tackle things in a
more joined-up way, to inject greater reliability into lean processes, to achieve
higher productivity and superior quality.
Yet that alone will not help us make the
industry more competitive.
BMW has recently been praised for its
advances in productivity. Why does BMW
need to open itself up to the world of
Industry 4.0 at all? Connecting the entire
value stream from raw material to end
product, to the finished automobile, harbors potential that has not yet been
­exploited. The BMW Group is a company
whose innovation sets it apart again and
again – through the use of carbon fibers in
the electrically-powered i3 and i8, for example. If you want to drive innovation in
products, you've also got to drive innova26
tion in processes. Industry 4.0 promises to
make us more innovative and perhaps
faster, for example by reducing the number
of tests involving hardware. We are already
moving toward more digital modeling: in
prototype construction, in product and
process development. Time is a very important factor in the competitive context.
A shorter time to market – the time
from development to the placement of
a product on the market – is regarded
as one of the main benefits of Industry
4.0. That is why we are interested in it.
We began with small pilot projects like
the one at our US plant in Spartanburg,
South Carolina. The collaborative robots
deployed there in door assembly help the
human workers – precisely, quickly and as
often as necessary. The movements of
both people and robots have been optimized and harmonized to ensure there
are no collisions. That is what I call intelligent networking. That is the production
of the future: interaction between humans and machines. We also had research partners on board. Our people
won't be replaced, but the robots help
make the process even more stable, thus
THINK ACT // COO INSIGHTS
IndustrY 4.0
providing even greater quality assurance.
This ergonomic assistance makes the
production system sustainable. We are
also trialing similar elements in other settings. That is driving progress in efficiency
and quality – thanks to connectedness.
And this is the opportunity that Industry
4.0 has to offer: enhanced connectivity
that improves the overall result.
How will Industry 4.0 change your relationship with suppliers? Will there be
shifts in parts of the value chain? We are
an OEM, so we will always concentrate on
vehicle assembly, on the car itself. But
maybe we will move toward more preassembled modules that are supplied to us
in connected digital processes. That goes
as far as simulated assembly, in which we
develop one part of digital door assembly
while the supplier develops the other part.
The whole development and production
system can be simulated, even across international facilities. Working together with
our suppliers, we can make things leaner,
faster and more stable. This will further
optimize the way we interact, but I don't
think it will lead directly to shifts in the
make-up of the value chain.
Photo: Thomas Dashuber
"BMW always
puts people
at the center
of its production
systems. That
is absolutely
fundamental."
11 4
on
Won't more connectedness tend to increase the importance of suppliers? The
majority of the value added in our chain is
already in the hands of the suppliers.
­Especially in the premium segment, car
production only works if suppliers and
OEMs collaborate seamlessly. There are
obviously all kinds of chains and different
kinds of suppliers. Some contribute an
­entire system, including development.
They develop a door panel and do the testing, too. But there are also component
manufacturers and parts suppliers. In the
context of connected production, we will
intensify our cooperation with system suppliers, because the early phase of product
development is important. We want integration to take place as early as possible.
That way, we can align interfaces so that
parts can be optimized collaboratively for
lean, fast production from an early stage.
That is how connectedness will increase.
Having said that, Industry 4.0 will not fundamentally change the importance of our
suppliers. They are already very important.
What concrete research projects are
you conducting, and with what goals?
We are conducting projects to connect
software. In the BMW Group, we work with
project teams and without too much organization. Our Industry 4.0 strategy targets
three objectives: First, projects in research and predevelopment. The collaborative robots in Spartanburg originally
came from the predevelopment phase of
production. We are interested in new,
lightweight construction, a different kind
of automation, new combinations of materials, easier fastening, and simpler concepts for shorter production lead times.
Second, we refine and improve ideas in
the routine setting of volume manufactu­
ring. We are currently investigating how we
can deploy these elements for future model series and products: building smart
networks to tap quality, cost and one-time
expenditure potential. Third, we work with
elements of Industry 4.0 in re­lation to the
planning of new product ­projects and new
production structures.
THE BIGGEST PRODUCTION
FACILITIES IN THE BMW GROUP
Adding value around the globe: Spread across four continents, the eleven biggest
BMW facilities are located in the USA, Germany, the UK, Austria, South Africa
and China (vehicle production in thousands per year). Oxford is the home of the Mini.
342.6
Dingolfing
297.3
295.5
Spartanburg
Regensburg
247.3
Munich
186.7
176.0
Leipzig
Oxford
126.9
125.6
Dadong
Graz
65.6
Rosslyn
3.0
88.0
Tiexi
Goodwood
USA
GB
D
A
RSA
CN
Source: BMW Group
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IndustrY 4.0
27
iew
Interv rüger
K
Harald
Can you explain that in a little more
detail? Let me give you an example. We
are currently expanding our international production network, including a new
plant in Brazil and one in Mexico. The
factory in Spartanburg is also being
ramped up significantly. New production
structures are emerging that will take
the online simulation of lead times and
processes to a higher level. At an earlier
stage and more intensively, we are mapping aspects of traditional technical
planning into a connected, digital planning base that involves the suppliers. If
we build a paintshop, for example, we
commission a large plant engineering
firm to deliver the whole thing. For BMW,
the OEM, the important aspects are the
lead times, the cool-off times, the stability of the entire production chain.
­A ssembly processes are another example. We will leverage the benefits of collaborative robots to make our vehicle
assembly more productive in other locations, too.
Does that pay off? If you look at the example of Spartanburg, it certainly does!
The production workers are delighted.
Right now, we are evaluating the potential, we are learning. Industry 4.0 is all
about ongoing development and improvement. It is early days, but the initial signs
look very positive.
Workers will obviously be delighted if a
robot carries the doors for them. But is
the commercial manager in you equally
delighted? He is indeed. Efficiency and
productivity are always important to me.
Point number one: This robot technology
is very reliable. I am not at all delighted
when production gets disrupted. We produce a new car every 60 seconds, so
every second of downtime is a loss to us.
Point number two: Everything can be implemented and integrated much more
quickly. We need fewer big superstructures, no safety bars and no cages. Our
new robots are small and flexible. It
takes less time to integrate and switch
them, so they can even be deployed
28
more quickly in new production settings.
There are several aspects of this technology that I get excited about.
How do you rate the overall potential of
Industry 4.0? I don't think there will be a
digital leap of 20 to 30% in producti­vity.
But I am happy about small, day-to-day
productivity gains. Just 5% would be a lot
if you map that onto two million ­vehicles
a year. We build about 8,000 cars a day,
so our responsibility is to be efficient day
in, day out.
In your capacity as Chief Production
Officer, where do you see other positives from the introduction of Industry
4.0? There are three good arguments for
Industry 4.0: One is the demographic
"Three good
arguments for
Industry 4.0:
demographic
change,
time savings,
quality"
change in Germany. At BMW, the number
of employees aged 50 and over is steadily increasing. Optimized ergonomic relief
means efficiency gains thanks to a
healthier work force. The second is speed.
