An Implementation Playbook for Industry, Academia & Government - January 2024
NAVIGATING THE FUTURE: Global Industry 4.0 Trends, Standards and Policy Sponsored By:
In Partnership With:
TABLE OF CONTENTS Foreword................................................................................................2 Contributors.........................................................................................3 Expert Insights..................................................................................4-6 Executive Summary.........................................................................7-16 Industry Pulse.....................................................................................17 Key Takeaways....................................................................................18 Recommendations for Industry...................................................19-22 Recommendations for Academia.................................................23-26 Recommendations for Government.............................................27-29 Industry Analysis with Michigan Manufacturers Association...31-32 Industry Analysis with Altair.......................................................33-35 Who We Are: Automation Alley............................................................37 Playbook Sources................................................................................38 Automation Alley Foundation Members.............................Back Cover
FOREWORD
TOM KELLY
EXECUTIVE DIRECTOR & CEO AUTOMATION ALLEY
T
echnology in industry is developing at a rapid rate across the world. Each nation that takes on the challenge Industry 4.0 presents responds in a unique and different way compared to its neighbors. How can we learn from each other, and capitalize on our differences to push innovation in our industry forward? We have much to learn from each other in Industry 4.0: China leads the world with its lion’s share of World Economic Forum designated Global Lighthouse Facilities. India is rapidly modernizing its industrial sector from heavy industry to high-tech manufacturing at an incredible rate. Europe continues to make strides toward pairing technological gains with gains in sustainability. And the U.S. catapulted powerful opensource artificial intelligence tools into its industrial base and mainstream economy at large. Each country has its own Industry 4.0 journey. However, there are tangible political and social challenges we must overcome for global collaboration in Industry 4.0 that will take a renewed sense of dialogue and understanding. This playbook on Global Trends in Industry 4.0 will play a pivitol role in advancing this conversation. An important part of this effort will be setting an international standard of excellence for Industry 4.0. Considering the diversity of each region, this standard
DR. RYAN KRAUSS
ASSOCIATE PROFESSOR AND CHAIR OF INTERDISCIPLINARY ENGINEERING GRAND VALLEY STATE UNIVERSITY
will need to be flexible enough to facilitate global collaboration yet sturdy enough to be a replicable measure of success in implementation. Another topic to be addressed is how we can collaborate across borders to ethically deploy powerful and transformative Industry 4.0 technology. How should artificial intelligence be regulated? Should we have rights to products and our likeness in the digital twin metaverse? Where is the boundary, if any? Lastly, this conversation will help identify what the technological game changers are that can affect every nation on its Industry 4.0 journey. Think of the wave of progress and challenges associated with Big Data. Imagine if the distributed manufacturing model could be made a reality with advances in artificial intelligence paired with 3D printing. We must identify these potential game changers and evaluate their utility in the coming years. It is an honor and a privilege to work on these important topics in global trends with our partners in industry, academia and government sectors. Automation Alley believes despite the world’s differences on socio-economic and political issues, Industry 4.0 remains a global beacon of technological collaboration and prosperity beyond borders. We look forward to serving you as a trusted source of information and insight.
2
A SPECIAL THANKS TO THOSE WHO CONTRIBUTED TO THIS REPORT
TOM KELLY EXECUTIVE DIRECTOR & CEO AUTOMATION ALLEY
NOEL NEVSHEHIR DIRECTOR OF INTERNATIONAL BUSINESS AUTOMATION ALLEY
MO ABUALI Ph.D.
TIM FINERTY
CEO US CENTER FOR ADVANCED MANUFACTURING
SENIOR DIRECTOR WIPFLI
PARTNER WIPFLI
YESHWANT MUMMANENI
SIMONE BONINO
Dr. RYAN KRAUSS
ALYSSA TRACEY
JOHN J. WALSH
CHIEF ENGINEER ANALYTICS, IoT & CLOUD ALTAIR
VP OF BUSINESS DEVELOPMENT, MANUFACTURING SOLUTIONS ALTAIR
ASSOCIATE PROFESSOR AND CHAIR OF INTERDISCIPLANARY ENGINEERING GRAND VALLEY STATE UNIVERSITY
DIRECTOR, INTERNATIONAL TRADE MICHIGAN ECONOMIC DEVELOPMENT CORPORATION
PRESIDENT & CEO MICHIGAN MANUFACTURERS ASSOCIATION
GEORGE SINGOS
SARAH COLEMAN
TONY PANOZZO
BEN WIXSON
STRATEGY & PARTNER OUTREACH MANAGER MICHIGAN MANUFACTURING TECHNOLOGY CENTER
PRODUCT MANAGER LIBERTY REACH
COO LEONARD'S SYRUPS
GROUP MANAGER, BUSINESS DEVELOPMENT ASA
FRANCIS VATAKENCHERRY
GEORGE AULTMAN VICE PRESIDENT OF SALES AND MARKETING VANTAGE PLASTICS
3
CYNTHIA HUTCHISON
SABRA BANDER DIRECTOR OF ACCOUNT MANAGEMENT HUMAN ELEMENT
CARINE WOLDANSKI PRESIDENT EZ METROLOGY
SMART CONNECTED FACTORY PORTFOLIO SIEMENS
RON KOVEL SMART MANUFACTURING SOLUTIONS GMT STRATEGIC PARTNERS LTD
EXPERT INSIGHTS:
By Mo Abuali Ph.D., Senior Director
The Roadmap to Industry 4.0's Global Future Unveiled
At its core, data is the foundation of Industry 4.0. Yet it will be people, processes, and technology that usher in this wave of manufacturing optimization. While it’s tempting to focus solely on technology, the true essence lies in digitization and the deployment of digital solutions to enhance interoperability and education. Many manufacturers have already taken steps to improve their digital maturity by collecting and leveraging real-time data, implementing digital tools, and upskilling their workforce and processes. These forward-thinking companies are reaping the rewards, using data as a powerful asset to drive business value and innovation. For some smaller manufacturers, constraints such as limited resources, time, or awareness are barriers to entry.
