In addressing the European technology media during our recent EMEA Press Day in Limerick, I discussed ADI’s efforts to advance factory automation and the trend we refer to as Industry 4.0. The term was actually coined in Germany in 2011 and has taken deep root among our European customers as it propagates across the global technology sector.
While Industry 4.0 may be a familiar movement for many, it nevertheless deserves a brief explanation to provide context as to the significance of the Fourth Industrial Revolution and ADI’s role in it. The first Industrial Revolution was the introduction of steam power, which laid the foundation for a global technological, social and economic transformation. The second phase came with the introduction of electricity and electric motors into industrial plants, which marked the earliest stages of automation by enabling humans to harness the power of machines in new ways. The third revolution was the introduction of computers and programmable logic controllers with the ability to direct individual pieces of factory equipment to perform very specific tasks.
Today, we are in the early phase of Industry 4.0 thanks to our ability to bring the internet into the factory and unleash the power of real-time data. The term “revolution” signifies a time of sudden, rapid change. For traditionalists, the notion of Industry 4.0 may be worrisome because it means, for the first time ever, we are opening manufacturing plants to the outside world. For some, that’s a scary notion, because historically factories were designed as self-contained, rigid structures with tightly controlled networks designed to run very efficient operations at the machine level.
It’s understandable that there might be an initial level of apprehension. When we start plugging IT networks and Ethernet lines into a manufacturing plant, we are upending a more than 100-year-old operating model that is conservative by nature and slow to embrace change. But while that change can feel disconcerting, the ability to liberate data by pulling it into a trusted enterprise, and increasingly, the cloud, promises profound benefits. On the environmental front, digital technologies deployed in factories worldwide are expected to reduce global greenhouses gases up to 15 percent by 2030*. In Germany alone, Industry 4.0 is projected to drive a nearly €30 billion annual increase in revenue growth**, which is equivalent to one percent of the country’s GDP.
Industry 4.0 Is a Jobs Creator and Productivity Driver
Factory automation raises other concerns, too, namely the question of whether robots will replace people on the factory floor. In fact, Deloitte in the U.K. suggests that every one additional technology job creates as many as five new jobs in the local economy. This doesn’t mean there won’t be change or a need for retraining. But the argument I made in Limerick is that the new business models that develop around Industry 4.0 will expand economies, are fruitful for society and are creating complimentary jobs that will help our global manufacturing ecosystem continue to thrive.
This is largely because Industry 4.0 is changing the very nature of manufacturing. Consider that OEMs for the past several decades drove efficiencies by moving production to lower-cost geographies. That option is becoming less practical as rising wages in many of these countries undermines the initial argument for offshoring. To counter this trend, manufacturers need new ways to improve productivity. This is opening a host of opportunities for Analog Devices, particularly because the biggest challenges to implementing Industry 4.0 are at the system-level, where our 50-plus years of innovation is unmatched.
As an example, we partnered with a major European carmaker to develop an equipment condition-monitoring solution. Once deployed, our sensors discovered a badly damaged gearbox on one of the OEM’s chassis welding turntables. Because they identified the problem before the gearbox failed, the manufacturer was able to make the repair while eliminating the need for unscheduled downtime, which saved an estimated €2 million.
Adapting to Shifting Consumer Demands
In addition to enhancing productivity, access to the internet is enabling manufacturers to more quickly respond to changes in consumer buying behaviors. Rather than building a new factory, for example, there is a greater likelihood that a manufacturer can reconfigure an existing plant. Not long ago, this would have been a major problem for an OEM whose fixed industrial infrastructure was inflexible and difficult to scale.
At ADI, we’ve been influencing these trends for many years to help manufacturers fully embrace the digital world and the Internet of Things (IoT) and take advantage of their newfound access to real-time data. The response has been richly rewarding as more and more OEMs are upgrading their manufacturing footprints to allow for more configurability, more flexibility and more modular automation equipment that is scalable and can be relocated to respond to changing consumer demands in real-time.
Factory Automation: Where IT Meets OT
Interestingly, industrial automation is creating a new challenge as the introduction of the internet to the factory floor causes two worlds to collide: Information Technology (IT) and Operational Technology (OT). Among other things, IT and OT function on vastly different time scales. A two-second delay when booting up a PC is usually acceptable within an IT framework. Latency of even a few milliseconds in an OT application could be catastrophic if you’re operating a precision robot that’s holding a car chassis while three other robots are trying to make precision welds.
The issue is compounded when you expose the fixed but high-speed world of OT to the outside world of the cloud and Ethernet networks – not to mention the need for new levels of security to thwart cyber threats.
So how do we integrate industrial IoT with legacy protocols, cables and field buses? What happens when customers start dumping more IT-type data onto networks that are already highly configured and optimized? That’s something ADI has spent many years thinking about, and that’s why our customers come to us. Among the lessons we’ve learned is that manufacturers can’t rip out all of their legacy equipment, controls and processes and simply start over with all-digital technology. This has prompted us to work even more collaboratively with our customers to help them gradually embrace Industry 4.0, starting with their biggest problems and accelerating that transition over time.
That’s where our deep industry expertise and expansive technology portfolio comes into play, offering everything from precision signal conversion and digital isolation to power management, connectivity and new networking capabilities – in short everything from the sensor to data analytics at the edge and in the cloud.
With all the challenges and opportunities that Industry 4.0 presents, I’m going to conclude that the trend toward factory automation is more friend than foe. It’s a jobs and revenue creator, frees workers from menial, repetitive tasks and reduces our carbon footprint. Over the longer term, Industry 4.0 could even begin reversing the industry’s longtime practice of offshoring by promoting manufacturing cost parity around the world. All of this informs how we at Analog Devices think about Industry 4.0 and what that means for the future of our company and customers.
Watch the complete video of the “Digital Transformation—Friend or Foe” presentation I gave in Limerick here.
Our next ADI Press Day in Limerick blog will come from Chris Jacobs, Vice President Autonomous Transportation & Automotive Safety. Chris will be discussing technology innovations that are defining the rapidly evolving autonomous transportation and automotive safety sector.