Today, we want to get products to market
quickly and rapidly expand production
capacity whenever the market demands
that we do so. Less effort thanks to digital connectedness and improvements at
the interfaces between subcontractors,
system suppliers and OEMs saves us time
– a genuine competitive advantage. The
third argument has to do with quality and
reliability.
THINK ACT // COO INSIGHTS
IndustrY 4.0
Customized mass production – another
promise of Industry 4.0 – should be
nothing new to you. In theory, there are
more possible variants of every car than
BMW ever sells. Yes, we do have a very
large number of variants. But Industry 4.0
will give us still greater flexibility. We
­assemble our 3 Series, for example, in
South Africa, China, Munich and Regensburg. So if I can relatively quickly slot a
new technology into place at four locations, hook them up globally and get them
working reliably, that opens up considerable potential. Simulation covers not just
production, but also the logistics, all flows
of goods and all delivery concepts. That
way, you can quickly see whether an extra
door panel variant also requires new logistical processes or a bigger warehouse.
Which brings us back to thinking in terms
of systems. Industry 4.0 will make that far
more vital, requiring staff who have an extensive range of skills and who enjoy forging links between technology and IT.
Speaking of which: Is information technology increasingly taking control of
production in Industry 4.0? Industry 4.0
adds to the importance of IT, but that
does not constitute a fundamental shift.
We already have lots of people working at
the point where IT dovetails with traditional production planning. The BMW
Group has always seen that as part of its
core competency.
Will BMW acquire IT specialists if necessary? We will always give top priority to
developing our in-house IT expertise and
recruiting graduates and researchers from
universities. The proportion of employees
with a knowledge of software is tending to
increase as a function of the rise in in-­
vehicle electronic content. Internationalization, too, is driving much greater connectedness. If you are building one type of
vehicle at multiple sites, you have to have
those bases covered globally – in the bill
of materials systems for logistical purposes, for example. ­Ultimately, production planning has itself become a much
more globalized discipline.
Photo: Thomas Dashuber
"It is early days for
Industry 4.0, but the initial
signs look very positive."
Who is responsible for driving this issue at BMW? The CFO, who is looking
to cut costs? The CIO, who sees his or
her position becoming more im­p or­
tant? Or you, the Chief Production
­Officer? I believe each of us will drive
this issue within our own sphere of influence. That is also something we do together as a company. To take one example: The head of technical assembly
planning at the BMW Group used to be
in charge of production IT. He was the
one who made the infrastructure and, in
particular, the application software
available. Now he is responsible for the
technical planning of assembly activities. That helps him achieve the targets
I set him for absolute and relative production costs, for one-time expenditures and for capital spending. He is
familiar with both sides. It is not unusual to have people at BMW change their
perspective in this way. One department
or one function alone cannot leverage
the full potential, which is why it is so
important for people to work well together. People are the drivers of connectedness. Without their curiosity
about new things, we would never have
seen carbon fiber-reinforced car bodies, for example.
The requirements placed on your team
are changing. What is changing for you
personally? How do you deal with new
assignments? One of the things asked of
me is that I concern myself with this issue
more intensively in order to better understand the potential of Industry 4.0. Why?
Because I have to implement it in new
product and structural projects, or pass it
on as a target for others. I have to weigh
up the opportunities and risks. I also ask
myself where we might be able to engage
in other forms of collaboration with universities and suppliers, and what that
might mean for the BMW business model.
Lastly, I apply myself every day to internationalizing the BMW Group network. It is
of no use to me to have a perfect model
factory in Germany if we ignore alternatives in other places.
Are the structures in, say, South Africa
so much different to the ones in Regensburg? They are, yes. In South Africa,
local suppliers normally roll out smaller
quantities than in Europe, where we are
supplied by a number of large OEMs. That
often leads to processes that are far less
automated; and that is where commercial
considerations come in. Last year, we
produced over 60,000 cars in South
­Africa. Now, you might find that a given
THINK ACT // COO INSIGHTS
IndustrY 4.0
technology is worthwhile for 300,000
units, but not for this number. These are
the same calculations we used to perform for automation when thinking about
whether robots would pay for themselves
given a certain volume and labor costs.
What is your vision for digital production? We still have in mind this image of
the collaborative robots in Spartanburg, which are essentially a form of
ergonomic tool… which is just one sample application, because we are still right
at the beginning.
Okay, point taken. But are we also tal­k­
ing about pure machine-to-machine
communication in which human workers have nothing more to do than use
their tablets to watch what happens?
We could also talk about vehicle-to-­
machine communication. At BMW, a lot
of information is exchanged between the
vehicle as it goes through the production processes and the machinery – all
the quality, process and environmental
data that is generated here and can be
put to good use. Our vehicle knows what
model it will be, what color it will have,
what extras will be fitted. We may even
be able to add further variants l­ater in
production. We simply have to remain
open.
29
Iew
Interv rüger
K
Harald
And where, in your opinion, do we go
from here with Industry 4.0? It is still
too early to say exactly where all this will
lead at BMW. That depends on so many
factors. How will the technology develop?
At what prices? Which processes can we
model and which ones can't we? Take the
haptic and visual properties of a car, for
example: Does the vehicle look and feel
like what you would expect of a BMW?
Whatever happens, Industry 4.0 will not
leave the people involved in manufacturing complex vehicles standing on the
sidelines and merely monitoring automated processes on their tablets.
Who do you believe has the edge in the
international race for connected production? europe or the USA? Opportunities
tHe LOGIC OF
BMW'S SUCCeSS
GLOBAL PRODUCTION,
MORE MODELS,
A BROADER SALES
FOOTPRINT
exist in both markets. The USA has a lot of
innovative developments in application IT.
In Europe, and not just in Germany, we
have an unrivaled SME segment with many
innovative smaller firms. We know suppliers and universities that are concerning
themselves intensively with production logistics and production software. As things
stand, Europe is more connected. I'm talk-
FACtOrIeS
A GLOBAL NETWORK
OF ADDED VALUE
NO. OF PRODUCTION SITES
GERMANY
REST OF WORLD
2013
19
8
2004
15
7
RollsRoyce
4
BMW
23
Mini
7
2013
34
RollsRoyce
Mini
2
MODeLS
NEW VARIET Y IN THE
PRODUCT RANGE
1
2004
17
BMW
14
PreMIUM FOr ALL
Full range: Models such as the i3,
Mini Countryman and BMW X6 are
targeting new swathes of buyers
SALeS
MORE BUYERS
IN EMERGING
MARKETS
2013
Source:
BMW Group
30
2004
1.21 million
PHOTOS: BMW GROUP
1.97 million
iew
Interv rüger
K
Harald
Photo: Thomas Dashuber
Talking to BMW Board of Management member Harald Krüger:
Roland Berger Partners Jochen Gleisberg (at left) and Philipp Grosse Kleimann
ing about research, predevelopment and
production – not the development of services, but of real industrial products. But I
am not saying things can't develop along
similarly positive lines in the USA.
