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What is Industry 4.0—the Industrial Internet of
Things (IIoT)?
Industry 4.0 refers to a new phase in the Industrial Revolution that focuses heavily on interconnectivity, automation, machine learning,
and real-time data. Industry 4.0, also sometimes referred to as IIoT or smart manufacturing, marries physical production and
operations with smart digital technology, machine learning, and big data to create a more holistic and better connected ecosystem for
companies that focus on manufacturing and supply chain management. While every company and organization operating today is
different, they all face a common challenge—the need for connectedness and access to real-time insights across processes, partners,
products, and people.
That’s where Industry 4.0 comes into play.
Industry 4.0 isn’t just about investing in new techno
logy and tools to improve manufacturing efficiency—it’s about revolutionizing the way your entire business operates and grows. This
resource will provide you with an in-depth overview on the topic of Industry 4.0 and IIoT, including information on the following:
The Evolution of Industry from 1.0 to 4.0
Basic IIoT Concepts and Glossary of Terms
Smart Manufacturing Use Cases
Whom is Industry 4.0 For?
Benefits of Adopting an Industry 4.0 Model
Challenges to Consider and Overcome
How Epicor Can Help Your Business
The world of manufacturing is changing. To survive and thrive now, you have to be willing to invest in Industry 4.0. This resource will
help you get started.
Evolution of Industry from 1.0 to 4.0
Before digging too much deeper into the what, why, and how of Industry 4.0, it’s beneficial to first understand how exactly
manufacturing has evolved since the 1800s. There are four distinct industrial revolutions that the world either has experienced or
continues to experience today.
The First Industrial Revolution
The first industrial revolution happened between the late 1700s and early 1800s. During this period of time, manufacturing evolved
from focusing on manual labor performed by people and aided by work animals to a more optimized form of labor performed by
people through the use of water and steam-powered engines and other types of machine tools.
The Second Industrial Revolution
In the early part of the 20th century, the world entered a second industrial revolution with the introduction of steel and use of
electricity in factories. The introduction of electricity enabled manufacturers to increase efficiency and helped make factory machinery
more mobile. It was during this phase that mass production concepts like the assembly line were introduced as a way to boost
productivity.
The Third Industrial Revolution
Starting in the late 1950s, a third industrial revolution slowly began to emerge, as manufacturers began incorporating more electronic
—and eventually computer—technology into their factories. During this period, manufacturers began experiencing a shift that put less
emphasis on analog and mechanical technology and more on digital technology and automation s
oftware.
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The Fourth Industrial Revolution, or Industry 4.0
In the past few decades, a fourth industrial revolution has emerged, known as Industry 4.0. Industry 4.0 takes the emphasis on digital
technology from recent decades to a whole new level with the help of interconnectivity through the Internet of Things (IoT), access
to real-time data, and the introduction of cyber-physical systems. Industry 4.0 offers a more comprehensive, interlinked, and holistic
approach to manufacturing. It connects physical with digital, and allows for better collaboration and access across departments,
partners, vendors, product, and people. Industry 4.0 empowers business owners to better control and understand every aspect of
their operation, and allows them to leverage instant data to boost productivity, improve processes, and drive growth.
Industry 4.0— Where is This Revolution Going?
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Basic IIoT Concepts and Glossary of Terms
There are hundreds of concepts and terms that relate to IIoT and Industry 4.0, but here are 12 foundational words and phrases to
know before you decide whether you want to invest in Industry 4.0 solutions for your business:
Enterprise Resource Planning (ERP): Business process management tools that can be used to manage information across
an organization.
IoT: IoT stands for Internet of Things, a concept that refers to connections between physical objects like sensors or
machines and the Internet.
IIoT: IIoT stands for the Industrial Internet of Things, a concept that refers to the connections between people, data, and
machines as they relate to manufacturing.
Big data: Big data refers to large sets of structured or unstructured data that can be compiled, stored, organized, and
analyzed to reveal patterns, trends, associations, and opportunities.
Artificial intelligence (AI): Artificial intelligence is a concept that refers to a computer’s ability to perform tasks and make
decisions that would historically require some level of human intelligence.
M2M: This stands for machine-to-machine, and refers to the communication that happens between two separate machines
through wireless or wired networks.
Digitization: Digitization refers to the process of collecting and converting different types of information into a digital
format.