Continued on next page >>
To navigate the future of Industry 4.0 successfully, manufacturers must grasp three pivotal global trends:
1
Leveraging AI for business value: AI and automation are critical in harnessing the potential of data. Manufacturers need to ask themselves how they can leverage data to achieve near-zero downtime, zero defects, and zero waste.
The key? Focus on the business case. Digital tools are available to assess digital maturity and create a roadmap for AI integration, spanning both front- and back-office operations. Predictive maintenance and quality control are just the tip of the iceberg; AI’s applications extend to areas such as sales, marketing, human resources, and accounting, where generative AI is revolutionizing traditional practices.
2
Empowering connected workers: The workforce of the future will be empowered by augmented and virtual reality (AR/VR) technologies. These innovations not only aid in training and onboarding but also enhance productivity on the
factory floor. Connected worker applications, powered by augmented reality and smart devices, guide employees through complex assembly processes and facilitate remote assistance for technicians. Additionally, gamification is changing the landscape of onboarding and training, making it more engaging for digital-native employees while collecting valuable data on their behavior and skillsets.
3
Unlocking new business models: Manufacturers are increasingly embedding sensors in their products, creating a wealth of data from products in the field. This data paves the way for innovative business models, such as offering
smart products as a service and improving warranties, spare parts, and overall customer satisfaction. Digital twins, where physical products have a virtual counterpart for monitoring and optimization, are returning significant insights into the next-generation design of a product.
5
Key Strategies for Manufacturers Manufacturers should prioritize education, assessment, and vision if they hope to seamlessly align with Industry 4.0. • Education Providing Industry 4.0 training is essential, covering areas such as automation, manufacturing operations management, data science, and data engineering with AI and advanced analytics. Encourage collaboration and knowledge sharing between generations, particularly between experienced manufacturing experts and digital natives.
• Assessment Every manufacturing company should conduct an Industry 4.0 assessment to create a digital road map. This process will help outline their digital maturity, identify gaps that require attention, and prioritize short-term and long-term initiatives with a cost-benefit analysis.
• Think big, start small Start with small-scale projects to test and refine digitization efforts, allowing for faster scaling. And don’t be afraid to fail. Manufacturers who start small will fail small, but they’ll also learn and improve.
Embracing data-driven transformations, empowering the workforce with technology, and exploring innovative business models are the keys to thriving in this digital age.
6
NAVIGATING THE FUTURE: Global Industry 4.0 Trends, Standards and Policy
7
I
f there's one consistent in global manufacturing today, it's the certainty that tomorrow is unknown. As we embrace the ongoing evolution of Industry 4.0, a slew of emerging technologies are making waves across industries and stand to redefine how we work and live. The fast pace of technological change has highlighted the need for a unified set of international standards as well as government regulations that foster responsible innovation and ensure the ethical use of advanced technologies. Additionally, global resilience is being tested by multifaceted disruptors. Supply chain uncertainty has underscored the need for resilience and flexibility in manufacturing operations. Trade disputes persist and escalate, while sustainability and environmental concerns are becoming more prominent, leading to a growing emphasis on green manufacturing practices and the development of eco-friendly materials and processes. Automation Alley takes pride in being a trusted authority for providing forward-looking insights into the realm of digital transformation, particularly within this era of unpredictability. Through our Integr8 Roundtables, we facilitate industry, academia, and governmental entities to create a comprehensive playbook featuring leading voices in the field. These roundtables offer a prospective outlook and recommendations on the evolving digital transformation trends in the years to come.
Leading the Change: Tech Trends The rapid pace of technological change associated with Industry 4.0 is fundamentally reshaping the global industrial landscape, and it distinguishes itself from the industrial revolutions that preceded it because of its accelerated pace. Industry 4.0 is characterized by the convergence of digital technologies, like the Internet of Things (IoT) and artificial intelligence (AI), creating an interconnected ecosystem. As this transformation unfolds, certain technologies are emerging as true game-changers, with the potential to disrupt entire industries. In this dynamic landscape, it becomes increasingly important for individuals and organizations alike to closely monitor these developments and remain ever-vigilant to the profound changes ahead. “You can’t manage what you can’t measure,” Wipfli senior director Mo Abuali said. “That is the beginning of Industry 4.0, getting connected with data, measuring where you are and driving change in the operation.”
Continued on next page >> 8
Many manufacturers are starting pilots in Industry 4.0, Abuali added. “But we see a great challenge in scaling the pilots — the conversion between pilot and scalability is the greatest challenge our clients are facing.” Wipfli surveyed 330 manufacturers for its 2024 State of Manufacturing Report. 88% of companies expect to see revenue increases in 2024, 71% intend to increase Industry 4.0 technology investment, and 99% place importance on digital transformation and technological advancement. However, only 47% are using robotics or automation, and only 36% are using AI in some form in their organization. “Manufacturers are looking into artificial intelligence in not just generative AI, but industrial AI to improve maintenance quality, and sustainability. It is not an overnight journey, but a three-to-five-year roadmap for manufacturers to get into Industry 4.0.”
