What is Industry 4.0?

Engineer in a smart factory

What is the fourth industrial revolution?

When computers were added to factories, they disrupted the established processes and allowed for much greater efficiencies. The process is now being taken one step further as computers are being linked together to generate data and ultimately to make decisions. A combination of Cuber Physical Systems (CPS), the Internet of Things and the principles of Industry 4.0 are responsible for bringing together these elements under one roof. As a result of the continuous improvements in factories, construction and quarry companies these industries are becoming less wasteful and more efficient.

The Four Industrial Revolutions

  1. The widespread use of mechanisation in industry    
  2. The widespread use of electrical energy in industry 
  3. The widespread use of computers in industry                       
  4. Smart machines and products which control their own manufacturing process

The fourth industrial revolution is enabled by internet technologies and the emergence of smart machines and products. The expression used for this fourth industrial revolution is Industry 4.0, an idiom that is a rumination of software revision labelling.7.

Four fundamental concepts define the Industry 4.0 initiative. The “house of” is a popular paradigm often applied to the lean initiative10; this model can also be utilised for the Industry 4.0 Factory.

History of Industry 4.0

The first three industrial revolutions spanned almost 200 years. The first industrial revolution began in the late 18th century with the introduction of large-scale mechanical looms for fabric production.1 From the 1870s on, the widespread use of electrical energy led to the second industrial revolution.2. The third industrial revolution began in the 1970s when newly developed electronics promoted the computerisation of manufacturing processes. 1,2. The Germanic term Industrie 4.0 was first used in 2011 to describe the fourth industrial revolution, the introduction of Internet technologies into industry. 1

The first industrial revolution was marked by the establishment of mechanised production works in the late 1700s. The founding of a water-powered cotton spinning mill at New Lanark, Scotland, in 1796 is a notable example of the first industrial revolution.3 The New Lanark spinning mill operation became a model example from the first industrial revolution of advancement and improved prosperity through the application of new technology and the adoption of social responsibility 4.

Kagermann, Lukas and Wahlster first published the principal ideas of Industry 4.0 in 20115 6. In America, a concept similar to Industry 4.0 has been generated and named the Industrial Internet by General Electric1. The expressions Industrial Internet and the Internet of Things are often used with a similar meaning to the German expression Industry 4.0.

Key concept 1: The Smart Factory

As shown in the below image, The Smart Factory, serves as the foundation of the Industry 4.0 Factory.  The Smart Factory is a manufacturing facility that harvests data from equipment sensors to enable its self-directed systems. This data needs to be transferred from the manufacturing equipment sensors to centralised Information Technology (IT) databases for analysis and monitoring.

Key concept 2: Cyber-Physical Systems

The first column of the Industry 4.0 Factory is Cyber-Physical Systems (CPS) CPSs are hardware-software systems that control and monitor physical processes.

Key Concept 3: Cobots

The second column of the Industry 4.0 factory is Cobots. Cobots, collaborative robots, are robots designed to cooperatively assist their human operators.  

Key Concept 4: Decentralised Decision Making

Decentralised decision making serves as the roof of the Industry 4.0 factory and provides shelter to the others. The Industry 4.0 workplace mandates a high degree of self-regulated autonomy with decentralised leadership and management approaches. Employees have greater freedom to make their own decisions, become more actively engaged, and have better control of their workload. This allows for faster decision making and a more engaged workforce.

Industry 4.0 Technologies

Within the Industry 4.0 Factory, numerous tools help enhance and deliver improvements in efficiency and productivity. These include Digital Twins, Augmented and Virtual Reality, Cybersecurity, Additive Manufacturing, Data Analytics and Artificial Intelligence.

The digital transformation is driven by Industry 4.0 and scientific advancement, so the Industry 4.0 factory tool kit is constantly added to and improved. Advances in Quantum computing, 6G technology, wearables, and neurotechnology ensure that Industry 4.0 and the digital transformation never stop.

Applications of Industry 4.0 Technologies

While it can be difficult to identify exactly how to apply Industry 4.0 technologies to your unique case, there are aspects of every industry that can be impacted. It helps to look at the best practices out there today and see how your competitors are applying technology now.

Identifying Opportunities

A cornerstone of Industry 4.0 is using sensors, and machine data to inform decisions. This process is not possible without first examining how the processes currently work and analysing the data to see if it can be done better. The smart factory will generate and analyse a huge amount of data from its machines. This data can then be analysed much faster and at a scale much greater than any human operator could.

Most companies who implement industry 4.0 practices are able to increase their gross margin by 30% within 24 months 11 . Industry 4.0 offers the opportunity for manufacturers to optimize their operations quickly and efficiently by knowing what needs attention.

Optimising Supply Chains

A supply chain that is fully integrated to the processes on the factory floor, in the quarry or on the site can adjust itself to deal with unforeseen events. An example might be if a weather event closes a route or delays a delivery, the system can readjust the manufacturing priorities to deal with it.


1. Drath R, Horch A. Industrie 4.0: Hit or hype? . 2014.

2. Hermann M, Pentek T, Otto B. Design principles for industrie 4.0 scenarios. . 2016:3928-3937.

3. New Lanark Conservation Trust. The story of new lanark. Lanark, Scotland: New Lanark Conservation Trust; 1997. Accessed 2017-08-24T13:48:54+0000.

4. New Lanark Conservation Trust. Robert owen and new lanark A man ahead of his time. http://www.robert-owen.com/. Updated 2017.

5. Kagermann H, Lukas W, Wahlster W. Industrie 4.0: Mit dem internet der dinge auf dem weg zur 4. industriellen revolution. VDI nachrichten. 2011;13:11.

6. Stock T, Seliger G. Opportunities of sustainable manufacturing in industry 4.0. Procedia CIRP. 2016;40(Supplement C):536-541. doi: https://doi.org/10.1016/j.procir.2016.01.129.

7. Lasi H, Fettke P, Kemper H, Feld T, Hoffmann M. Industry 4.0. Business & Information Systems Engineering. 2014;6(4):239.

8. Kagermann H, Helbig J, Hellinger A, Wahlster W. Recommendations for implementing the strategic initiative INDUSTRIE 4.0: Securing the future of german manufacturing industry; final report of the industrie 4.0 working group. Forschungsunion; 2013.

9. Hofmann E, Rüsch M. Industry 4.0 and the current status as well as future prospects on logistics. Comput Ind. 2017;89:23-34.

10. Flinchbaugh J, Carlino A. The hitchhiker’s guide to lean. Dearborn, Michigan: Society of Manufacturing Engineers; 2006.

11. Baur C., Wee, D., 2021. [online] Available at: <https://www.mckinsey.com/business-functions/operations/our-insights/manufacturings-. next-act> .

What is Industry 4.0?
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