The next industrial revolution will be (self) organised

Everyone seems to have a different idea about what will spark the next industrial revolution: 3D printing, more sophisticated robots and even renewable energy have all been put forward as potential progenitors. The German vision of the future of manufacturing, as laid out at a talk this week at the Royal Academy of Engineering, is somewhat more complicated and extensive. Proposed by a government-backed working group of Germany’s top industrial companies, “Industry 4.0” envisages a world of self-organising smart factories where manufacturing machines talk to each other, to their products and to other links in the supply chain to make production more efficient, more flexible and more personalised.

If you don’t really understand what that means then don’t worry: unlike previous big changes in the way things are made, which were driven by the advent of steam power, electricity and computers, respectively, Industry 4.0 isn’t easily summed by a single key technology, cause or effect. At its heart is the internet’s ability to connect many different machines to one another, but wireless communication and artificial intelligence are also crucial. It encompasses many of today’s most popular technology buzz concepts – the internet of things, cloud computing, 3D printing ­­­, big data ­– but it’s also more than the sum of its parts.

Put simply, Industry 4.0 is about faster manufacturing of products to more particular customer specifications by automating not just the metal bashing but as much of the design and production process as possible. For example, an Industry 4.0 smart factory might receive a unique order for a set of customised products, adjust its production lines to match the design and number of units needed, contact supply chain factories so their production matches the component requirement, track each individual unit as it is made and customise it accordingly, and have transport ready to ship the order as soon as it is complete.

The good news about Industry 4.0 – besides the obvious potential for improved productivity – is that much of the technology to enable it already exists. The difficulty will be in convincing companies to adopt it. The easiest things to sell are the ones that need the least explanation and, as the previous three paragraphs show, Industry 4.0 is not a simple concept to unpick, at least not like electrification is and especially when described with jargon such as “cyber-physical systems”.

The German conception of Industry 4.0 includes considerations of how it could make manufacturing more environmentally friendly, achieve a better work-life balance for operating staff and even enable the introduction of more computerised assistance systems for older workers. But the reality is that a technology is unlikely to be widely adopted if companies can’t clearly see how it will improve the bottom line.

There are other issues to overcome as well. For companies to collect and share so much data, they will have to be sure it is securely stored on their own systems and on the internet using “trusted cloud” technology. And other questions of data privacy and ownership will have to be addressed if products become so connected that they continue to gather and send data even after they’ve been shipped to the customer – for example to let a manufacturer know if something goes wrong and they need to send out a repair team.

Pushing humans further out of the production process with ever-greater automation might destroy traditional manufacturing jobs but there’s a good chance Industry 4.0 could create plenty of new jobs as well, just as happened in previous industrial revolutions. So skills and training could become an even bigger issue for manufacturing than it is at the moment, with legions of software engineers and code-literate machine operators needed to ensure those intelligent factories are doing their jobs properly.

But the biggest lesson from the German experience of developing Industry 4.0 seems to be that it requires strong business leadership. It may be that because the change encompasses a variety of technologies and processes, we will see a gradual, piecemeal transition to smart factories over several decades. Certainly, no one is expecting an overnight transformation. But the complexity and interconnected nature of Industry 4.0 suggests it will require companies to work closely together.

Political backing will help: Industry 4.0 is part of the German government’s high-tech strategy and is even mentioned in its coalition agreement. But primarily the concept is the work of the country’s top industrialists and researchers. It inevitably needs manufacturing companies to work with software companies, for big firms to encourage and collaborate with their supply chain to ensure smaller firms understand the benefits of the new technology and that they are willing to invest.

The UK hasn’t traditionally been that good at industrial collaboration, instead sticking to fierce competition with rivals and harsh negotiation with clients. But Jaguar Land Rover director Bob Joyce told the Royal Academy audience that this was changing and that the top engineering companies were now much more inclined to share best practice than they were even five years ago.

If this greater partnership culture can be developed then it might help the UK achieve the productivity gains it needs to compete with already advanced Germany and the newer low-cost manufacturing countries. If we revert to muddling along then a future of further decline seems much more likely.