Embracing ‘Industry 4.0’

From my Fortune CEO Daily briefing:

There’s a interesting new report out from BCG this morning on “Industry 4.0” – the German’s preferred term for how big data, cloud computing, sensors, advanced analytics, augmented reality and improved robotics are dramatically changing the world of manufacturing (known in GE land as the “Industrial Internet”).

BCG surveyed 380 U.S.-based manufacturers, and found that a majority – 53% – see Industry 4.0 as a priority, but not yet a “competitive threat” to their business. The main focus for now seems to be cost reduction, and change is happening fastest in the most cost sensitive industries: semiconductors, electronics, oil and gas. The potential for product innovation, improved client service, increased revenue, etc., is so far taking a back seat.

The BCG folks argue many manufacturers are “moving too slowly to adopt Industry 4.0” and that companies taking a “wait-and-see” approach do so at their peril. The report highlights some interesting examples – for instance:

–A manufacturer of truck engines that has managed to reduce tooling time from 20 weeks to 2 weeks, and tooling costs from $10,000 to $770, by using a 3D printer to create prototypes for a water pump housing used to perform heat and pressure tests on new engines.

-A tire manufacture that has installed wireless sensors on its tires to gather data on temperature, speed, fuel consumption, and location, and will ultimately sell “tires as a service” – where customers pay by the mile, rather than the tire.

You can read the full report here.  

Alan Murray
@alansmurray
alan.murray@fortune.com

Contrast this with the hot news topic making the rounds emphasising on “saving US manufacturing jobs”.   Sounds like that more “manufacturing” will be returning, thought it will be done with fewer people than when it left or is being done offshore.

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