What part does this kind of consideration play for BMW as a global enterprise that is only historically based in
Munich? We are driven by a strategy focused on balanced global sales distribution. Production follows the market. In
other words, we need a successful production base in all markets. That means employees who have the right skills, and partners and suppliers who connect and
cooperate with us. Twenty years ago, when
we set up Spartanburg and built up our
operations there, many suppliers followed
us and opened their first American branches. The internationalization of the market
causes the supplier structure to internationalize with it. In the USA as in Germany
and China, we strive to optimize our quality, efficiency and speed. The collaborative
robot – by way of example – was introduced first in Spartanburg, but had already been used in Germany in research
and predevelopment. That is how things
will develop throughout our network.
Is your head office still the breeding
ground for such topics? We naturally
have many good specialists in Germany.
But our research effort has a global footprint. We have been running a Technology
Office for development and production in
California for more than ten years. We
have another one in Japan. We receive
fresh ideas from here and other parts of
our global network, for trend scouting and
production volumes, too. Innovation is no
longer confined to just one place.
Where do you see your international
rivals with regard to Industry 4.0? I believe Europe is out in front on this score.
That is what my view of Germany and the
European networks tells me. We shouldn't
be looking only at OEMs, though, but also
at Europe's extensive supplier network.
On the subject of industrial capabilities:
Can smart technologies help Germany
in particular corner a larger share of the
value chain? I believe Germany has the
chance to play a lead role in Industry 4.0.
We have been through the arguments
­already, and there is also our strong plant
engineering sector. Germany is giving the
topic a great deal of attention. Via the
agency of Acatech, for example, the BMW
Group has been involved in drawing up
recommendations for federal government
on the implementation of Industry 4.0.
But we must not underestimate global
­developments. Speed is also a factor in
competition between locations.
THINK ACT // COO INSIGHTS
IndustrY 4.0
It sounds like everything is rosy in the
garden. But what about the competition? Surely BMW has to get ahead and
not just get connected! You always have
to face up to competition. You do it again
and again, day after day. Where we believe Industry 4.0 gives us a chance to
gain a specific competitive advantage,
we will seize that opportunity. But there is
another side to connectedness: If you believe the opportunity lies in standardization, you need to achieve consensus. That
is why we will see both dimensions.
Where do you stand right now compared to other companies? I believe the
BMW Group is not doing badly at all. But
market transparency is only now beginning to emerge. As things stand, different
companies attach widely differing significance to Industry 4.0. The spectrum
ranges from "very important" to "nothing
will change for us".
Siemens sees itself as having reached
Industry 3.8. What about you? We're not
going to invent a name, because that
would run counter to the philosophy of
continuous improvement. For us, it is an
important topic, and one to which we are
applying ourselves intensively. We are
only at the very beginning of a very pro­
mising development. But that is what
makes it so exciting.
Harald Krüger
Born in Freiburg in 1965, studied in Braunschweig
and Aachen, earned a degree in mechanical engineering from RWTH Aachen University in 1991.
Joined BMW AG as a trainee in Technical Planning/Production in 1992. Involved as a project
engineer in the build-up of the Spartanburg plant
(USA) in 1993. Held various management posts
in Munich and the UK from 1997.
Appointed as a member of the Board of Management on December 1, 2008, initially with responsibility for HR and social affairs and later for the
Mini, BMW motorcycle and Rolls-Royce brands
and for after-sales. Has overseen production
throughout the BMW Group as a Board member
since April 1, 2013.
At its meeting on December 9, 2014, the Super­
visory Board of BMW AG appointed Harald Krüger
to become next Chairman of the Board of Management effective the end of the Annual General
­Meeting on May 13, 2015.
31
K P Is
The fourth industrial revolution is be­
ginning to unleash its potential. What
do businesses and economies stand
to gain? And who will the winners be?
| GROWTH ENGINE |
| REGIONAL COMPETITION |
Industry 4.0 outpacing
the global economy
Initial handicap for Europe
Shares of the global ITC market
(2013)
1
2
USA 27.1%
EU 21.3%
BRIC 18.7%
| DIGITAL UNIVERSE |
62%
GLOBAL GDP:
USD 82 trillion
Annual growth through
2020: 2.5%
GLOBAL INDUSTRY 4.0:
USD 13.1 trillion
Annual growth through
2020: nearly 6%
of the world's data
traffic volume in
the year 2020 will come
from China and India.
3
32
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
54%
| VALUE ADDED |
| MARKET ANALYSIS |
EUR 78 Billion
in productivity gains (23%) are feasible
in six German industries between
now and 2025. Mechanical and plant
engineering, electrical engineering
and chemicals in particular stand to
benefit from Industry 4.0, along with ITC,
the auto industry and agriculture.
4
31%
26%
17%
15%
| RESOURCE PRODUCTIVIT Y |
USD 30 BILLION
CAN BE SAVED OVER THE NEXT
15 YEARS IF THE USE OF
INDUSTRY 4.0 TECHNOLOGIES
ENABLES KEROSENE
CONSUMPTION
TO BE CUT BY 1%.
5
| CEO AGENDA |
4%
INTENSIVELY
Mechanical engineers
Plant operators
7
6
45%
NOT AT ALL
Supply still has the edge
Survey: "How intensively are you
tackling Industry 4.0?"
Established at top management level
Survey: "Who at your company concerns
themselves with Industry 4.0?"
52%
SPORADICALLY
Production
Business
management
IT
| GOVERNANCE |
41%
OF RESPONDENT COMPANIES
HAVE NOT YET APPOINTED
SOMEONE WITH OVERALL
RESPONSIBILITY FOR INDUS­
TRY 4.0 TOPICS.
6
34%
SOURCES
Wikibon; Roland Berger 2 Bitkom/EITO ICT Market Report 2014/15
3 IDC Study "Digital Universe", 2012 4 Bitkom/Fraunhofer IAO,
"Industry 4.0 – Economic Potential for Germany", 2014 5 GE Report "Industrial
Internet", 2012 6 Experton user study "Industry 4.0", covering German
ITC decision makers, 2014 7 IDC, "Industry 4.0 in Germany", survey of
German manufacturing companies>100 FTEs, 2014
1
33
Ctrl.
P
Additive Manufacturing alias 3D printing
captures the imagination like no other
production method.
The most fascinating business models
are rooted not in mass production,
but in dynamic niche markets.
There was certainly no lack of hype in the
media and on the stock exchanges in
New York and Frankfurt in 2013. Since
then, expectations placed on the manufacturers of 3D printers have been toned
down and are more realistic. Stock prices are trading sideways at best. Forecasts still point to a fourfold increase in
the market over the next decade – to
eight billion euros generated by sales of
plant, materials and component manufacturing. That adds up to rapid growth
from a narrow base: 3D printing machines account for less than 1.5% of the
machine tool market. Yet even if the optimistic predictions come to pass, these
machines are not going to replace any
existing production technologies in the
medium to long term.
Most promising is not the mass market
for metal or plastic parts. 3D printing –
production technicians speak of generative or additive manufacturing (AM) –
creates significant benefits for (very)
34
small series. It also opens the door to
new business models.
