The U.S. still trails Europe on Industry 4.0

The industrial internet of things (IIoT) market is projected to be worth over $106 billion by 2026. Between unprecedented supply chain issues caused by the pandemic and customer delivery expectations reaching an all-time high, it’s no wonder companies are doing everything they can to bolster the efficiency and reliability of their operations.

Consider the massive transformation and new product adoption that occurred during the three previous industrial revolutions, stimulated first by the application of water and steam power and then, in Industry 2.0, distributed electricity and assembly lines, followed by computers (Industry 3.0).

Today, Industry 4.0 connects those disparate systems and layers on smart sensors for advanced integrated systems use cases. Industry 5.0 is poised to take industry another leap forward, making everything even more aware, predictive and autonomous.

Despite incredible advances in IIoT technology, the U.S. is lingering in Industry 3.0, whereas other countries have more fully adopted the technologies and practices of Industry 4.0 and are now even exploring Industry 5.0.

According to data from the 2019 MPI Internet of Things Study, “The U.S. lags significantly behind Europe and China in Industry 4.0 strategic readiness and implementing Industry 4.0-enabling technologies.”

This brings up two important questions: Why has the U.S. been slow to adopt some of the latest IIoT technologies? And what’s possible for U.S. companies with Industry 4.0?

What’s the hold up?

Despite being a top manufacturing country, many parts of the U.S. are still stuck in Industry 3.0. While U.S. companies are using modern software systems to automate many of the processes within their factories, these systems often lack interconnectivity, real-time location data and the ‘learning’ that’s possible with artificial intelligence (AI) and machine learning (ML).

To compare, one report found that German companies appeared to be “better prepared to adopt Industry 4.0” and had “stronger ambitions to implement and apply technologies like autonomous robots” than U.S. companies. Although most U.S. companies recognize that Industry 4.0 will be a critical part of their digital transformation strategy, implementation can be challenging and these novel technologies create new demands for employees.

Other factors that may be hindering adoption include extensive investment in barcode technology that makes it difficult to switch to Auto-ID, poor early experiences with ultra-wideband (UWB) or similar technologies and the delayed integration of location data into enterprise resource planning (ERP) and other systems to achieve true automation.

But speculation aside, one factor that has certainly contributed to the U.S. falling behind is a lack of early investment and implementation of IIoT technologies. According to a 2019 report, “despite windfalls of cash from tax reform and strong consumer demand for their products, U.S. manufacturers aren’t likely to close the gap of Industry 4.0 investment [in 2019]. Uncertainty around trade policy and general fear of a market correction will likely cause delays.”

Additionally, the pandemic slowed things down even further. One report found that “over one-third (36%) of U.S. organizations have decreased their investment plans in IoT and 33% have canceled their IoT initiative altogether as a result of COVID-19.”

What’s possible

Fully adopting Industry 4.0 will require prioritizing the strategic importance of industrial digitization in addition to a paradigm shift around the way organizations operate. Once U.S. companies make the shift, Industry 4.0 will offer a whole new world of possibilities. By interconnecting machines, adopting more intelligent software (that thinks and grows along with business processes) and implementing more location-aware sensors, companies can gain vital insights regarding their factories and warehouses, in real-time.

For example, imagine a cargo ship is encountering poor weather conditions. In Industry 4.0, a company’s AI/ML software will have learned that this particular bad weather situation has a high probability of translating into specific, learned delays. From there, the receiving company can create a contingency plan for how to deal with the delay. Software can similarly be trained to learn from and predict delays in air and roadway traffic. In addition to getting insight on problematic routes, this technology also provides visibility into bottlenecks that may be happening right on the shop floor, in a warehouse, or on the assembly line in a factory.

Industry 4.0’s technology is critical for tackling disturbances in the supply chain. Pandemic-related supply chain disruptions continue to linger and have cost large companies an average of $184 million annually. Not only that, but a multitude of other disruptions have the potential to disrupt the supply chain at any given time. But with the right technology, companies can be aware of where their assets are in the supply chain so that they can fulfill their just-in-time processes. As soon as a delay is detected, software can alert them so that they can pivot their strategy.

This technology isn’t only beneficial for mediating problems and ensuring operations run smoothly; it’s also essential for supporting growth. During the pandemic, e-commerce companies, for example, experienced massive growth. Suddenly, online retailers were faced with fulfilling millions of orders with limited warehouse workers. These businesses desperately needed technology that allowed them to do more with fewer people.

During this time, some companies wisely opted to scrap barcodes in their warehouses. Having workers go around and scan barcodes manually is cumbersome at best and even impossible at times (as in the case of the pandemic). By implementing intelligent asset tags and software into this process, items can be automatically identified (Auto-ID) via radio waves by a forklift as soon as the pallet is picked up, eliminating the need for a worker to physically walk up and scan each pallet or box.

Industry 5.0 is on the horizon

Looking forward, Industry 5.0 will be a factory that plans for itself. The factory of the future will have access to — and be able to properly process and learn from — data to make decisions, handle problems and delays and ensure that end-users get what they need. It will be nearly totally autonomous thanks to advances in AI, ML, real-time location data and robotics, and it will, compared to Industry 4.0, require little human input or intervention.

Industry 5.0 isn’t far away; as mentioned, some countries are already adopting these trailblazing technologies. With next-generation technologies and opportunities looming on the horizon, it’s time for the U.S. to fully embrace and begin reaping the benefits of Industry 4.0.

Ersan Guenes is the senior vice president of product and IIoT at Inpixon.

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