9
“You can't manage what you can't measure.” -Mo Abuali Wipfli
AI: The Transformative Force Shaping Every Aspect of Our World AI has dominated the public domain since ChatGPT's viral release in November of 2022. The AI large language model program set the record for the fastest growing user-base in history in February 2023, reaching 100 million users in a time-frame of two months. But manufacturing technicians know that it's been relevant for much longer. For example, AI-driven predictive maintenance and quality control are common use cases in industry. Within the past decade, and increasingly over the last few years, organizations have made significant investments into the promise that AI holds for their operational efficiency. These investments will play into the AI market at large, which is growing at an impressive rate. A 2023 Bloomberg Intelligence report forecasts the AI market will grow from its 2022 net-worth of $40 billion to $1.3 trillion in the next 10 years.
99% place importance on digital transformation and technological advancement. However, only 47% are using robotics or automation, and only 36% are using AI in some form in their organization. -
Wipfli 2024 State of Manufacturing Report
Accordingly, investors are taking note. Earlier this year, chip-making company Nvidia saw a record-high jump in its stock due to its focus on AI technology. It's now on track to a market valuation of $1 trillion, on par with Apple, Microsoft, Saudi Aramco, Amazon, and Alphabet. Distilling this hype from the market to the industry, manufacturing can capitalize on these technological advancements to create gains in newfound quality control systems with the help of AI analysis as well as predictive maintenance with AI analysis. However, AI will also redefine how products are designed. Generative AI design when paired with advanced additive manufacturing can lead to generation-changing gains in the industry. Companies like Relativity Space and Czinger are already demonstrating this prowess with AI generative design. In 2021, the generatively designed Czinger 21C supercar broke the Laguna Seca lap record, dethroning McLaren by two seconds. McLaren had over 50 years of racing experience compared to the upstart Czinger, which was founded in 2019. In aerospace, Relativity Space generatively designed and additively manufactured a rocket fuselage and engine in house, circumventing a traditional supply chain spanning dozens of companies and thousands of miles. Its Terran 1 rocket withstood Max-Q (maximum mechanical stress in spaceflight) in a test flight earlier this year. Going forward, experts anticipate further investments into AI across the board, especially in the realm of business where smart technologies are 10
already proving themselves worthwhile.
Additive Manufacturing: A Sustainable Game-Changer for Manufacturing A once-niche concept, additive manufacturing (AM) is now making its way into mainstream industrial operations. This method of manufacturing creates parts by adding, layer-by-layer using a 3D printer, often resulting in complex geometries that wouldn’t be possible to create with traditional “subtractive” manufacturing methods. 3D printing has been utilized for prototyping since the 1980s, but recently, advancements in both materials and software have allowed AM to become a viable option for producing functional parts at scale. According to SME, the additive manufacturing market is projected to surpass $70 billion by 2030. It’s current market size is approximately $20 billion. Increased investment and new technologies in additive manufacturing set the stage for distributed manufacturing, a concept being proven by Automation Alley's Project DIAMOnD, that transfers production from one facility to many facilities with 3D printers capable of running the same file and recipe globally. Additionally, 3D printing will lend itself toward mass customization. Products will no longer be constrained by the precise, yet difficult-to-change nature of a traditional assembly line. Adapting to change and tweaking design will be much easier to do with 3D printers in comparison to traditional moldmaking.
Unleashing the Power of IoT, 5G, and Big Data Even before AI becomes the industry standard, we can expect to see the Internet of Things (IoT) and cloud computing begin to gain popularity in manufacturing. The benefits of 5G connectivity are already being felt. With data becoming crucial to Industry 4.0, 5G provides lower latency, higher capacity, and increased bandwidth in comparison to standard 4G LTE networks. Worldwide, 94 countries deployed 5G in 2023.
11
In Industry 4.0, 5G implementation will see machine sensors provide info to operators at newfound speeds, advancing predictive maintenance, machine monitoring and more. Accelerating this trend is the low cost and prevalence of sensors. The average price of a sensor is under $.50 per unit. The rise in AI also dovetails into the increase in manufacturing data collection. The technology already is deployed with Big Data applications through machine vision, root cause analysis and supply chain analysis. With a growing pool of information through advancements in Big Data, IoT, and cloud computing, AI will be sharper and more accurate in its predictions.
Global Synergy in Industry 4.0 International collaboration is paramount for global economic growth and innovation. Nations must recognize and learn from the unique approaches of industry leaders such as China, India, Europe, and the U.S. as they navigate their Industry 4.0 journeys. Each country brings distinctive expertise, technological advancements, and cultural perspectives to the table, offering a rich tapestry of insights.
Digital Transformation Strategy: • Technology • Analytics • Connectivity
“There is a wide disparity in I4.0 adoption globally,” said Yeshwant Mummaneni, Chief Engineer of Cloud, Analytics & IoT at Altair. “The ecosystem is still fragmented and there are different levels of maturity. We need a more systematic approach.” Embracing these diverse approaches fosters a global ecosystem where knowledge exchange and collaboration thrive, propelling innovation forward. By leveraging the strengths of different nations, industries can develop more robust solutions, address common challenges, and create flexible policies and standards. This collaborative approach not only accelerates the pace of technological advancements but also ensures that the benefits of Industry 4.0 are shared globally, promoting sustainable and inclusive economic development.
