May 07 2019
Last month, Manchester played host to the third annual Industry 4.0 summit and exposition, highlighting the ways in which companies both large and small can benefit from the ‘Fourth Industrial Revolution’ (4IR).
Whilst the United Kingdom pioneered the first, Industry 4.0 was initiated by the German government in 2011 as part of plans to promote the total computerisation of manufacturing, incorporating the next phase of automation, data analytics, advanced manufacturing and computing technologies.
The project is focused on technology that seeks to enhance the collaboration of connected and complex computer systems that communicate with one another to make decisions without human involvement. Technical enablers in the process include advanced robotics, simulation, data analytics, cloud and cyber security systems, streamlining processes and making autonomous decisions.
What are the benefits?
When fully developed, Industry 4.0 will connect machines and systems to create intelligent networks along the entire value chain with internal systems to control each other autonomously. Machines and systems with Industry 4.0 capabilities can perform predictive maintenance and self-organising techniques that can adapt to unexpected changes in production. In addition, network processes previously limited to one factory will be lifted under Industry 4.0 in order to interconnect multiple factories beyond geographical regions. Domestic businesses and manufacturers already use automated warehouses, 3-D printing, robotic assembly and self-driving vehicles, but such practices retain human involvement and are not interlinked. Ultimately, the shift to Industry 4.0 will allow manufacturers to benefit from increased productivity and a significant reduction in operating costs, improving labour productivity, increasing asset utilisation and reducing operating costs.
According to the Department for Business, Energy and Industrial Strategy (BEIS), faster innovation and adoption of Industry 4.0 systems could be worth as much as £455 billion for the UK manufacturing sector over the next decade, contributing to between 1.5% and 3% additional annual growth. The manufacturing sector accounts for 44% of total UK exports. With the United Kingdom facing strong competition from emerging markets and lower-cost economies, the fact that 70% of business R&D comes from the manufacturing sector will be vital, as the development of Industry 4.0 facilitates improved global competitiveness and exports, leading to higher domestic employment.
Where does the UK stand?
In 2017, UK R&D expenditure as a percentage of GDP stood at 1.66%, lagging behind both the EU 28 and G7 averages, and government funding is set to remain important. With the UK government aiming for this figure to reach 2.4% of GDP by 2027, the manufacturing sector will play a highly important role. Specially designed automated processes have been available to manufacturers for decades. BAE Systems plc, featured in the Aircraft, Engine and Parts Manufacturing industry (IBISWorld report C30.300), has adopted automated production systems that can accurately machine holes in composite aircraft components. Industry operators in the Motor Vehicle Manufacturing industry (IBISWorld report C29.100) utilise automated assembly techniques which have enhanced production and output. The prevalence of artificial intelligence and next-generation systems has also revolutionised the financial services sector, with benefits in customer service, threat detection and data analytics.
Artificial intelligence and automation are the fastest growing components of Industry 4.0. Automation can be found in nearly every UK sector from manufacturing to logistics, with machines required to undertake repetitive tasks and control processes. The next stage of these processes will involve interconnected machines able to communicate and make decisions to optimise processes. According to the Made Smarter Review by BEIS, the adoption of Industry 4.0 will require a balance between productivity and job creation. For example, a 30% adoption rate between 2015 and 2025 is expected to create 475,000 jobs. However, a 50% adoption rate would be expected to generate 380,000 jobs over the same period. Approximately one-third of new jobs created are expected to be in IT, analytics and R&D. Higher adoption rates could, however, lead to overall job losses.
Nonetheless, adoption is expected to transform UK productivity over the next decade, with manufacturers already benefiting from supply chain innovation. Many firms in the logistics industry have implemented smart warehouse systems that use artificial intelligence and robotics to identify, organise and distribute goods automatically.
Funding the future
The rate of acceleration is expected to increase rapidly in the coming years, with a survey by the Manufacturers’ Organisation stating that 80% of manufacturers believe that Industry 4.0 will be a business reality by 2025. The majority of manufacturers expect the Internet of Things, which represents interconnectivity of everything, to be a business reality. Despite its potential, Industry 4.0 is only fully adopted or integrated in internal and external processes by a relatively small number of companies in the United Kingdom due to a combination of workforce capabilities and lack of maturity with some technologies. Industry 4.0 technologies require investment in order for adopting industries to reach their full potential. For years, UK manufacturers have gathered information in preparation for advanced technologies.
The 2019 Industry 4.0 summit included information for several sectors and placed a particular focus on small to medium-size businesses. The summit included over 100 exhibitors aimed at enhancing production in several industries, from parts manufacturing to telecommunication. The event attracted thousands of manufacturing and supply chain professionals keen to adopt the latest advances in automation, robotics, virtual reality, cyber security and predictive maintenance. Industry 4.0 is expected to shape the UK supply chain and force firms to adjust to a new operating environment. Suppliers will have to employ systems and machines compatible with next-generation systems required by their clients.
UK businesses can benefit from a number of sources of government funding, including the Industrial Strategy Challenge Fund, and the National Productivity Investment Fund. Moreover, through Innovate UK, the BEIS provides funding and support for SMEs in particular, after identifying that smaller firms are central to realising the 4IR. This is important as SMEs often lack funding, and many are uncertain where to begin the process of upgrading to Industry 4.0. The uptake among SMEs has been slow because it has been difficult for innovators to demonstrate value to small businesses with limited budgets. SMEs are challenged to disrupt and bring innovative ideas to the forefront of manufacturing, aided by funding provided by Innovate UK.
As a result, more efforts have been focused on making digitalisation more accessible to SMEs without excessive cost and risk. In addition, Industry 4.0 could lead to opportunities relating to R&D tax credits aimed at encouraging more SMEs. Robotics is the fastest growing technology for Industry 4.0 in the United Kingdom, which is currently home to the strongest artificial intelligence and machine learning in Europe, involving over 200 SMEs. UK manufacturers are already actively adapting mechanical and electrical designs to ensure they are capable of future industry standards. Although Industry 4.0 is slow to gain traction among UK sectors, full implementation in the coming years is expected to lead to sustainable economic growth.
For a printable PDF of Industry 4.0 and the UK, click here.
IBISWorld industry reports used in this special report: