Industry 4.0 is the X Factor that Will Transform Today’s Supply Chains

The enigmatic X Factor—that unknown element that will take supply chains to the next level. As is so often the case in our industry, there’s not just one transformative technology that will produce revolutionary change within our field, but rather many.

The MHI Annual Industry Report examined the concept of the digital, always-on supply chain, defined as: “An integrated set of supply networks characterized by a continuous, high-velocity flow of information and analytics, creating predictive, actionable decisions that better serve the customer.”

That definition, as it turns out, sounds a lot like the term “Industry 4.0,” also called the fourth industrial revolution (the first being steam- and water-powered mechanization in the 1800s; the second debuted in the early 1900s with electric-powered linear assembly lines; and the third was marked by the integration of computers, robotics and automation of connected, fixed-line machinery in the 1970s).

Industry 4.0 expert Markus Lorenz, partner and managing director of The Boston Consulting Group’s industrial goods and operations practices, describes it as a trend toward greater interconnectivity between automated equipment. Through data exchange between cyber-physical systems enabled by the technologies mentioned above—plus device interoperability and communications supported by the Internet of Things (IoT)—Industry 4.0 supply chains will be transformed by intelligent machinery. Letting the machines make smart decisions with minimal human intervention will yield greater productivity, faster throughput and dramatically fewer errors.

But how?

Lorenz attributes such gains to the ability of “Industry 4.0 systems to reach far beyond the limits of a facility’s four walls or the confines of a single organization,” he says. “These cyber-physical systems interact with each other via standard, Internet-based protocols. Further, they continuously analyze data to predict failure, then adapt to changes by reconfiguring themselves.”

Thus, in an Industry 4.0-enabled supply chain, it will be possible to collect and analyze data across all machines, yielding faster processes that are more flexible, more efficient and produce higher-quality goods at reduced costs.

Industry 4.0 will transform the supply chain workforce

Our industry continues to be challenged by the perception that manufacturing and warehousing facilities are dark, dirty and stagnant; that the work is physically demanding, repetitive and offers limited potential for advancement. While that hasn’t been true for decades, Industry 4.0-enabled supply chains will not only offer dynamic, interesting and challenging jobs, it will also create millions of them.

Lorenz’s research on the impact of Industry 4.0 on Germany’s manufacturing industry shows that 600,000 traditional jobs will be lost in the next decade—and subsequently replaced by more than 1 million new ones. And, he predicts a similar workforce evolution in the United States.

These new careers will demand new skill sets, as the nature of the work changes. Traditional tasks will be replaced by: industrial data analysts; data modeling, simulation and interpretation specialists; mechanical and industrial engineers; autonomous robot and vehicle task and routing coordinators; digitally assisted field service technicians; and research and development specialists.

But which systems and solutions should companies invest in to become Industry 4.0 ready?

At MHI, we see a direct correlation between those X Factor technologies and Industry 4.0 preparedness; indeed, it’s no accident that MHI selected “Solve for X” as the theme of ProMat 2017.

As one of the largest global material handling and logistics expos, ProMat 2017 runs April 3-6 at McCormick Place in Chicago. Across the 350,000 square feet of show floor, more than 850 exhibitors will showcase the latest technologies and solutions that are essential for maintaining competitiveness throughout manufacturing and the supply chain. Further, at 8:45 a.m. on Tuesday, April 4, Markus Lorenz will deliver the keynote “Industry 4.0—How Intelligent Machines are Transforming Supply Chains,” to help attendees gain a better understanding of this trend and what it means for their businesses.

Industry must embrace the benefits and the opportunities intelligent, connected machines will provide—not only for organizations, but also for individuals in our daily lives.

I hope you’ll accept MHI’s invitation to Solve for X and learn more about Industry 4.0 at ProMat 2017. For more information or to register, please visit

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