Fourth Industrial Revolution vs. Industry 4.0: Same but different?

It is the new year of 2019, and initially, for the first post of the year, I would like to write about a key concept which would be an underlying tone for the year(s) ahead, and the backdrop for some of the topics I may be featuring in this blog in this year (besides having already featured some topics in 2018). The terms “Fourth Industrial Revolution” and “Industry 4.0” have become buzzwords of the century, and gone out from being mere jargons used by management consultants to widespread use in various industries.

But then as I realised, even though we have heard these two terms “Fourth Industrial Revolution” and “Industry 4.0” being interchangeably used, the equivalence might not be as strong as we may perceive.

With that, let’s get right into what entails within these terminologies.

Fourth Industrial Revolution

The term “Fourth Industrial Revolution” (4IR) was first coined by World Economic Forum founder and executive chairman Klaus Schwab in 2015, when he compared technological progress with the industrial revolutions previously happened.

Source: https://online-journals.org/index.php/i-jim/article/viewFile/7072/4532

Of course, there are various definitions and descriptions on the 4IR, but they all point to an industrial transformation “characterized by a range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human” as the World Economic Forum points out.

Schwab has highlighted that the 4IR is not a mere extension of the Third Industrial Revolution that spanned from the 1960s to the end of the 20th century, as it was different in velocity, scope and systems impact. He pointed that the speed of technological progress under 4IR would be exponential rather than linear, that the scope is wider with every industry being affected, and that it would be impacting systems of production, management and governance in a transformative way.

Among the technologies that were cited under 4IR are “artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing “.

Schwab has also identified the opportunities and challenges that underline 4IR. 4IR may bring about an improvement in global income levels and quality of life for people across the world through greater accessibility to affordable digital services, and the efficiencies brought by these services. Relating to the point of efficiency, businesses may stand to benefit from more effective communication and connectivity through technological innovation under 4IR.

However, 4IR presents the concerns on widening existing inequality. Given that automation and digitalisation can, if not already have, substitute and displace workers, this might “exacerbate the gap between returns to capital and return to labour”. In other words, low-skilled workers which generally come from the poorer segment of the society would increasingly face scarce job opportunities, while the owners of capital (in this case, the automation, robotic, digital systems) – mainly innovators, shareholders and investors – would be exemplifying the colloquial term of “the rich gets richer”. Considering how much of the anxieties and discontent in this current age is very much fueled by inequality, perceived or otherwise, the problem of growing inequality is certainly a growing problem.

Nonetheless, Schwab reminded that all of us are responsible for guiding this evolution, and that 4IR can be a complement to the “best of human nature”, bringing the human race to a new level of moral consciousness based on a shared sense of destiny.

Industry 4.0

So how is Industry 4.0 different from 4IR? To begin with, the source of where the term comes from is different in time and place.

The term Industry 4.0 found its origins from Germany’s Industrie 4.0, which is a high-tech strategy by the German government to promote technological innovation in product and process technologies within the manufacturing industry. The Malaysian Ministry of International Trade and Industry defines Industry 4.0 as “production or manufacturing based industries digitalisation transformation, driven by connected technologies”.

At the core of Industry 4.0 lies several foundational design principles:

  1. interconnection between people, systems and devices through Internet of Things;
  2. information transparency to provide users with plenty useful information to make proper decisions;
  3. technical assistance to support aggregation and visualisation of information for real-time decision making and problem solving, as well as to help users conduct unfeasible tasks;
  4. decentralised decisions made autonomously.

From the design principles, it entails that Industry 4.0 heavily involves specific types of technology, mainly those involved in achieving inter-connectivity and automation. Cleverism cited a research which identified the main types of technology involved under Industry 4.0, and outlined four main components: Cyber-Physical Systems, the Internet of Things, the Internet of Services and Smart Factory.

Given Internet of Things have been widely discussed (even on this site), let’s have a brief look at what the other terms entail:

  • Cyber-Physical Systems aim at integrating computation and physical processes, where physical processes are able to be monitored by devices over a network. Developing such systems would involve unique identification of objects throughout processes, the development of sensors and actuators for exchange of information, and the integration of such sensors and actuators.
  • The Internet of Services looks at how connected devices (under Internet of Things) can become an avenue of value creation (and revenue generation) for manufacturers.
  • A smart factory is a manufacturing plant that puts the aforementioned concepts together, by adopting a system that is aware of the surrounding environment and the objects within it. As the research paper mentioned, “the Smart Factory can be defined as a factory where Cyber-Physical Systems communicate over the Internet of Things and assist people and machines in the execution of their tasks”.

The benefits and challenges of Industry 4.0 would be similar to that of 4IR, with some having more specific focus on how it would impact the manufacturing industry.

One of such benefits is allowing manufacturers to offer customisation to customers. Industry 4.0 would empower manufacturers with the flexibility in responding to customer needs through inter-connectivity, Internet of Things and Internet of Services. Having the connectivity with consumer devices through Internet of Things, manufacturers would have access to consumer behaviours and needs in a seamless manner, and therefore has the potential to cater to unique consumer demands quicker than conventional go-to-market methods.

On the flip side, one greatest challenge Industry 4.0 would face is security and privacy. With great powers of connectivity comes great responsibility in ensuring data transmitted across these connections are protected. Similar to the challenges of security discussed in the Internet of Things article, the challenges of security also apply to manufacturers, and ever more so considering how processing methods are trade secrets in most manufacturing industries. On the other hand, as manufacturers increasingly assume the role as collectors of consumer data under Industry 4.0, this would increase consumers’ concern on how their data might be handled and used.

Still, despite the challenges, the future is bright for Industry 4.0 due to the promises of process efficiencies it bring, which is why the Malaysian government is seemingly convinced and committed to this technological trend, and acknowledged the need for industries to transform accordingly through its 2019 Fiscal Budget allocation for SMEs adopting automation technology.

Final Thoughts

And in conclusion, even though both terms of “Fourth Industrial Revolution” and “Industry 4.0” might have been used interchangeably, it is rather clear that these two terms have different focus. Some suggested that Industry 4.0 is a more relevant discussion on technological progress rather than the concept of 4IR, while others said that Industry 4.0 can be considered as a subset under the Fourth Industrial Revolution.

At the end of the day though, it is upon us to figure out how we should envision the future ahead with 4IR and Industry 4.0 by resolving pertinent issues surrounding personal data ethics and the future of workforce.

Featured Image credit: Christoph Roser at AllAboutLean.com

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