• Return on Investment 12
Industry 4.0 Standards and the Global AI Landscape It is no secret that the hot-button issue in Industry 4.0 standards is the regulation of AI. Lawmakers are being honest about the fact that the rate of its advancement has greatly outpaced their regulatory work to date. The first substantial regulation of AI came in August 2023 from the European Parliament’s EU AI Act, a regulatory framework aimed at categorizing AI applications in a three tier risk system. The U.S. followed suit in October 2023 with President Biden’s Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence. Core tenets of the order include new AI standards for: • AI Safety and Security • Protecting American’s Privacy • Advancing Equity on Civil Rights • Standing Up for Consumers, Patients, and Students • Supporting Workers • Promoting Innovation and Competition • Advancing American Leadership Abroad • Ensuring Responsible and Effective Government Use of AI
13
“People, process and technology leads to profitability.” -Mo Abuali Wipfli
“It is apparent to me that AI is in the forefront for all of us now,” President of the Michigan Manufacturers Association John Walsh said. “We think that is an important trend. Going into analytics, deploying AI is becoming more affordable, but we still need to learn how to use data from the shop floor to the top floor.” The challenge is translating not just AI, but all Industry 4.0 processes to all levels of people in an organization, Walsh said. “This will need to mean the same thing to someone on the line, in marketing, and in the supply chain. Those are all different languages.”
“I think Industry 4.0 adoption is all about rallying an organization behind it. It’s about upskilling, all the way from the shop floor to the C-suite. There is also a lot of fear that comes with change.” -Yeshwant Mummaneni Altair
Data Security and Privacy Standards With the increased reliance on Big Data and cloud computing in Industry 4.0, ensuring robust data security and privacy standards is paramount. Global manufacturing standards should address the secure collection, storage, and sharing of data to protect sensitive information from unauthorized access or cyber threats. Defining standardized protocols for data encryption, access control, and privacy compliance will foster trust among international collaborators and stakeholders in the manufacturing sector. The U.S. and European Union recently implemented its newest law for trans-Atlantic exchanges, the EU-US Data Privacy Framework.
Sustainability Imperative in Industry 4.0 With the world's resources at an ever-growing risk of depletion, it's critical that nations come together on environmental standards for manufacturing and resource usage. Industry 4.0 presents a unique opportunity to rebuild the way we use resources, but it will need clear guidelines from governments in different regions. The United Nations has put forth several initiatives like Sustainable Development Goals to encourage countries towards better stewardship of our shared planet. Additionally, the manufacturing industry will need to take a leadership 14
role for its own contributions to climate change. According to the World Economic Forum, the manufacturing industry represents nearly 30% of global greenhouse gas emissions and consumes 54% of the world’s energy sources. In a statement on sustainable manufacturing, the EPA calls on manufacturers to take “a proactive role in increasing sustainability and reducing greenhouse gas emissions by implementing a circular economy that reduces materials use, redesigns materials to be less resource intensive, and recaptures ‘waste’ as a resource that can be used to manufacture new materials and products.”
Resilience Against Worldwide Industry 4.0 Disruptors As Industry 4.0 evolves, it operates within the broader context of geopolitical complexities and economic shifts. Acknowledging and addressing these challenges becomes critical for global stakeholders, highlighting the need for strategic planning, adaptability, and collaborative efforts to safeguard the global economy and ensure the resilience of Industry 4.0 in the face of these disruptive forces.
Untangling the Supply Chain Though the severe shortages and unknown lead times of the pandemic era are waning, the global supply chain remains in a fragile state of recovery. According to a CNBC Supply Chain Survey conducted in October 2023, the freight industry is projected to have no growth in the first half of 2024 due to lessened demand and a cooling consumer market. Additionally, onshoring or reshoring efforts are redefining the supply chain in North America. Dodge Construction Network reported the construction of manufacturing facilities in the U.S. was up 116% in 2022 compared to the previous year. South America is also ripe with reshoring or nearshoring efforts in the manufacturing industry to localize the manufacturing supply chain to the Western Hemisphere. Morgan Stanley forecasts Mexico will receive $46 billion in new investment driven by nearshoring within the next five years. However, this radical realignment of the supply chain is not purely economical—it’s political as well.
Navigating Trade Disputes The political relationship between the world’s two largest economies has been rocky over the past few years. In 2018, President Trump’s administration imposed tariffs 15
on $300 billion worth of Chinese goods. China responded in kind with tariffs on $100 billion of American goods. The tariffs from both sides persist today. In December 2022, China filed a dispute with the World Trade Organization against the U.S. limiting its exports of semi-conductors to the country.
“The government does not drive the standards, but creates and enables a world within which we can thrive.” -John J. Walsh
President, Michigan Manufacturers Association
The saga of frosty trade tit-for-tat moves continued in late 2023. Recently, China limited exports of rare earth materials and graphite in a bid to hamper U.S. EV production. Meanwhile, Shanghai-based LIDAR laser manufacturer Hesai lost nearly 50% of its stock value after being investigated by the U.S. for national security concerns. However, there are some signs of this relationship mending after President Biden and Chinese President Xi Jinping met at the Asia-Pacific Economic Cooperation (APEC) summit in November 2023. Though some issues remained divisive, both presidents agreed to collaborate on curtailing the fentanyl epidemic and re-establishing military communications. Hopefully this is the first step in normalizing relations since meaningful growth on a global scale cannot progress with the largest economies at odds with each other.
