Characteristics and Impacts of Industry 4.0


The waves of the Industry 4.0 model in the global and national economies, specific industries, employment, and capital markets are drawing more and more attention from economists. The global industrial environment has changed dramatically in latest years as a result of technological progress and inventions. Industry 4.0 may be compared to three industrial revolutions that occurred in the preceding centuries and signify the most important disruptive shifts in manufacturing consequently technological advancements

The essential progress from traditional manufacturing toward Industry 4.0 established four important features and characteristics.

(1) Vertical networking of smart production

(2) Horizontal integration over a new generation of global value chain networks

(3) Through-life engineering over the whole value chain

(4) The influence of exponential technologies.

Vertical networking of smart production


Industry 4.0′s first key characteristic is the vertical networking of smart manufacturing systems. Vertical integration in Industry 4.0 starts a connection between the several levels of the industry, from the manufacturing floor up, to production monitoring, control, supervision, quality management, operations, product management, processing, and so on. This interconnectedness through all corporate levels delivers a fluid, transparent data flow, permitting data-driven strategic and tactical choices. Therefore, the key objective behind vertical networking is to use Cyber-Physical Production Systems (CPPSs), to allow industries to rapidly reply to unexpected order changes resulting from demand fluctuations, equipment failure, or stock shortages. Vertical networking expands an organization’s capacity to necessarily familiarize itself with changes in market requirements and advantage from new possibilities.

2. Horizontal integration over a new generation of global value chain networks

In the Industry 4.0 idea, horizontal integration states to the network of varied processes, companies, and services that structure a product’s global value chain. This may be observed at the production level as a total merging of all associated manufacturing processes. Vertical integration, instead, states to a high level of coordination between production and top management layers for example quality management, product management, and production control.

The horizontal integration in an Industry 4.0 enterprise happens at diverse levels: production floor, many production facilities, and the whole value chain. Each linked machine or production unit develops a node with well-defined properties inside the production network. These nodes always communicate their status to reply separately to dynamic production requirements cost-effectively and decrease system downtime through predictive maintenance. If an enterprise owns several production sites, the horizontal integration enables to share of inventory levels and unexpected delays, and probably redistributes work among owned facilities to reply to market demand fluctuations quickly or upsurge the efficiency and speed of the production process. Though, the utmost critical and global horizontal integration remains the integration across the whole value chain.

Industry 4.0 deals with a highly automated and transparent collaboration through the whole value chain, using CPPSs, from the inbound assembly, packaging, storing, production, quality control, marketing, and sales, to outbound distribution, logistics, and retail services. The horizontal integration through all these activities makes a transparent value chain that is efficient in real-time. Therefore, this feature makes available a high level of flexibility to respond faster to changing market demands, shortcomings, and problems, eases the optimization of the production process, rises its efficiency, and decreases the generated waste. Moreover, the detail that any part or product’s history is logged and may be accessed at any time makes sure constant traceability is also recognized as “product memory”.

3. Through-life engineering over the whole value chain

Midst the characteristics of the Fourth Industrial Revolution is also the influence of the ten components of the 4th Industrial Revolution, Well-organized management of innovation, and lastly, Effective life cycle management.

Characteristics and Impacts of Industry 4.0

The ten Components of Industry 4.0

Industry 4.0 will allow integrated and cross-disciplinary engineering all over the value chain, in addition to throughout product and customer life cycles. Industry 4.0 applications are envisioned to ensure the traditional domain of product innovation. Innovation is not narrow, innovation has traditionally been linked mostly to product offerings, but it similarly has important potential in areas such as company structures, processes, networks, and profit models, along with customer-facing functions.

Well-organized management of innovation

The digital transformation to industry 4.0 will make it possible to advance further the efficiency of innovation management in all the Components of Industry 4.0. Collaborative and designed programs make individualized learning achievable, so, accelerating strategic implementation and organizational development. Industry 4.0 solutions in project portfolio management succeed easier to track not only the return on investment (ROI) in innovation, then also to identify risks by utilizing global comparative project data for monitoring and remediation.

Effective life cycle management

The digital transformation industry 4.0 will enable important data for life cycle management to be delivered at any time and from any location. These data will comprise not just information and reports, then also the results of big data processing, which will be used to grow suitable early indicators using artificial intelligence (Al). Al will service global cross-checking to control the credibility of developing appropriate bases for data-driven decision-making. It will enable businesses to better recognize and address the needs of their customers, as well as customize product cycles.

4. The waves of exponential technologies

Corporate venture capital firms have a robust gamble of profiting from disruptive innovation and exponential technology by capitalizing on new trends at the beginning. Corporate venture capital investing in start-ups permits businesses to join in the development of new products and services though also confirming their long-term effectiveness. This type of investment permits early and suitable access to new technologies. Companies must be known as more flexible to see around the next corner. Only then may a new business region be shaped, which will finally become the company’s, new heart. Companies’ existence can be jeopardized if such potentials are abandoned. If companies are to completely use the potential of exponential technologies in building the digital transformation to industry 4.0, they must transform into learning organizations. Exponential technology acceptance and integration must be sluggish but unbroken. Learning is vital for long-standing organizational development. It is time to make a transformation that is not so counterproductive. New concepts, processes, and business sectors are most fruitful when they start as a learning niche and finally migrate to the center of the organization, establishing them as a new important fragment.