The latter derives from three disruptive
paths: the rapid, low-cost manufacture of
individual products; new geometries, materials and processes; and distributed
production. All three will profoundly influence the production industry and both
B2B and B2C business models.
DIGITAL DESIGN:
THE SKY IS THE LIMIT
Compared to conventional methods, AM
delivers a series of advantages. The fact
that the CAD data is channeled directly
into the part or component leads to extremely short process chains. Relatively
little investment is therefore needed to
distribute production.
Batch size has no bearing on the cost
of parts, which favors the production of
highly specialized small series and prototypes. Nor do costs depend on geometric
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
complexity, but are linked merely to the
weight of the manufactured component.
Virtually unlimited digital design options
allow high-strength materials to be fashioned into new geometric forms that conventional production methods have never
been able to cope with. New component
functions can thus be implemented that
further reduce lifecycle costs. New repair
strategies for high-value parts save time
and money. Resource efficiency improves, too, as production consumes exactly the quantity of raw material that
corresponds to the weight of the finished
part – no more, and no less.
There are still a few clouds in the
additive manufacturing sky, however.
Severing the link between cost and batch
size can be both a blessing and a curse.
If parts that are currently rolled out in
medium to large series were to be manufactured "as is" using 3D printing techniques, the unit cost would increase by a
factor of between 10 and 50. The cost
PHOTO: FRED SMITH ASSOCIATES
NTI
3D PRI
NG
would quickly fall, of course, but not by
enough to make up this discrepancy.
Why? Because 3D printing knows no
economies of scale. The first component
costs just as much as the hundred thousandth component.
Better leverage can be achieved with
small series and prototype production.
Robust prototypes can be rolled out overnight, without the need to procure complex tools. That shaves months off development and testing cycles in sophisticated industrial development programs.
For highly customized products such as
dental crowns, medical implants and
even designer jewelry, 3D printing is already an established and competitive
production method.
If no tools are needed, industrial
products can be manufactured on demand – and even outsourced to partners
if necessary. 3D printers for metal components cost between 400 and 1.5 million euros, depending on the need for
Application in medical engineering:
The model shows how perfectly
the 3D implant fits the aperture
in the skull – an excellent example
of advanced customization.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
35
NTI
3D PRI
LIGHTER,
FASTER,
CHEAPER
cient combustion processes allow aircraft,
sports vehicles and racing cars to benefit
from lower fuel consumption. General
Electric, for example, has improved fuel
injection nozzles for use in aircraft.
SHORT CYCLES
FOR CREATIVE IDEAS
Customers can offset the cost of production against the far weightier factor of fuel
savings during the product lifecycle. It is
therefore no surprise that all the major
aviation groups are working on 3D printed
components, including efficient engines
with new flow properties and optimized
combustion. The first series production
runs are expected in 2015.
2
R&D departments will likewise have to
adapt the way they work to this new technology. Development timelines are shrinking from months to days. Creative ideas
can be implemented in short cycles.
Software is becoming more important
than ever – as a tool to support development and production, but also as part of
the product itself. Leading German
manu facturers are thus taking a close
look at the creative agility with which
software giants control their development processes and reduce complexity
using the empirical, incremental and iterative Scrum framework.
Further new developments are conceivable: large, complex structures (aircraft wings), combinations of materials
(metals and synthetics) and the combination of additive manufacturing with
cutting machines (for turning, grinding
and drilling). For production purposes,
additive manufacturing is the next step in
the digital transformation. Even as an
industrialized niche technology, however,
it will not lead to the demise of traditional methods.
Additive manufacturing builds (or "prints") threedimensional parts in (additive) layers. Plastics,
ceramics, glass, sand and/or metal are processed
in line with the 3D data for the part which engineers
create in a Computer-Aided Design (CAD) environment. The processes from design to production are
more flexible, more efficient and less expensive – a
prime example of the digital transformation taking
place within the framework of Industry 4.0.
1
Airbus, for example, fits bionic cabin brackets
made of titanium powder in its A350 aircraft 1 :
These brackets are 30% lighter than their predecessors, and production generates 90% less raw
material waste. Both production and operating
costs are down as a result.
3
General Electric "prints" cobalt-chromium fuel
injection nozzles for aircraft engines 2 .
Every gram counts in motor racing, too. Made of
aluminum powder, this partially hollowed upright
joint from EOS 3 is 35% lighter and has 20%
greater torsional rigidity.
36
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
PHOTOS: AIRBUS GROUP; RENNTEAM UNI STUTTGART; GENERAL ELECTRIC
quality, overall dimensions and build rate.
Professional systems for plastic parts
production start in the tens of thousands
of euros and can go up to six figures. The
quality of these professional systems is
vastly superior to the "home printers" that
sell for a few hundred euros. In the B2B
segment, a highly specialized infrastructure has sprung up in which service providers optimize customers' parts and
handle the actual production. Web platforms such as shapeways.com and manufacturing.materialise.com also serve the
B2C segment.
Using AM becomes especially lucrative where a product's costs, such as repair costs, can be reduced over the entire
lifecycle. Siemens, for example, grinds
down worn out gas turbine burners and
rebuilds them using additive methods.
More lightweight designs and more effi-
NG
N
E A S T E RS E
PROMI
PREPARING A
PHOTO: ISTOCKPHOTO BY GETT Y IMAGES
TOUR DE FORCE
To realize China's ambitious plan to become a global high-tech
supplier, the government and the corporate community
are driving the implementation of Industry 4.0 concepts.
Yet the country still faces daunting hurdles.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
37
N
E A S T E RS E
PROMI
T
he Hannover Messe trade show in
2011 prompted the first stirrings
of change. Chinese firms, government officials and industry associations feasted their eyes on new app­roa­
ches to smart production: Industry 4.0
pro­to­types developed by leading German
companies.
Curiosity quickly morphed into vision.
Chinese industry experts report that Industry 4.0 has since been understood as an
opportunity to raise broad swathes of the
country's industry to a new technological
level – a level of intelligent, digital, webbased business models and production
methods.
HUMAN WORKERS
WILL STEP BACK
If that is to happen, however, the country
must take a huge leap forward in technology. Domestic experts describe the new
era thus: Production will shift away from
the time-honored model of "people analyzing and deciding and machines producing", moving instead toward the organizational principle that "machines analyze,
decide – and produce". The human factor
very definitely recedes into the background in this equation – a distinctively
Chinese take on the theme of Industry
4.0. By contrast, experts in Europe believe
that skilled workers will remain indispensable even in the new epoch of digital, connected production. Accordingly, the Old
Continent is already debating the kind of
education and qualifications that Industry
4.0 businesses will need. Time will tell
who is nearer to the truth.
Either way, Chinese industrial companies
can be sure to enjoy the fullest backing of
the state. As early as 2012, the Chinese
Ministry of Industry and Information Technology published its 12th Five-Year Plan,
part of which is devoted exclusively to
high-end equipment manufacturing and
intelligent production. The term Industry
4.0 is not mentioned explicitly. Nor did the
original definition of intelligent production
38
include combining production with the internet. However, the concepts and measures since developed do indeed very
closely match Industry 4.0 approaches.