Addressing Political Unrest Manufacturing and Industry 4.0 doesn’t operate in a vacuum. The Russian invasion of Ukraine demonstrated this after Ukraine lost 71% of its steel production ability in 2022, complicating manufacturing supply chains in Europe and the Middle East. In 2023, the conflict between Israel and Gaza-based Hamas sent shipping and insurance costs up for Israel’s manufactured exports. Though solutions to political unrest issues remain complicated, it is important for all players in Industry 4.0 to be aware of these issues and attempt to stymie the damage to the global economy and supply chain. Managing and nurturing Industry 4.0 on the global scale involves tact and a deep knowledge pool on the industry’s most pressing issues beyond the production line. However, all policy decisions should start with dialogue between stakeholders in academia, industry and government. “Looking at standards that come from trade associations, academia, and individual businesses as they develop will be where the real standards come from. Governments have the ability to react to these, but not establish them,” Walsh said. “The government does not drive the standards, but creates and enables a world within which we can thrive.” Paired with accurate data, these conversations may not provide detailed directions in how to succeed in Industry 4.0, but they will provide a clearer route and direction to navigate the global trends in our increasinglyconnected world.
16
INDUSTRY PULSE INDUSTRY PULSE Automation Alley posted weekly polls in November - December of 2023 for our LinkedIn followers of over 5,000 professionals in the technology and manufacturing ecosystem on the topic of Global Industry 4.0 Trends, Standards and Policy. This is how the industry responded at a glance.
17
KEY TAKEAWAYS
1 2
Learn from International Counterparts to Spark Innovation
3
Transform Workforces for Industry 4.0 Success
Recognize and learn from the unique approaches of nations like China, India, Europe, and the U.S. in their Industry 4.0 journeys to foster global innovation.
Create Flexible Global Standards to Promote Collaboration Global standards must balance adaptability for diverse regions with robust measures for success, promoting collaboration without sacrificing consistency. Join industry consortiums to agree on standards, navigate global regulations, and ensure smooth supply chain operations.
Emphasize manufacturing as a viable career path through partnerships, apprenticeships, and relevant programs. Prioritize upskilling programs, dynamic training, and collaboration with educational institutions to ensure a competent, adaptable workforce. Address job displacement and income inequality through education and training programs. Instill a culture of lifelong learning and adaptability in students to thrive in the digital economy.
4 5
Invest in Infrastructure Readiness
6 7
Deploy New Technologies Ethically
Prioritization of investments in high-speed internet, data security, and regulatory frameworks will support Industry 4.0 advancements.
Identify Game-Changing Technology Identify and evaluate potential technological game changers like Big Data, AI, and 3D printing to stay ahead. Avoid the pitfalls of outdated systems and make small, deliberate changes in digital infrastructure to stay competitive.
Address political and social challenges to collaboratively deploy Industry 4.0 technology ethically, considering issues like AI regulation, digital twin metaverse rights, and establishing ethical boundaries.
Prioritize Cybersecurity Protection Conduct regular audits, control access, plan for breaches, and prioritize data encryption to safeguard against rising cyber threats.
18
Recommendations for Industry
19
W
ith the explosion of Industry 4.0, businesses across all industries are seeking ways to maximize the potential new technology brings to the market. To leverage these technologies, it’s critical that companies anticipate digital transformation trends and pay close attention to changing policies and standards in this rapidly evolving landscape. Particularly, for manufacturers, remaining competitive will rely on leaders Placing small and innovators who focus on investments in digital technologies and protections, collaborate on standards and regulations bets on digital cybersecurity and prioritize workforce development. transformation Investment in Digital Technologies can be the on outdated software to handle the current and future advanced solution to pilot Relying technologies of Industry 4.0 is a monumental mistake, as legacy systems can’t keep up with more advanced AI learning, machine-to-machine and purgatory. human-to-machine communication, increased cybersecurity demands, IoT and more.
But, deciding on the best use of investment capital for upgrading digital infrastructure can be a daunting task. This leads to many companies over collecting and over-analyzing data that roadblocks the digital transformation from ever getting off the ground. Another common mistake is waiting for the ideal data and technology systems to present themselves before beginning a digital makeover. The wait-and-see approach to Industry 4.0 digital transformation will result in falling behind the competition. Investing in Industry 4.0 technology does not mean making large-scale, high-risk changes overnight. Small and deliberate changes at the right time can position companies for success in the future of advanced manufacturing as well as in other industries. Placing small bets on digital transformation can be the solution to pilot purgatory.
Continued on next page >>
20
Cybersecurity and Privacy Protections Diving into Industry 4.0 and the enormous amount of data it generates requires an audit of current cybersecurity protocols. In 2022, over one billion emails were exposed to phishing scams, 236 million businesses suffered ransomware attacks globally and data breaches cost businesses more than $4.35 billion, according to AGG IT’s latest cybercrime statistics. Protecting private information is an essential aspect of cybersecurity. Client and employee personal information, financials, future investment strategies and more corporate data are at risk. Continuous cybersecurity training, risk and vulnerability assessments, and ongoing monitoring can help prevent these attacks from being successful.
Collaboration on Standards and Regulations Planning to compete in an ever-changing global industry landscape is a step in the right direction. Still, industry leaders must know the laws and regulations in the U.S. and worldwide. Different nations have different political ideologies, views on labor, rules on using natural resources and climate policies. There are even rigid boundaries between states in the U.S. that have different sets of standards and laws businesses must abide by. With so many government bodies making laws and setting standards, companies within the automation industry may struggle to keep up without adding a massive in-house legal department. Joining others in industry consortiums and associations allows companies to agree upon standards and lobby governing bodies to enact regulations that will aid in maintaining public technical infrastructure, keep the supply chain running smoothly, and facilitate amicable business relationships with other countries.
21
As new trends emerge, associations can be ready for those changes by creating common terminology, practices, quality standards and education requirements for high schools and universities to create practical curriculums to support a skilled talent pipeline and a unified approach.
