How Industry 4.0 will affect the traditional organizational value chain
Customer driven design and production
After drawing an initial sketch of your imaginary sandalwood coffee table with integrated multimedia capabilities, you upload your design into a virtual network of industrial designers and manufacturers. Advanced analytics algorithms match your input with available design specialists. Via models in augmented reality you can see a range of offerings so you can make a proper selection. Meanwhile, the time to delivery is calculated using data from the entire supply chain of connected parties. So when hitting the order button you know that you will be sitting at your coffee table within 23 hours and 45 minutes.
This example indicates the enormous impact that a range of maturing technologies can have on the traditional value chain for products and service delivery. According to Forrester, innovative enterprises are using Internet of Things (IoT) solutions to transform their business models by moving from one-time product transactions to ongoing product-as-a-service relationships. Business leaders need advice as they look to equip manufacturing lines, trucks, and machinery with IoT devices, and as product managers rush to IoT-enable their product experiences.
And it is not only IoT that will cause major disruptions in the field of manufacturing and consumer bargaining power, which will ultimately lead to Industry 4.0. Other drivers are for example augmented reality, high performance computing, advanced analytics and artificial intelligence and digital manufacturing methods, e.g. 3D printing, robotics. Product-as-a-Service relationships, combined with new technologies, will lead to a wide range of reusable, optimized services supplied via Internet by a wide variety of innovative service suppliers.
The Internet of services, a network of digital service suppliers
While digital services are often delivered by specialist parties offering niche services for certain industries, big players like Amazon are already covering a broad scope. The adoption of standard services for exchange of information like Amazon Web Services is already exploding, so within five years fully integrated networks utilizing these services will become reality.
Brokers will connect customers to services everywhere
Independent brokers with adaptive capabilities will deliver to a big market pool of potential consumers. With disappearing boundaries multiple opportunities appear in the area of ensuring the product is still delivered on time with high quality and a proper price. Already in the field of clothing manufacturing brokers make sure custom designs from Europe are manufactured by multiple companies in China depending on availability of materials and prices.
Global value creation networks, via a connected network of services and brokers
Connected Manufacturing Execution Systems (MES) and continuous synchronization of manufacturing data via connected Intelligent Gateways, SCADA, MES and ERP enable a product lifecycle and order execution across organizations. This enables a global value creation network ranging from inbound logistics to production, marketing, outbound logistics and service delivery.
Each of these transitions may have a direct impact on the future way of working of traditional players and provide great opportunities to newcomers in the industry. Productivity improvements, increased revenue or risk reduction will be enabled by a vast range of new technologies. Furthermore, boundaries to enter the manufacturing market have disappeared so traditional players need to act now.
 Forrester TechRadar™: Internet Of Things, Q1 2016
Industry 4.0 is the fourth industrial revolution.
It is driven by technological developments and brings, among other things, a revolution in operations and supply chains within the manufacturing industry.
The value chain of products and services delivery will change under pressure of customer demand in customized products. The manufacturers’ challenge lies in choosing the proper strategic direction and position in the value chain, taking into account the manufacturer’s segment it operates in, its market position and its ambition. The next overall task lies in its ability to adapt its products, services, structure, processes, operational technology, human capital and IT accordingly.
Industry 4.0 is ‘actionable’: many of the technology drivers (eg. Internet of Things, sensors & controls, wearables, operational technology, analytics) have sufficient maturity. Ideation, proof of concepts, lighthouses and implementations are ongoing. Why wait?
Download the report 'Industry 4.0 and manufacturing ecosystems'
To get a better understanding of what Industry 4.0 is and how it will affect the traditional organizational value chain, please download the full report 'Industry 4.0 and manufacturing ecosystems'. Read more about Industry 4.0 on Deloitte Insights.
More information on Industry 4.0?
Would you like to know more about Deloitte’s view on Industry 4.0 and how it will affect your business? Please contact André Barneveld Binkhuysen at +31 (0)88 2880003.