Industry 4.0 is the Fourth industrial Revolution which encompasses the ongoing digital transformation of the industries and machinery.

Industry 4.0 is the Fourth industrial Revolution which encompasses the ongoing digital transformation of the industries and machinery. It refers to the automation of the traditional manufacturing practices, with the help of digital technologies such as Artificial Intelligence and Internet of Things (IoT). Even though the concept Industry 4.0 was introduced by German Scientists to improve the productivity of German Manufacturing Industry, it was brought to prominence by Klaus Schwab, in 2016 at the World Economic Forum.

The idea behind Industry 4.0 is Machine-to-Machine communication, with the help of integrated systems that network with each other, and intelligent software systems that enable newer ways of monitoring as well as optimizing performance. Powered by technology such as Big Data and Industrial Internet of Things (IIoT), Industry 4.0 offers immense potential for enhancing operational efficiency and propelling growth in organizations.

Key Components

  1. Cyber-Physical Systems

Equipments monitored and controlled by censors and algorithms that enable a tighly scrutinized ecosystem that reduces machine failures by continuously tracking the activities, performance and machine-health.

  2. Internet of Things (IoT)

The networking of physical assets with electronics such as censors and computer softwares enable faster and complete data collection across the equipments.

  3. Cloud Computing

Analysing the collected data and providing feedback is an important aspect which is taken care of by Cloud Computing. Various companies offer solutions and technologies that facilitate cloud computing which enables faster decision making.

Design Principles of Industry 4.0

The key design principles and their benefits are strongly convincing factors for adoption of Industry 4.0. They are:

  1. Interoperability

Interoperability refers to the ability of the machines and humans to communicate with each other and plan & implement activities based on the shared information. This ability to connect everything together provides a unique advantage of data that offers never-before obtained insights which enables to increase efficiency of the production & manufacturing activities.

Interoperability can be achieved by connecting machines to enable communication between each other, by facilitating the use of cloud systems and advanced algorithms that can read & understand the information.

  2. Transparency

The inter-connectedness of the machines with digital technologies facilitates a transparent system that can be accessed by stakeholders at all levels. This enables faster and better decision-making, accounting for better accountability with no grey areas.

  3. Real-Time Information

Real-Time information refers to the collection and analysis of data in real-time, allowing decisions to be made immediately. This allows to eliminate failures and redundancies, enabling for a faster, smoother and longer production & manufacturing activities with lesser downtimes.

Why is Industry 4.0 important?

  1. Agility

The adoption of digital technologies, paving the way towards Industry 4.0, will offer the much-needed agility to the manufacturing and production sector, by enabling it to react quickly to fluctuating demands. Aspects such as predictive maintenance systems have proven to be a very helpful tool in improving the efficiency and productivity of the manufacturing sector.

  2. Decentralization

The process of decentralized decision support for intelligent manufacturing is a fundamental factor driving the concept of Smart Factories. Technologies like wireless censors and advanced machine learning algorithms coupled with cloud computing systems allows the organization as a whole, to be more aware  of what is going on inside the business systems as well as the production plants, thereby creating opportunities for making better decisions.

  3. Efficiency

Essentially, the goal of Industry 4.0 is to make the manufacturing equipments more efficient in terms of production as well as maintenance. It is achieved by:

1. Reducing production halts

2. Optimizing asset usage

3. Reducing maintenance costs due to:

1. Better use of resources

2. Lesser equipment downtimes

3. Faster maintenance

4. Reduced raw material wastage

5. Lower Operating costs

4. Improving the existing process

  4. Documentation

One of the significant advantages is the documentation of all the processes and decisions, which helps to avoid any confusion. This will enable faster and smoother decision making, and will also help to trace the steps, to identify the path traversed by the organization in the past.


With better quality, lower costs and the capacity to work well towards customer satisfaction, Industry 4.0 puts producers and manufacturers on a way to be the most favoured supplier to customers. Additionally, it opens up approaches to serve bigger business opportunities, offer tweaked/customized and subsequently higher-margin items.

Adding newer technologies can also drive advantages to a higher level. For example, organizations that can have a digital twin of their tasks will profit with all the extra controls and subsequent improvements. The ones that can really use artificial intelligence and machine learning to see patterns and help anticipate future problems can also keep them away.

Manufacturers who undertake the decentralized intelligent production approach of Industry 4.0, will definitely be the ones who will be able to compete profitably even in the most demanding global markets.