Prioritize Workforce Development Technology changes require a shift in skills and corporate culture. Investments in progressive training and upskilling programs for employees to adapt to the rapid implementation of Industry 4.0 will create competent employees capable of working with new technologies. There must be more than a standard training program for all technology areas. While AI, digital twins, edge and fog computing, and IoT share crossover areas such as data analytics and physical equipment, some differences require specific training. Companies should implement a framework that must be dynamic enough to adapt to each system or technology. A training program that allows the employees to grow and learn is an attractive benefit, helping to attract top talent. Moreover, it’s imperative that manufacturing companies work closely with educational institutions at all levels to ensure the appropriate curriculum is being taught to fill the jobs of today and tomorrow.
22
Recommendations for Academia
23
I
ndustry 4.0 has created a unique pivotal moment for education systems worldwide, forcing us to rethink how we learn and reshape what it means to be a worker in the digital age.
A holistic approach to learning will ensure that graduates are wellequipped to tackle this evolving landscape, providing practical and innovative solutions.
The skills required to operate and maintain Industry 4.0 technologies are very different than those needed to manage traditional systems. As a result, there is a growing skills gap in the manufacturing sector — and in other industries — that is being driven by a corporate struggle to find employees with the right mix of technical and soft skills. This skills gap is only expected to grow in the coming years as more companies adopt Industry 4.0 technologies. In fact, U.S. manufacturing is expected to have 2.1 million unfilled jobs by 2030, according to Deloitte. How we address this education trend will define our future success in the digital age. This education transformation will require collaboration between industry leaders and educators, a greater focus on broadranging skills, and a culture shift towards lifelong learning that embraces technology, especially AI.
A Focus on Hard & Soft Skills Industry 4.0 brings together a diverse range of technologies and challenges that do not fit neatly into traditional academic silos. Educators will play a critical role in developing a talent pipeline with both the technical and leadership skills needed to thrive in the digital age. While hard skills are necessary for technical proficiency — like maintaining existing robotic systems and equipment, implementing new software, and using AI to make processes more efficient — soft skills are equally important for adapting to change, collaborating effectively, and addressing the human and social aspects of Industry 4.0. For example, recent research by the World Economic Forum suggests that investing in just one important skill area — collaborative problem-solving — could add as much as $2.54 trillion to global GDP. Other important soft skills include creativity, adaptability, communication, and emotional intelligence. A holistic approach to learning will ensure that graduates are well-equipped to tackle this evolving landscape, providing practical and innovative solutions. Continued on next page >>
24
Industry-Academic-Government Collaboration To ensure students are equipped with relevant skills, K-12 schools, community colleges, and colleges and universities face the challenge of motivating students, keeping up with technical infrastructure and predicting Industry 4.0 trends several years into the future. Educators must prioritize working in concert with industry leaders and policymakers to better understand the skills needed, recognize the emerging technologies being adopted, and secure the necessary funding required for digital learning, which should equip students with cutting-edge tools, software, and techniques. Funding must also provide equitable opportunities to underserved communities. Access platforms need to be accessible to multilingual learners and people with disabilities. This ensures that all graduates are wellprepared for the tech-driven job market. In addition, a greater emphasis on manufacturing as a viable career path for students is also vital to meet future demand. Creating interest is critical to increase student involvement. Schools should hold science fairs, host guest lecturers, design STEM-based programs, and start robotics teams. While partnerships with industry must focus on apprenticeships, internships, and certifications. Lifelong Learning and Adaptability with AI in Mind Industry 4.0 is characterized by rapid technological advancements. Educators need to instill a culture of lifelong learning and adaptability in students. This means teaching them not just how to acquire new knowledge and skills, but also how to embrace technological change as a constant. The ability to learn and adapt throughout one's career is a fundamental skill for success in the digital economy. Rapid technological advancements can render specific skills obsolete. Academia must fundamentally re-engineer its delivery model with AI in mind. Doing so will enhance personalized learning experiences, create adaptable curricula and emphasize critical thinking and collaboration skills essential in an AI-driven world. Embraces AI-driven tools will not only optimize educational efficiency but also empower students with the adaptive skills needed for the evolving demands of the workforce. 25
Recommendations for Government
27
G
overnments at all levels are currently facing great challenges to not only keep up with the exponential growth of technological advancements, but to also create pertinent legislation for digital trends such as AI, digital identification, supply chains (national and international), data security and energy efficiency. The U.S. has several organizations that focus on the role of growing technology in society, including the Office of Science and Technology Policy (OSTP), the Office of Innovation and Intellectual Property (OIIP) and the National Institute of Standards and Technology (NIST). The OSTP and OIIP are tasked with offering government policy recommendations, while NIST's mission is to work with industry and academia to use innovation to improve economic security and the quality of life. In addition, governments also have an obligation to protect intellectual property that includes copyrights, patents and a company's trade secrets, including proprietary software, manufacturing and automation processes and systems, and more. Being able to understand the future of Industry 4.0, its potential benefits and risks, its physical and digital infrastructure, and its societal impacts will be critical for guiding the responsible and ethical adoption of advanced technologies, protecting citizens' rights, and ensuring that the benefits of these innovations are distributed equitably across society.
Understanding Future Benefits & Risks To effectively regulate and leverage the benefits of Industry 4.0, governments must be proactive in understanding emerging technologies, including AI, blockchain, 5G, 3D printing, quantum computing and more. By monitoring current trends and staying informed about the latest developments, policymakers can anticipate risks and challenges, create regulations that are forward thinking, and encourage innovation that aligns with societal values.