According to the government's 2012
plan, China's industrial sales are to grow
by an average of more than 25% per annum and should top one trillion yuan for
the first time in 2015. A volume of more
than three billion yuan is projected for
2020. Intelligent production is to be one
of the drivers of this growth.
A more sober analysis of China's industrial base nevertheless shows that a
wide gulf still separates this vision from
reality. One striking macroeconomic fact
is that, for all the country's political and
economic endeavors in recent years, its
manufacturing industry continues to lag
far behind competitors in the Western industrialized world when it comes to accumulating technological expertise and putting it into practice. Most Chinese
manufacturers still compete only on products that add little value and generate
thin margins. China's share of the markets for high-end and special sensors,
intelligent instruments, automated and
digital control systems and robotics products, for example, is less than 5%. Most
companies are still some way away from
being able to assert themselves on the
global market as system and solution
providers. Compared to Western rivals,
their capabilities to innovate are modest
at best.
On the microeconomic level, most
Chinese companies are still in a transitional phase from Industry 2.0 (production
without the use of digital technology) to
Industry 3.0 (production involving basic
digital technologies). The competence
gap is equally apparent from the lack of
transparency in internal information and
the piecemeal design of information systems – not to mention the mismatch be­
tween standards and actual processes, as
well as the fact that some industrial processes are heavily dependent on individual behavioral patterns. Even in companies
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
that have completed the transition to extensively connected information technologies, data management cannot be described as satisfactory. To date, a number of
Chinese firms have, for example, neglected to use data mining to leverage the benefits of intelligent production.
THREE STEPS
TOWARD 4.0
To help companies quickly lay a firm foundation for expansion in the direction of
Industry 4.0, the experts at Roland Berger
recommend a three-step roadmap.
The first challenge is to optimize both
the manufacturing base and capacity in
research and development, to ramp up
quality controls and to advance employees' development and education. At the
same time, companies must nurture the
credibility of their products and cultivate
brand awareness. If they want to narrow
the technology gap to Western competitors, they must develop a new agility with
the aim of leveraging product and process innovations to fuel faster growth.
Second, leading manufacturers must
be encouraged to consider the development of Industry 4.0 especially in sectors
in which they are internationally competitive – in components and plants for power
generation, transmission and distribution, for instance. Market prospects are
similarly promising in mining and in agricultural machinery. Manufacturing, however, remains at the core of Industry 4.0,
driving development toward the end-toend digitization of production. Global
leading players are already using the Industry 4.0 concept for remote diagnostics, predictive maintenance and other
intelligent processes, products and services that are gaining ground on the Chinese market. Domestic firms would do
well to take this to heart.
Chinese companies that boldly and
resolutely back Industry 4.0 are already
reaping the first fruits. One of them is the
Daquan Group, a digital monitoring tech-
COMPARATIVE VIEW OF 4.0 IN EUROPE
IN THE MIDST OF
A TOUR DE FORCE
Four clusters, four leaders – China does not yet make the cut.
RB Industry 4.0
Readiness Index
5
Germany
Belgium
Finland
Sweden
Denmark
4
Ireland
FRONTRUNNERS
Netherlands
POTENTIALISTS
Austria
UK
France
3
Czech Republic
TRADITIONALISTS
Slovakia
Slovenia
Hungary
Italy
Spain
Estonia
2
Lithuania
Portugal
Poland
HESITATORS
Croatia
nology specialist whose remote-controlled transformers have made quite a
splash. Another is the Shengyang Machine Tool Group, which launched mass
production of a new generation of intelligent cloud-based machine tools in 2014.
Third, governments, associations,
universities, research organizations and
other stakeholders must observe market
principles more closely. Here are a few
suggestions:
The Chinese government could drive
the development of industry standards,
complementing this strategy by creating
tax incentives to modernize industry without distorting competition.
Industry associations could support
companies by providing advanced training courses and promoting cross-industry
dialog regarding the implementation of
Industry 4.0.
Universities and research organizations could work together more closely to
come up with new and intelligent Industry
4.0 solutions.
Industry 4.0 is nothing short of a culture change that will demand a veritable
tour de force on China's part.
China
Bulgaria
1
1
2
3
4
5
Manufacturing as a % of GDP
While China warms to the idea of Industry 4.0, many industrialized
countries in Europe have already moved on. The Roland Berger Industry
4.0 Readiness Index (see vertical axis) shows that the field is still
patchy. On the one hand, we grouped the state of development in
production processes and automation, employees' level of education
and the intensity of innovation together under the heading "industrial
excellence". On the other hand, the value added, the openness of the
industry, innovation networks and digital maturity were also bundled
together. Combining the evaluation of the individual scores determines
a country's position in the "RB 4.0 Readiness Index" – from the hesitators to the traditionalists, from the potentialists to the frontrunners.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
39
CYBERCRIME
The
invisible
threat
40
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
r
acula
Spect oopholes
rity l
secur daily cybe be
make appear to alls
s
itf
threat rm. Most p ted.
c
the noain undete can
rem mpanies fend
Yet co tion to de
c
take ahemselves.
t
A
t the latest since the Stuxnet
worm attacked a production automation system in an Iranian
nuclear facility in 2010, traditional value chains have lost their cyber-innocence. We have a few things to
say on the subject.
PHOTO: F. SCHMIDT/FOTOLIA
COMPANIES' SECURITY
IS AT RISK
Three developments sparked off the current debate about data security.
First, traditional IT is permeating every
business process to an ever greater ex-
tent. Advances in the virtualization and
digitization of business processes, electronic interaction in networks with suppliers and customers, and the consumerization of IT – the tendency to follow
habits of use that stem from the world of
personal smartphones and tablets – are
driving this development.
Second, the public at large has become more aware of existing weaknesses.
We analyzed the associated problems in a
2010 Roland Berger and SAP study of success factors for cloud ­services in Europe.
Managers outside this community are likewise gradually becoming aware of the
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
threats – thanks to the revelations of Edward Snowden, the debate about stolen
intellectual property in the context of industrial e­spionage, and the role the
­internet has played in geopolitics (such as
in the Ukraine crisis and the "Arab Spring").
As widely as these examples differ, they
have nevertheless prompted decision-­
makers around the world to put the topic
of data security high on their agenda.
Third, numerous web-based digital
business models have become established in relation to connected vehicles,­
e-commerce, e-health, e-energy and In­
dustry 4.0, for example. Although tradi41
CYBER
CRIME
DATA SECURITY
CHECKLIST
1
Analyze where and how you are
exposed to THREATS.
2
Cultivate security
AWARENESS.
FEWER DISRUPTIONS,
MORE PROFITS
3
Build security systems and processes with
clearly defined RESPONSIBILITIES.
4
Verify your company's COMPLIANCE,
both internally and in collaboration with suppliers.
5
Change your organization's MINDSET.
