Bosch board member Werner Struth

In the space of four years, Industry 4.0 has grown from  an industry buzzword to a multibillion-euro marketplace that in Europe alone is predicted to attract annual investments of up to €140bn (£100bn) per annum to 2020.

Industry 4.0 – or the Fourth Industrial Revolution – represents a shift change in the capabilities of the Internet of Things (IoT). It can be broadly defined as an evolution in IT systems that connects people, systems and devices to improve productivity and services.

According to Bosch, the IoT  is driving a major reorganisation of industrial production by connecting machines, systems, workpieces and products to create intelligent production systems that can control each other autonomously without manual intervention.

Estimates vary, but Bosch predicts there will 14 billion connected devices by 2020. For many in the developed world, elements of daily life are already connected in some way to  the cloud, be it with mobility, smart homes or other situations where interactions are made on smartphones and similarly connected devices.

It is in this context that Dr- Ing Werner Struth, a member of Bosch’s board of management with 35 years of production experience asks: “Do you think production and manufacturing  will be kept out of this domain?”

Struth’s employer operates more than 250 production facilities worldwide, with projects related to connected production in progress in around 100 of them, notably in Homburg where more than 200 hydraulic valves are assembled into a single value stream on an assembly line. Using an RFID chip on the workpiece, the nine stations on the line recognise how the finished product is to be made and which stages are required. Displays show personnel the corresponding working instructions for the version that is to be processed.

“By means of organising our suppliers and customers, we’ve reduced inventory by 30 per cent value,” said Struth. “That is cash. We also increased productivity of the logistics system and decreased costs, consequently, by 10 per cent.”

Bosch gained a head start in  this burgeoning industrial arena when Dr Siegfried Dais, currently  a limited partner of Robert Bosch Industrietreuhand, chaired the Working Group on Industry 4.0, which in 2012 presented a roadmap to the German government on how to implement the concept.

Step forward three years to Hannover Messe 2015 where technology demonstrators including Bosch’s Remote Service Manager, which facilitates the servicing of machinery over the internet, and Process Quality Manager, which uses operational data from bolt-tightening machines to avoid risks in real time, vied for the attention of attendees.

According to Struth, the strategy taking Industry 4.0 forward at Bosch is based around its well-established competency in the provision of software, services and sensors, which in turn defines what is ‘revolutionary’ about Industry 4.0.

He said: “We know how to make software; we have 15,000 software engineers, 3,000 of which are working on IoT and services in the broader scope, not just Industry 4.0.

“We are one of the world’s largest manufacturers of MEMS sensors, having connectivity so thus being ready to be ‘wired’, so to speak, to the internet to transmit data. We have business models [that answer] what to do with that [data] for our internal factories, [and] for our external customers.

“We have more than 250 factories on a global basis, so we have the user domain knowledge, from serious mass production from the automotive business to single- piece production in the project business. And we are an elite provider of Industry 4.0 solutions, which is our software suite for enterprise resource planning or manufacturing execution systems.

“The technological platform… has a high degree of maturity to start with, so what is the new part? The new part is that out of the potential of connectivity, the achievement of data collection and the analysis of data that will lead to new business models that haven’t been seen so far.

”The new part is that out of the potential of connectivity, the achievement of data collection and the analysis of data that will lead to new business models that haven’t been seen so far

“New business models include [those] with external customers [and] with our internal processes in order to achieve higher productivity [and] efficiency.”

Struth noted that Germany, the US, South Korea and China are leading the way in embracing Industry 4.0, but conceded that implementation in his homeland is still evolving and that lessons are to be learnt from other countries, particularly the US, which applies a large degree of flexibility with its business modelling and expertise in information communications technology to Industry 4.0.

“Germany is one of the largest manufacturers – and exporters – of production machines so there’s a huge tradition in this basic stone and iron business, I’d say, with high-precision equipment and processes,” said Struth. “But Germany is not that strong in cloud and internet technologies and the development of business models.

“If we manage to combine the creativity in business model creation and the domain knowledge on how to run a cloud- and internet-based business with the technological domain of production… [then] this would be the ideal solution and that is what we are working for.”

Gartner has forecasted that manufacturing, utilities and transportation will be the top three industries using IoT this year, with 736 million connected devices in use.

For manufacturing SMEs, opportunities await in Industry 4.0 because, as Struth highlighted, the technologies that make Industry 4.0 viable are probably employed on the shop floor already to make the concept of the decentralised ‘smart factory’ a reality.

”This comes from my heart – we must not mix up Industry 4.0 with automation

“There have been… a lot of technological evolutions in the past – wireless connectivity, for example,” he said. “But this is not attributed to Industry 4.0. We [at Bosch] have a huge amount of sensors that we can use in order  to identify acceleration, humidity, air pressure [and] temperature… which can be used to control equipment and processes that have already been developed – and remain in development. These are not attributed to Industry 4.0. Rather, it’s a kind of toolbox that is used by Industry 4.0 to take those tools out of the box [to] make a new application.”

While too modest to suggest how the UK’s SMEs should run their businesses, he does believe initial first steps into Industry  4.0 can be made with first-step implementations that do not require large amounts of capital expenditure and can manage the value stream of materials in the factory in order to drive down logistics costs and inventories.

The essential element of Industry 4.0 is, however, being able to grasp the holistic nature of the concept in order to exploit the myriad of potential solutions provided by it.

“This comes from my heart – we must not mix up Industry 4.0 with automation,” said Struth. “The major part of Industry 4.0 is getting more information from my production system, being able to analyse this information, gain new business processes and optimise the entire value stream.”