Continued on next page >>
28
Infrastructure Readiness One of the most significant challenges of Industry 4.0 adoption is marrying legacy systems with digital systems. Governments play a critical role in ensuring the best infrastructures are in place to support rapid technological advancements. Governments must prioritize investments in high-speed internet access and connectivity, data security, and regulatory frameworks. Providing a robust and updated physical infrastructure is essential to support the logistics of new technologies on factory floors, in autonomous vehicles, on our roadways, for drone deliveries and more. Societal Impacts Industry 4.0 may disrupt traditional job markets, potentially leading to job displacement and income inequality. Governments play a vital role in addressing these challenges by providing education and training programs to help workers transition to new roles, implementing progressive taxation policies, and creating safety nets to support those adversely affected by automation and AI. Maintaining social cohesion is essential for political stability and economic prosperity. In addition, it is imperative government safeguard citizens' rights and interests. This involves enacting and enforcing regulations to protect data privacy, prevent monopolistic behavior, and ensure ethical business practices. Transparency and accountability are key to maintaining trust between citizens and companies.
29
"There is a wide disparity in Industry 4.0 adoption globally. We need a more systematic approach." -Yeshwant Mummaneni
Altair
30
INDUSTRY ANALYSIS
WITH MICHIGAN MANUFACTURERS ASSOCIATION Navigating Industry 4.0 Challenges: The Imperative of Collaboration and Connectivity By John J. Walsh, President & CEO, Michigan Manufacturers Association
I
n the landscape of technological evolution, Industry 4.0 stands as the gateway to a future where the manufacturing industry not only thrives but propels mankind into a new era of efficiency, innovation, and competitiveness. While the promises of Industry 4.0 are undeniable, the journey towards its realization presents significant challenges. Addressing these challenges necessitates a collaborative effort, where industry players and key stakeholders work hand in hand to unlock the true potential of this transformative revolution. The linchpin to realizing the benefits that Industry 4.0 offers lies in connectivity and clear communication. These are not mere technical requirements but prerequisites for harnessing the full potential of the Fourth Industrial Revolution. However, the kind of connections needed extends beyond the confines of machinery and systems; they transcend political, technological, and ethical boundaries. It is evident that standardization is a crucial element in ensuring seamless connectivity across the diverse spectrum of Industry 4.0 technologies. Standardization provides the common language that facilitates interoperability, making it possible for different components to work together seamlessly. It is the foundation upon which the interconnected machinery, sensors, and systems can collaborate, ensuring a harmonious integration that drives efficiency and innovation. However, caution must be exercised to strike the right balance in the pursuit of standardization. An overly restrictive and mandate-heavy regulatory environment could stifle innovation and impede the organic growth of Industry 4.0. The key lies in finding a middle ground where standardization is encouraged, but room for flexibility and creativity is preserved.
31
"The key lies in finding a middle ground where standardization is encouraged, but room for flexibility and creativity is preserved." -John J. Walsh
"Industry 4.0 is a global phenomenon, and its benefits can only be fully realized when nations collaborate rather than compete in isolation. -John J. Walsh
The collaborative effort needed to unlock the true potential of Industry 4.0 extends to the relationship between industry and regulators. Instead of viewing regulations as constraints, they should be seen as guiding principles that ensure responsible and ethical deployment of advanced technologies. Industry and regulators must work together to develop standards that are conducive to innovation while safeguarding against potential risks. In the realm of connectivity, political boundaries often pose significant challenges. Industry 4.0 is a global phenomenon, and its benefits can only be fully realized when nations collaborate rather than compete in isolation. Governments and industries must transcend geopolitical barriers, fostering international cooperation to establish common standards and frameworks. This global collaboration not only accelerates the pace of innovation but also ensures that the benefits of Industry 4.0 are distributed equitably across the globe. Technological boundaries, too, must be overcome. As Industry 4.0 embraces a diverse array of technologies, ranging from artificial intelligence to the Internet of Things, the challenge lies in creating interoperability among these technologies. Collaboration between technology providers, manufacturers, and innovators is essential to ensure that the components of Industry 4.0 can communicate seamlessly, unleashing the full potential of interconnected systems. Ethical boundaries form a critical aspect of the Industry 4.0 landscape. As technology becomes increasingly embedded in our daily lives, ethical considerations become paramount. A collaborative effort between industry and ethicists is necessary to establish guidelines and frameworks that ensure the ethical use of advanced technologies. While the challenges on the path to realizing the full potential of Industry 4.0 are significant, they are not insurmountable. The key lies in collaboration, connectivity, and clear communication. Industry and key stakeholders must unite to transcend political, technological, and ethical boundaries, working in partnership to strike the right balance between standardization and innovation. In this collaborative journey, the true promise of Industry 4.0 will be unlocked, ushering in a future where efficiency, innovation, and competitiveness redefine the global landscape.