Nurture a philosophy that integrates security
from the earliest stages of product design.
6
Lead by EXAMPLE.
tional security management is a mature
discipline in commercial IT circles, these
digital business models still raise new
questions: Is enough being done in the
development of connected vehicles to
rule out unauthorized electronic access?
Are the manufacturers of aircraft, power
plants and production lines taking adequate precautions to ensure that embedded software components from third parties are innocuous. Is companies' most
valuable intellectual property really safe?
TOP MANAGEMENT
NEEDS TO RESPOND
New digital lines of business often lack
clear security guidelines, organizational
42
systems as necessary. The third thing
they must do is map out comprehensive
and sustainable systems, processes and
spheres of responsibility. For those areas
that are currently unguarded, management systems for data security must be
established or adjusted.
principles and management tools. There
are three things businesses must do to
institutionalize a high level of security in
their organization. The first is to gain a
clear picture of the threats and weaknesses inherent in the value chain. We
advise companies to identify risks from
two perspectives: from an end-to-end
process view; and in light of all company's
key assets, including intellectual property,
proprietary process knowledge, physical
and digital products and the principal
com­ponents thereof.
Second, having achieved transpar­
ency, firms must prioritize the need for
action. Above all, they must quickly set
up initial solutions to deal with urgent
white spots, defining or adapting security
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
Preparing a business case for security is
not easy. Some threats – such as production outages – are comparatively
easy to quantify. Putting numbers on
other risks is much more difficult, how­
ever, with the loss of human life due to
product defects topping the list. Yet
damage to the company's reputation
and/or its brand value is equally hard
to pin down. Statutory and regulatory
­compliance requirements are many and
­varied, especially for top managers and
governing bodies. It is therefore vital to
strike a fine balance between robust
quantitative analysis and qualitative
management assessments of risks and
their impact. As hard as it is to cost a
business case for investments in data
security, it is a worthwhile exercise. The
true returns are measured in terms of
minimized incidents and disruptions.
SIMPLE GUIDELINES
CAN HELP
A few pieces of guidance and advice to
companies and their employees can
make a huge difference to data security.
Don't overdo the rules and procedures.
Leave a balanced measure of flexibility
between the needs of your operating
business and the requirement for data
security. Ultimately, even when faced with
potential threats, your company still has
to be able to act quickly and flexibly on
the markets it serves. More security must
not come at the expense of agility.
IEW
INTERVOTTI
B
JEAN
"Compa­nies
have
become
more
vulnerable"
PHOTO: AIRBUS GROUP
I,
B O T T al
N
A
J E echnic
T
us
Chief TO) of Airb
lists
r (C
Office p, even en sters
Grou vvy young t
a
ns
tech-sguard agai .
ks
to
ity ris
secur
Monsieur Botti, Industry 4.0 means
more and more interfaces to the outside world. That increases the threat to
security. How does Airbus Group deal
with this situation? Security is very important. It is a critical factor to which we
give top priority. But if we are honest, we
have to admit that you will never have total security. We will never have 100 percent, bullet-proof production, and none
of our competitors will either. Everyone
has to ask themselves what price they are
willing to pay for security. Our strategy is
to identify the crown jewels and set
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
p­ riorities. We have improved the situation
­significantly and we have limited the level
of risk.
How do you adapt to the threats? With­in
this enterprise, harmonized processes,
methods and tools lead to greater efficiency and security in aircraft develop43
IEW
INTERVOTTI
B
JEAN
ment and production. But also the data
exchange with our suppliers in the socalled "extended enterprise" has to meet
highest security standards.
Which means? The first question is: How
do you get the data back and forth? How
do you protect it? To answer this question, the Airbus Group joined forces with
other big players in 2008: Thales, Dassault and Safran. We called the project
"BoostAeroSpace".
What was the project focus? The main
purpose was to set up a secure digital
hub where we can exchange data on both
sourcing and engineering. That speeds up
the deployment of electronic processes
and tools from the OEM to our suppliers,
"We
work
together
with
top notch
experts.
That is
extremely
helpful."
44
most of whom are SMEs. Further companies such as Liebherr Aviation have joined
the hub, too.
A recent survey said that companies
suffer from more than 120 successful
cyber-attacks a week. What is the figure for Airbus? We don't want to disclose
that information. But no major company
will seriously claim to have been spared
this kind of threat so far – except where
the threats go undetected.
And how do you protect yourself from
these threats? A year ago we put together a cyber-security board, which I am
chairing, to protect our interests – our in­
formation and products – as best we can.
All key stakeholders are represented on
this board. We also have the people in
charge of cyber-security at Airbus Defense and Space. That used to be a p­ urely
IT topic, but it has become much broader
now. Indeed, it ranks among the eight
most important goals for our company in
2014. We have set a clearly defined budget for security.
How much do you spend on security every year? Believe me, it is a lot of mo­ney.
And it is absolutely necessary.
Airbus Group is a European company
with many stakeholders. How do you
tackle the problem of security on an in­
ter­national level? To be frank, it is scar­
cely possible to please everybody. In the
US you have one federal government to
deal with. In Europe it is a bit more complicated: There is Germany, there is
France, the UK and Spain; and each government has its own specific agenda. So
we don't have a unified structure within
which we protect our data. We are always
having to respond to varying demands
from different countries.
Do you believe data security is driven
more by regulation or by concrete
threats? It is driven by both. Of course
we cannot ignore what our governments
want. Authorities formulate very specific
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
requirements – France in particular, if it is
defense we are talking about. We have to
find sensitive answers to their questions.
At the same time, we also have to deal
with concrete threats day in, day out.
Regulation adds to the complexity, but we
have a clear strategy. The link between IT
and process security on the one hand
and product security on the other hand is
vital for us.
Does that change the role of your suppliers? We rely on very close relationships. Every supplier of software for passenger aircraft now has a digital sig­nature
and is part of our Aircraft Security Management System. Irrespective of whether
they deliver just a small piece of software
or any other part of the equipment for our
aircraft.
Do your suppliers differ in terms of
­security awareness? Not all suppliers
are like Safran or Rolls-Royce. Some
don't have the money to guarantee nogaps security for their own systems. That
is why we help SMEs to protect themselves, which is ultimately in our own interests. Hackers will always look for the
weak links. BoostAeroSpace provides
SMEs with a level of security that is indispensable to us in a 4.0 setting.
Has the threat become more serious or
just more complex in recent years? It
has become both more complex and
more serious, because hackers are growing more intelligent, tricky and sophisticated all the time. Companies have become more vulnerable, and that demands
a different approach to what we used to
do in the past.
Who poses the greatest threat to you?
You read the newspapers the same as I
do. Some players are more vulnerable to
product piracy and cyber-attacks than
others. We used to see fairly simple attacks on a small scale, but what we are
seeing today are threats on an enormous
scale. We talk about an advanced per-
A CTO IN
HIS FIELD
THE
SECURITY
ARCHITECT
JEAN BOTTI, born in 1957, master's
degree and PhD in mechanical engineering, Toulouse/Paris, MBA in Michigan;
Chief Technology Officer of the Airbus
Group and member of the Airbus Group
Executive Committee since 2006. Botti
has previously worked with Renault,
General Motors and automotive supplier
Delphi in the USA and France.
