Making sense of Industry 4.0
Industrial revolutions have involved significant events that have had far-reaching impacts on future generations. There have been only three such industrial revolutions identified up until the beginning of this century. The first one was at the end of the eighteenth century and led by the introduction of the steam engine. The second one was at the beginning of the twentieth century which culminated in the mass production of goods. The third revolution has been happening since 1970 with the increase in commercial and civil usage of computers and the automation of production processes.
A majority of industry experts today believe that the fourth revolution is currently underway. According to experts, 2015 can be flagged as the year when the fourth industrial revolution began with digitisation of all processes in industries. This revolution got christened with a contemporary name -- Industry 4.0.
For an enterprise, the core of Industry 4.0 is digitisation. An enterprise creates value across its production processes till it produces final products. These interdependent processes are collectively known as value chains. For example, a cement manufacturing company in Bangladesh may have a bag manufacturing unit. The bags produced in the bag-making unit become the input to the cement factory where the cement is produced and packed in these bags. When viewed in isolation, each of these units produce goods of certain value. When viewed together, both these value-producing processes are integrated in a way that the whole enterprise enhances the value of its final output to a large extent.
Industry 4.0 seeks to digitise the integration of such value chains. Digitised integration of such value chains will provide more transparency to the production process of each unit. It will also provide faster and accurate visibility to production quality such as the number of bags produced in the bag-making unit vis-à-vis the number of cement bags used by the cement manufacturing unit from that lot. Finally, it will help making the integrated value chains far more efficient. Many companies in Bangladesh have already embarked on this journey of value chain integration through enterprise resource planning (ERP) and business intelligence (BI) implementation.
The next step in the Industry 4.0 journey will be the digitisation of products and services. An enterprise may have some successful products and services in the market. The fourth industrial revolution is expected to disrupt them in a significant way. The enterprise, in such a situation, will have two choices to make -- either disrupt the market proactively or wait to get disrupted by an emerging enterprise. Leaders in a particular sector are also first movers in such situations to transform themselves for a digitised world. Digitisation of an existing product or service is not a familiar path of product development. It requires innovation and customer-centric design thinking. An enterprise that actively fosters a culture of innovation is likely to show results faster than its counterparts.
Finally, Industry 4.0 seeks to digitise existing business models and create new ones in a completely digitised manner. We are seeing several such examples in both developed and developing countries today. Mobile app-based ride sharing services have been disrupting the traditional taxi-based transportation business significantly. It took less than five years to start this business and spread to more than 80 countries. This particular business model has also changed the demographic profile of cab drivers in some large cities. What used to be a male majority population before has now become a multi-racial, gender-balanced, technology-reliant population of cab drivers. Thus, Industry 4.0 is not only going to impact society but human lives too.
Technological advancements are going to enable the journey of Industry 4.0 faster than the earlier industrial revolutions. Technologies such as mobile devices, sensors, IoT platforms, cloud computing, augmented reality, robots, artificial intelligence and the blockchain are going to play critical roles in this journey of enablement. In fact, there are about 150 distinct technologies that are used in various industries today and each of these technologies will make an impact in accelerating this revolution.
Analytics will be a critical capability for an enterprise to process data generated by these new technological devices and create new insights for the business. In fact, enterprises which will invest to become virtuosos of analytics faster will lead the journey among their peers. This will also require the workforce to become capable of using analytics for creating insights. For the younger population of Bangladesh, this is going to be a new career opportunity with rewarding growth prospects.
Changes towards digitisation are happening fast across the world. According to a global survey conducted by PwC on Industry 4.0 in 2016, 47 percent of the companies surveyed are digitising their existing products or services. About 44 percent of the companies are working to introduce a new digital product or service, and 72 percent of the companies are building customer relationships digitally. A good number of them believe that these initiatives will help them in growing their revenues in the coming years. They also believe that Industry 4.0 is going to globalise their enterprise significantly.
Industry 4.0 is expected to influence enterprises in Bangladesh in the coming years. Manufacturing, transportation and logistics, construction, and packaging industries are going to experience this revolution sooner than others. Early adoption of the enabling technologies will help these enterprises create new products, compete globally and grow their business. Their collective growth will also accelerate Bangladesh's national economic growth.
The writer is partner at PwC. The views expressed here are personal.