Industry 4.0 and the Importance of Thinking Holistically

When we were born, our world mainly was our mother, but it became our immediate family in short order. Our data exchange was minimal, and that worked just fine. By the time we entered pre-school or kindergarten, our interactions expanded to a larger group, mostly our young classmates, the teachers, neighbors, and family. As we grew, those limited circles of interaction expanded. Our ability to exist and adapt relied on navigating multiple circles of people within our high school and the associated and indirectly associated people that defined our reach and relationships. By the time we entered the world, numerous sets of people, groups, organizations, and even cultures defined our existence, and we learned to navigate between and amongst them. Our ability to do so made us more effective on business and personal levels. To the extent we could not adapt, it narrowed our capabilities and limited our possibilities. 

We Are Moving to a Hyperconnected World

This journey began long ago, but the pace of the forward progression is increasing and unmistakable. In industry, it started with programmable controllers and factory automation, which eventually gave birth to the IoT-enabled machinery and the rudimentary beginnings of Industry 4.0. That was the baby state. The IoT-enabled machines were limited in nature, many of them being peer-to-peer interactions where the data created was specific to the consuming entity, usually the manufacturer of the machine. It enabled a better understanding of the device’s condition, resulting in more effective maintenance and use. 

We progressed to connected systems (or connected factories), where various connected machines were exposed to one another and could share data. Think of this as Industry 4.0 kindergarten. That may seem harsh given that characterization still defines where many are today, but stay with me. This was a significant leap forward. By integrating the data from numerous machines, an organization could create adaptive schedules, more tightly integrated maintenance scheduling, and much more. Operational understanding progressed immensely with a more complete, holistic rendering of the factory or system. This produced better quality, cost-effective and efficient operations and increased overall productivity. 

Evolving to Industry 4.0 High School

However minimally defined it may have been (or still be today), the notion of a holistic system has begun to validate the architectural approach for a broader definition of holistic. The view of connecting everything in the factory expands to consideration of related constituents. Yes, we want to run the factory as optimally as possible, and to do that, there are other entities involved beyond the factory. The high school student no longer has a limited group of classmates, but now multiple groups spread across various classes. Accordingly, the factory has supply chain partners, insurance companies, building managers, corporate offices, regulators, and more. We begin to understand that optimization has to extend beyond the data from the machines. It must include enterprise data (staffing, costs, orders, forecasts) and second and third-party relationships as mentioned above. It probably also includes other third-party data ranging from environmental data to demographic data and more. As we become increasingly aware of these additional elements, we also understand that our ability to adapt and optimize means gaining and sharing data appropriately amongst these entities. Our definition of holistic has expanded, and with good reason. By now, we have gained an understanding of machine learning (ML) and artificial intelligence (AI). We are beginning to recognize that all of this data provides the baseline for better AI/ML and better outcomes. But before we graduate to the world, we minimally need to get two key factors correct. These include the holistic optimization of the foundational system elements and the data governance. 

The foundational elements include but are not limited to the sensors used, the storage capacities, the power sources, the security choices, the communication choices from the sensor to receiver, the tiered architecture choices, the data storage choices, the privacy choices, the gateway choices, and the cloud choices. These can all be pretty straightforward, but in this regard, holistic means it is essential to understand our objectives and the associated characteristics of each element because the elements have critical interdependencies. For example, our choices regarding security will impact our power source choices and our communication choices, and these choices ripple across the extended system. Since technologies continue to evolve, it is crucial to evaluate and optimize holistically. Why? Because we will both spend less over time and create the best possible underlying data set. The data is the goal. For that matter, trusted data is the real goal. Truth is in the data, and trusted data is the key.

This brings us to the governance model. The temperature and vibration readings from a given device are atomic data. The same atomic data (or associated derived data) can have multiple forms with multiple constituents. The key is to separate the creation of the data from the consumption of the data. That is where the governance model becomes the critical piece. The governance model allows you to get the correct data in the right form to the proper constituent. This is where optimization happens. The factory, the corporate headquarters, the supply chain partner, and the regulatory authority may have different missions and desired outcomes. All are increasingly using AI/ML to improve understanding and adaptation in optimal fashions. But the best models in the world are still limited by the underlying data, so the better the curation and propagation of data, the better the opportunity for leveraging it. Happy graduation. 

Into the World (or Perhaps, Into the Wild)

Most organizations are not at the holistic optimal level described above, although most industrial organizations now understand that operating more effectively, sustainably, and responsibly relies on continued progress towards a holistic view with system and governance continually optimized. So this is our end game, right? 

It is not. Progressing to a hyper-connected world will ultimately extend what holistic means in some very challenging ways. The characterization above assumes that all of the constituents in the ecosystem are somehow identified and authenticated (directly or indirectly) to one another. In the seminal article4 in the Harvard Business Review in 2014, Jim Heppelmann, CEO of PTC, and Michael Porter, professor at Harvard Business School, described the progression from:

  • Products to smart products.
  • Smart products to smart connected products.
  • Smart connected products to product systems.
  • Product systems to system of systems

Reaching the latter equates to a point where devices will exist and interact as a part of a heterogeneous ecosystem. Using our analogy in the broadest sense, we must understand how to live and adapt to people and cultures we do not belong to or currently understand. This last element will be tricky for Industry 4.0 and other markets, and we are not there yet. How heterogeneous devices identify, authenticate, and ultimately autonomously transact will evolve faster than most people think. Governance will be a big part. Holistic will mean something different than it does today. As we progress to a hyper-connected world, we must expand how we optimize, continually challenging how we think about and deploy technology. The trick is recognizing that today’s aspirational view may look like a relic tomorrow.

Industry 4.0 is all about cyber-physical transformation, the progression to a hyper-connected world, and how to operate with trusted data to achieve better outcomes. Industry 4.0 is a holistic proposition causing us to think more broadly and optimize more broadly, and technology now enables us to do that. These steps are outstanding achievements, and the more innovative organizations are stepping up to leverage these capabilities, thereby increasing their competitiveness and ability to be responsible corporate citizens. Those doing this well are benefitting. But success today cannot equate to hubris tomorrow, as the landscape continues to change at an increasing rate. Failure to continue to innovate, learn, adapt, and think holistically will be the greatest lost opportunity of all. 

Don DeLoach

Don DeLoach is an entrepreneur, author, board member, and a leading industry evangelist for the Internet of Things. He is Co-founder and Managing Partner of Rocket Wagon Venture Studios, creating innovative startups for the cyber-physical world. He co-founded the Midwest IoT Council, where he served as co-chair from 2015 – 2020. Don is a serial entrepreneur, serving as CEO for three companies, Youcentric, Aleri, and Infobright, spanning the last 20 years. He serves or has served as an outside director or advisor for multiple companies. He also serves on the executive committee of the Array of Things (US DOE smart cities project), the Illinois Autonomous Vehicle Association, and as a director on the Juvenile Protective Association. He is the principal driver of the "First Receiver" IoT architectural thesis addressed in his book "The Future of IoT", which he co-authored with Gartner analyst Emil Berthelsen and Hitachi/Pentaho executive Wael Elrifai, which was published in June of 2017. He is an Industrial Engineering graduate of Ga. Tech.

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