THE
NETWORK
PHOTO: AIRBUS GROUP
THE AIRBUS GROUP operates at
more than 170 locations worldwide,
employs around 140,000 people and has
machine maintenance hubs on five
continents. Airbus gives work to 35,000
suppliers on its domestic markets alone.
The volume of external delivery agreements – nearly 40 billion euros – equates
to almost two thirds of Airbus' revenues.
sistent threat, from outside. Attacks are
often coordinated, concealed and come
from different directions. That makes it
difficult to generalize.
It must have come as a shock last year
when German security consultant Hugo
Teso showed how easy it was to remotely attack an airplane's communication
system. All he needed was a radio trans­
mitter and some software he had bought
on eBay. It wasn't a shock. What he said
was wrong, for sev­eral reasons. He was
never able to take full control of an airplane. However, the mere fact that he was a
smart hacker with a pilot's license made
his scenario extremely credible, and we
were obliged to react.
How? We have been working together
with top notch experts for more than ten
years. That is extremely helpful. The Airbus team in charge of aircraft security is
always open to discussions about potential weaknesses. We have conclusively
proven to the aviation safety authorities
that everything is okay. I have every reason to trust in the work we do and the
competent people we have on board. We
are doing everything in our power.
The threats are changing constantly.
How do you learn about new security
gaps? To give you just one example: We
work together with tech-savvy young­
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
sters who help us recognize future threats – to anticipate them rather than merely react to them. That is especially
important because airplanes have such
a long l­ifecycle.
How do you make sure that you always
keep your nose in front? Our people are
highly connected, they are top-notch specialists and they know the hacker scene.
It is a small world. Lots of experts work for
us. They spend half of their time working
on a certain product or for a certain division at our company. The other half they
devote to attending prominent events in
the USA, France, Germany, the UK and
sometimes even China. This was an important condition when we recruit­ed
them. We normally look for experi­enced
specialists, but not in the field of cyber-security. Here, we look for younger
people, because we need creativity more
than anything else.
Do you coordinate with competitors to
ward off criminal attacks? That's not
easy. We have tried to agree on harmonized security standards. We engage in intensive dialog with our competitors, especially with regard to aircraft security. Every
year, Airbus hosts an Aircraft Security User
Panel that is attended by various players in
the industry. Future threats, common standards, past experience, customary solutions are all discussed in this forum – with­
out excluding competitors from anything.
We also participate in the ­Aviation Information Sharing Working Group, a US-led
initiative whose aim is to encourage industry and governments to share ideas on the
subject of data s­ ecurity.
And the outcomes? When it comes down
to the details, many companies keep
their cards close to their chest. So we first
try to resolve our problems internally.
Looking ahead, I see an urgent need for
us all to collaborate and strengthen each
other. That is something we still need to
ingrain in our culture.
45
COO
WORKSHOP
| ROLAND BERGER INDEX |
IS YOUR
COMPANY
READY FOR
INDUSTRY 4.0?
What must companies do to boost their
efficiency, quality and speed as they
­implement Industry 4.0? How can
­managers tap their company's potential? On top of its economic maturity
­index (see p. 39), Roland Berger Strategy
Consultants has now also prepared
an analytical index for managers and
e­ ntrepreneurs. The four most important
factors are infrastructure, processes,
data traffic and work models. These
­factors enable us to calculate a com­
pany-specific maturity index value
­high­lighting how all departments must
pull together. Our study is due out at
the ­beginning of 2015.
COMPANY ANALYSIS BASED ON ROLAND BERGER'S MATURIT Y MODEL FOR INDUSTRY 4.0
(generic model)
ELEMENT
INDICATOR
INFRASTRUCTURE
Sensor technology
LEVEL 1
Industry 3.0, basic digital
capabilities
LEVEL 2
Maturity, but principles of
Industry 4.0 not implemented
●
Use of precision
engineering technology
Production design
Planning and control
●
●
●
Logistics
Maintenance
DATA
WORK MODELS
●
●
Internal data integration
External interfaces
●
●
Flexible work force
●
Management models
46
Industry 4.0 implemented
●
Flexible production
plant
PROCESSES
LEVEL 3
●
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
COO P
HO
WORKS
77%
| STRATEGY |
ENGINEERING
Western European
companies' sales and
engineering footprint
41%
SALES
| ENGINEERING EFFICIENCY |
More efficiency, please!
As Western European companies enlarge their footprint throughout the
world, the question of how best to serve
local customer needs takes on new urgency. Three typical mistakes are often
made when entering a new market:
1. Developing products that are too
complex for emerging countries 2. Failing to ensure that products are suitable
712
2003–2013
350
1973–1983
for the mass market 3. Allowing an imbalance to arise between sales on domestic markets (41%) and the personnel
expenses incurred in development in
these markets (77%).
Our "Engineering Efficiency 2014" study
outlines a roadmap to more marketable
technologies and more customer-­orient­
ed products.
| TECHNOLOGY GROUPS |
GIANTS'END?
Change or die? HP is splitting its business,
eBay is jettisoning Paypal, Facebook wants to
be rid of its Messenger. Technology magazine
"Wired" concludes that the important thing is
to focus on one thing and do it really well. 350
companies dropped out of the Fortune 1000
between 1973 and 1983. Between 2003 and
2013, the number was 712. The half-life of bu­
si­­nesses is declining. Agility is the order of the
day, and is rewarded by investors in companies
big and small. Industry 4.0 creates conducive
conditions.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
LEARNING
FROM NETFLIX
Today's companies must make complex
strategic decisions against a backdrop
of unprecedented uncertainty. Digitization, growing uncertainty about political regulation, the need to manage
emerging markets and the need for organizational agility are just some of
the many imponderables. Charles
Edouard Bouée, CEO of Roland Berger
Strategy Consultants, recommends a
strategy that has proven its worth in
military contexts: light footprint management. It emphasizes agility, speed,
responsiveness and the efficient use
of resources. Ignore change and you
risk falling into the "Kodak trap" of
missing out on transformation. Drawing on the experience of champions
such as Netflix (innovation), Haier (reorganization) and P&G (collaboration),
the "Mastering 2020" study spells out
seven key principles of adaptability.
www. rbsc.eu/mastering2020
BEYOND MAINSTREAM
Mastering 2020:
How light footprint
management helps
prepare you for a
world of uncertainty
REVOLUTION
Developing
new models
EVOLUTION
Upgrading
existing
businesses
MASTERING 2020
How to get prepared for the VUCA world with
Light Footprint management
FEBRUARY 2014
47
| COST-CUT TING |
Unexpected
obstacles
What steps does a cost-cutting pro­ject
typically involve? What obstacles
might you encounter? What are the
success factors? Savings of up to 30%
are possible – thanks to standardiza­
tion, design changes, renegotiation
with suppliers and leaner production.