Smart factory: A smart factory is one that invests in and leverages Industry 4.0 technology, solutions, and approaches.
Machine learning: Machine learning refers to the ability that computers have to learn and improve on their own through
artificial intelligence—without being explicitly told or programmed to do so.
Cloud computing: Cloud computing refers to the practice of using interconnected remote servers hosted on the Internet to
store, manage, and process information.
Real-time data processing: Real-time data processing refers to the abilities of computer systems and machines to
continuously and automatically process data and provide real-time or near-time outputs and insights.
Ecosystem: An ecosystem, in terms of manufacturing, refers to the potential connectedness of your entire operation—
inventory and planning, financials, customer relationships, supply chain management, and manufacturing execution.
Cyber-physical systems (CPS): Cyber-physical systems, also sometimes known as cyber manufacturing, refers to an
Industry 4.0-enabled manufacturing environment that offers real-time data collection, analysis, and transparency across
every aspect of a manufacturing operation.
Now that you have a better understanding of some of the core concepts related to Industry 4.0, you’re ready to dig deeper into how
smart manufacturing can revolutionize the way you run and grow your business.
Smart Manufacturing Use Cases
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Smart Manufacturing Use Cases
One of the best ways to understand the concept of smart manufacturing better is to think about how it could be applied to your
business, or a business similar to your business. Here are three use cases that can help you understand the value of Industry 4.0 in a
manufacturing operation:
- Supply chain management and optimization—Industry 4.0 solutions give businesses greater insight, control, and data
visibility across their entire supply chain. By leveraging supply chain management capabilities, companies can deliver
products and services to market faster, cheaper, and with better quality to gain an advantage over less-efficient
competitors. - Predictive maintenance/analytics—Industry 4.0 solutions give manufacturers the ability to predict when potential
problems are going to arise before they actually happen. Without IoT systems in place at your factory, preventive
maintenance happens based on routine or time. In other words, it’s a manual task. With IoT systems in place, preventive
maintenance is much more automated and streamlined. Systems can sense when problems are arising or machinery needs
to be fixed, and can empower you to solve potential issues before they become bigger problems. Predictive analytics allow
companies to not just ask reactive questions like, “what has happened?,” or “why did it happen?,” but also proactive
questions like, “what is going to happen,” and, “what can we do to prevent it from happening?” These type of analytics can
enable manufacturers to pivot from preventive maintenance to predictive maintenance. - Asset tracking and optimization—Industry 4.0 solutions help manufacturers become more efficient with assets at each
stage of the supply chain, allowing them to keep a better pulse on inventory, quality, and optimization opportunities
relating to logistics. With IoT in place at a factory, employees can get better visibility into their assets worldwide. Standard
asset management tasks such as asset transfers, disposals, reclassifications, and adjustments can be streamlined and
managed centrally and in real time.
The point of reviewing these use cases is to help you imagine and start thinking about how smart manufacturing could be integrated
into your own organization. How do you actually decide if Industry 4.0 is right for you?
Who Is Industry 4.0 Right For?
How do you know when or if your business should invest in Industry 4.0?
If you’re able to check off most of the items on this list, it’s probably safe to start evaluating Industry 4.0 technology and solution
providers and allocating the resources needed for deployment:
You’re in a particularly competitive industry with a lot of tech-savvy players
You’re having a hard time recruiting to fill vacant jobs at your organization
You want better visibility across your supply chain
You want to identify and address issues before they become bigger problems
You want to boost efficiency and profitability across your entire organization
You want everyone on your team to have informed, up-to-date, relevant views of production and business processes
You want richer and more timely analytics
You need help digitizing and making sense of information
You want to improve customer satisfaction and customer experience
You want to improve product quality or keep product quality intact
You want a more integrated enterprise resource planning system that spans not only inventory and planning, but also
financials, customer relationships, supply chain management, and manufacturing execution
You want a consistent and flexible view of production and business operations tailored to specific areas or users in your
organization
You want real-time insights that help you make better, faster decisions about your business each day
Still not sure if Industry 4.0 is right for you? Keep reading to learn about some specific ways it can help you and your business.
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How Digital Transformation and ERP Can Help You Build Your Factory of
the Future
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Benefits of Adopting an Industry 4.0 Model
Industry 4.0 spans the entire product life cycle and supply chain— design, sales, inventory, scheduling, quality, engineering, and
customer and field service. Everyone shares informed, up-to-date, relevant views of production and business processes—and much
richer and more timely analytics.