Our concept can be mapped onto all
product phases.
PRODUCT
FUNCTIONAL OPTIMIZATION
•Product portfolio
•Functional scope
STANDARDIZATION
•Simplification of design
•Standardization of parts
•Reasonable quality requirements
PURCHASING
MATERIALS
•More professional material purchasing
•Dual sourcing
PRICE NEGOTIATIONS
•Product cost benchmarking for
contract negotiations
PROCESSES
ASSEMBLY
• Simplification of processes based
on product redesigns
•Changes in process technology
PRODUCTION
•Changes to the production process
•Material substitution
•Process reengineering
SUPPLY CHAIN
LOGISTICAL OPTIMIZATION
•Simplification of logistics and
­transportation
•Optimization of both suppliers' and
­in-house inventories
•Localization of production facilities
•Synergies across different
development/production sites
36%
vs.
57%
x2
59%
vs.
11%
Employees in the most digitally advanced
companies are 50% more satisfied with
their working life than their peers at poorly
digitized firms.
Paradoxically, consumers evidence
greater digital maturity than companies.
59% of French people shop online, but
only 11% of French companies sell online.
The most digitally advanced companies are
growing six times faster than firms with the
lowest level of digital maturity.
| DIGITAL TRANSFORMATION |
NEW OPPORTUNITIES
FOR FRANCE
Commissioned by Google, a new study by Roland Berger France
assesses the economic and social potential of the digital
transformation. The publication was produced in collaboration
with Cap Digital, a digital economy industry association,
and is based on a survey of more than 500 French companies
that each employ more than 50 people.
www.rbsc.eu/digitransformation
www.rbsc.eu/opsradar
48
Untapped growth potential: French companies have doubled their sales growth
by accelerating their digital transformation.
50%
x6
57% of firms rank the digital transformation
as a strategic medium-term priority. Yet
only 36% have formalized a digital strategy.
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
COO P
HO
WORKS
| STAYING COMPETITIVE |
Escaping from the commodity trap
When even complex products and services degenerate into effective commo­
dities, a company has fallen into the
commodity trap. Scope for differentiation is limited and competition is primarily price-based. Innovation, quality
VERY
LOW
LEVER
EFFECTIVENESS/
LEVEL OF USE
VERY
HIGH
Effectiveness
Level of use
Differentiate products through innovation
Add value to products with services
Improve product and delivery quality
and the business model are the three
main rungs of the ladder to climb out
of the commodity trap. The biggest
discre­pancy between the effectiveness
of a lever and its application in practice
concerns the realignment of business
models and target costing/design-to-
Strategically realign the business model
Step up target costing/design-to-cost
Design a more flexible organization
Use marketing and sales tools
cost. This study shows how firms can
gain a fresh competitive advantage.
www.rbsc.eu/commoditytrap
Focus on special market segments
Realign the company portfolio
| E-LEARNING |
SPOCs
Small private online courses
SOOCs
Selective open online courses
(Participants can be chosen based on prior
qualifications and/or their employer, for example)
­TORQUEs MOOCs
Tiny open online courses
with definite restrictions, focusing
on quality and effectiveness
Massive open online courses
ALL CHANGE
IN CORPORATE
LEARNING
Online tuition technologies can help companies
become more agile, adaptable and able to
learn. The most important areas of application are
not free mass course offerings ("MOOCs"),
however, but personalized and individualized
educational offerings that encourage lifelong
learning. The rules that govern the corporate learning
value chain are changing as silo mentalities that
thinks in terms of departments, business units or
individual enterprises are gradually torn down.
www.rbsc.eu/corporatelearning
THINK ACT // COO INSIGHTS
INDUSTRY 4.0
49
S LAST
F A M O UR D S
WO
MAN OR MACHINE:
WHO WILL BE IN
CHARGE OF
PRODUCTION
IN THE FUTURE?
An essay by Andreas Neef
50
In a mature Industry 4.0 scenario, new
professions and training concepts will
emerge. System architects are the "brains"
of Industry 4.0. They will combine traditional engineering skills with software excellence and the vision of a game designer. They will create a framework and rules
under which the self-organization of production will take place.
CONFIGURATORS AND
CONTINUITY ENGINEERS
Configurators will use intelligent interfaces
to adjust systems to local conditions, but
without needing to tackle the complexity of
the processes. They are the users of the
digital factory, who recognize errors and
can adjust the parameters to the specific
situation, but without having to exercise
centralized control over the entire process
in the traditional sense. Continuity engineers will be responsible for avoiding
downtime and ensuring that value-adding
processes don't stop, even if there are failures. They will provide ad-hoc solutions to
minimize any damage from interconnected
risks and combat the threat of cascade effects should any production stage crash.
Operating decisions in Industry 4.0 will
increasingly be made by the systems
themselves, not only because of the complexity of data networking, but also to conTHINK ACT // COO INSIGHTS
INDUSTRY 4.0
trol risks. If there are problems at a supplier, essential primary products can be
automatically ordered from other providers
using an industry platform. Production
processes can then be kicked off there in
real time. This will change relationships in
the industrial ecosystem. Just like social
networks have changed the social concept
of friendship, relationships between companies in Industry 4.0 will be more diverse,
looser and volatile. Simultaneously, openness in terms of cross-company collaboration and the integration of data across
processes will be necessary to actually realize value-creation potential. Significant
spatial density and a diversity of industries, skills and company sizes provide the
ideal setting for establishing such a highly
flexible production system. Europe is relatively well positioned. From a global perspective, we can expect new production
clusters to be formed not by industry homogeneity, but by virtue of adaptability
and complementary competences in close
physical proximity. The paradigm shift to
Industry 4.0 means the cards will be reshuffled on all levels.
Andreas Neef is the Managing Partner of Z_punkt
The Foresight Company. A highly regarded management consultant, Neef is the author of a study entitled "Connected Reality 2025 – Die nächste Welle
der digitalen Transformation" (The next wave of digital transformation). Download: www.z-punkt.de
ILLUSTRATION: BEN KIRCHNER
I
ndustry 4.0 is an industrial ecosystem,
the heart of which are intelligent software systems that enable highly-efficient and adaptive production through
autonomous cyber-physical systems. The
shift to this new paradigm is forcing a
change in people's role in the industrial
value chain. Where today technical expertise, experience, human judgment and discretion are mandatory even for highly automated production processes, these skills
will hardly add any value at the point of
production in the real-time logic of future
hyper-flexible production structures. Let us
not deceive ourselves: As with every wave
of industrialization, Industry 4.0 will also
destroy jobs over the long term.
This time, however, it will be jobs that
require experience – skilled labor and middle management positions – that the machines replace. This is because expertise,
practical experience and the ability to
make sound operating decisions will be
embedded in system logic itself. Sensory
technology and self-teaching software will
permit cyber-physical systems to increasingly improve their assessment of situations, learn from them and then independently optimize processes. For all the
risks it poses to the labor market, this also
provides us with the opportunity to keep
industrial value creation in Europe, despite
a shortage of skilled professionals.
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Published in November 2014
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