Here is a quick, non-exhaustive list of some of the benefits of adopting an Industry 4.0 model for your business:
It makes you more competitive, especially against disruptors like Amazon. As companies like Amazon continue to optimize
logistics and supply chain management, you need to be investing in technology and solutions that help you improve and
optimize your own operation. To stay competitive, you have to have the systems and processes in place to allow you to
provide the same level of service (or better) to your customers and clients that they could be getting from a company like
Amazon.
It makes you more attractive to the younger workforce. Companies that invest in modern, innovative Industry 4.0
technologies are better positioned to attract and retain new workers.
It makes your team stronger and more collaborative. Companies that invest in Industry 4.0 solutions can increase
efficiency, boost collaboration between departments, enable predictive and prescriptive analytics, and allow people
including operators, managers, and executives to more fully leverage real-time data and intelligence to make better
decisions while managing their day-to-day responsibilities.
It allows you to address potential issues before they become big problems. Predictive analytics, real-time data, internetconnected machinery, and automation can all help you be more proactive when it comes to addressing and solving
potential maintenance and supply chain management issues.
It allows you to trim costs, boost profits, and fuel growth. Industry 4.0 technology helps you manage and optimize all
aspects of your manufacturing processes and supply chain. It gives you access to the real-time data and insights you need
to make smarter, faster decisions about your business, which can ultimately boost the efficiency and profitability of your
entire operation.
As mentioned, this list is not exhaustive—there are many more benefits to consider. To read about more benefits, explore
our manufacturing software page.
Challenges to Consider and Overcome
As you consider whether or not to invest in Industry 4.0, you may be thinking about some of the potential challenges associated with
incorporating new technology and processes into your organization. You’re not alone. Here are some of the most common questions
that most business owners think about when it comes to smart manufacturing:
Question #1: Will our business data and customer information be safe?
As the threat of cyber-hacking continues to intensify each year, many businesses are worried that investing in cloud-based technology
and moving data out from behind their own walls will leave their businesses and data vulnerable to attackers. Epicor keeps
information safe and secure by leveraging deep security expertise and deploying stringent cyber-security measures for all customers
that invest in Industry 4.0 technology.
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Question #2: Will I be able to get support from my team?
The short answer to this question is yes. While implementing new technology and a new business model can be hard for some people
to accept and adopt, you can ultimately get support from your team by clearly setting expectations up front, stating the purpose and
benefits of investing in Industry 4.0 technology, and being open and transparent with your team throughout the entire implementation
process.
Question #3: Do we have the resources and staff to implement and manage this
technology?
When you invest in cloud-based technology, you don’t have to rely so heavily on your IT team to manage and maintain systems.
Instead, you benefit from regular updates and maintenance performed by the service provider. For example, to avoid the ongoing
implementation and upgrade challenges ERP has historically presented, some companies are choosing cloud-based ERP or software
as a service (SaaS). As with cloud storage, the cloud ERP provider assumes the costs otherwise borne by IT to build and maintain
infrastructure. A cloud-based ERP system provides all of the benefits of ERP without requiring dedicated IT infrastructure or staff,
and frees those resources to be used in other IT tasks.
Question #4: Will I know how to leverage data to make more informed decisions?
Yes! Epicor can provide you the knowledge, training, and documentation you need to understand how to use data to change,
improve, and grow your business
.
One Smart Way to Tackle Three Industry 4.0 Challenges
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How Epicor Can Help Your Business
Epicor can help you implement Industry 4.0 technology into your manufacturing business. We provide flexible, industry-specific
software that is designed around the needs of our manufacturing, distribution, retail, and service industry customers. To learn more
about how we can help you and your business, explore our business solutions page.
The image below illustrates why more companies are working with us to invest in smart manufacturing and build factories of the
future:
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Wrapping up
To build a sustainable, scalable enterprise in today’s business environment, you need to use tools that help you streamline tasks,
boost productivity and collaboration, and leverage data in real time. Industry 4.0 solutions from Epicor can put you on the right track.
Ready to make the investment? Get started.
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Additional Resources
One Smart Way to Tackle Three Industry 4.0 Challenges
Know the Key Trends in Manufacturing
Industry 4.0 and the Factory of the Future
More Industry 4.0 Resources
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