32
INDUSTRY ANALYSIS WITH ALTAIR
Three Key Insights: Digital Twin Technology and Industry 4.0 in the Manufacturing Industry By Yeshwant Mummaneni, Chief Engineer, Analytics, IoT & Cloud Altair
I
ndustry 4.0 is reshaping the way today’s organizations do business – and it is, by extension, transforming the ways we live and work. Industry 4.0 is the ultimate convergence of a wealth of advanced technologies, including but not limited to simulation, high-performance computing (HPC), data analytics, artificial intelligence (AI), the Internet of Things (IoT), and digital twin technology. It enables breathtaking new capabilities while simultaneously speeding innovation, fostering automation, lowering costs, minimizing waste, and enabling greater connectivity and collaboration between individuals, teams, and organizations around the world. Industry 4.0 can be transformative for manufacturers especially: it can minimize unplanned downtime, improve quality metrics, fine-tune supply chains, and enable seamless data-driven decision-making. Recently, Altair conducted a global study to dive deeper into digital twin technology to better understand how organizations – specifically those in manufacturing – are using it to enable Industry 4.0 practices. The study revealed a few key insights and promising news for the manufacturing industry and those that lean on it. Insight 1: Digital Twin in Manufacturing is Already Prevalent First, the study revealed that far from being a conceptual technology or aspiration, digital twin technology is already playing a big role in the manufacturing industry. 71% of the surveys 292 manufacturing-specific respondents said their organizations already leveraged digital twin technology. Among the 11 industries surveyed in the larger overall study, manufacturing was the third most likely sector to say it leverages digital twin technology. Of respondents who said their organizations leveraged digital twin technology, 97% indicated it was “important” to their organization.
33
"There is no denying the onset of Industry 4.0 around the world in large part thanks to digital twin technology and the innovative potential it can unleash." -Yeshwant Mummaneni
Insight 2: Digital Twin in Manufacturing is Mature and Impactful The data also suggested that the manufacturing sector is more mature in its digital twin adoption relative to most industries. Overall, manufacturing respondents were the second most likely group to say their organizations adopted digital twin three or more years ago, behind just the aerospace sector. And manufacturing is thrilled with what digital twin can do. Of respondents who said their organizations used digital twin, 94% said it better informed the development of new products. 62% of digital twin users said it had reduced their maintenance and warranty costs. Moreover, 89% said it helped their organization create more sustainable products and processes. And in general, the study revealed that the manufacturing sector believed that digital twin advances organizational sustainability initiatives, including efforts to reduce waste and pollution, cut carbon emissions, minimize waste, fuel, and material usage, and beyond. Insight 3: Manufacturers Believe Digital Twin is the Future Looking ahead, the data showed that there is no denying the onset of Industry 4.0 around the world in large part thanks to digital twin technology and the innovative potential it can unleash. 40% of manufacturing respondents in the survey indicated digital twin is already making, or will make, the need for physical prototyping obsolete within the next four years. Additionally, manufacturing respondents were the most likely industry group to say digital twin technology will make the need for physical prototyping obsolete in 5-6 years at 26%.
Continued on next page >>
34
And lastly, of manufacturing respondents who said their organization doesn’t currently utilize digital twin technology, more than half (55%) predicted their organization would adopt it within the next two years, a very short time frame. Final Thoughts The data from our study was clear: manufacturing organizations are already going all in on digital twin technology, and those who haven’t done so yet plan to do so in the very near future. It is fascinating that so many think that digital twin likely spells the obsolescence of traditional physical prototyping. But this demonstrates how big of an impact that digital twin technology is already having within manufacturing. Beyond the adoption of digital twin, to remain competitive in a global manufacturing marketplace, embracing broader Industry 4.0 technology transformation is must to be able to optimize cost, customize production, and provide visibility of the entire supply chain to meet sustainability objectives. To learn all about Altair's Digital Twin capabilities, visit https://altair.com/digital-twin.
35
ABOUT:
Automation Alley is a nonprofit technology business association and Digital Transformation Insight Center focused on driving the growth and success of businesses in Michigan and beyond through innovation and automation. With a global outlook and a regional focus, we foster a vibrant community of innovators, entrepreneurs, and business leaders through opportunities for collaboration and learning. Our programs and services help businesses develop the skills and expertise needed to effectively jumpstart or accelerate digital transformation. By bringing together industry, academia, and government, we aim to create a dynamic ecosystem that drives innovation and growth across Michigan.
Automation Alley, our mission is to help businesses thrive in the MISSION: Atrapidly changing digital economy by equipping them with the knowledge,insights, and tools to develop a software-first mindset that leverages the power of automation, AI, and other cognitive technologies. We believe that by working together, we can build a stronger, more innovative, and more competitive economy for the future.
VISION:
Wealth, prosperity and equality through technology.
To find out more about Membership visit:
automationalley.com Publication Credits: Editorial: Nicole Kampe, Dennis Burck, Joseph Gray Graphic Design: Laura Gearhart Photography: Sean Healey 37
PLAYBOOK SOURCES Wipfli 2024 manufacturing outlook research report http://www.wipfli.com/Home/Industries/Manufacturing-andDistribution/2024-Outlook-report-for-manufacturers
The World Economic Forum - Reducing the carbon footprint of the manufacturing industry through data sharing https://www.weforum.org/impact/carbon-footprint-manufacturing-industry/
Reuters - ChatGPT sets record for fastest-growing user base https://www.reuters.com/technology/chatgpt-sets-record-fastest-growinguser-base-analyst-note-2023-02-01/
CNBC - The global freight recession will continue in 2024: CNBC Supply Chain Survey https://www.cnbc.com/2023/11/07/freight-recession-will-continue-in-2024cnbc-supply-chain-survey.html
Bloomberg Business - Generative AI to Become a $1.3 Trillion Market by 2032, Research Finds https://www.bloomberg.com/company/press/generative-ai-to-become-a-13-trillion-market-by-2032-research-finds/ CNBC - Nvidia shares surge to record close with 24% rally https://www.cnbc.com/2023/05/25/nvidia-on-track-for-record-high-drivenby-ai-chip-demand.html PR Newswire - Czinger 21C smashes lap record at WeatherTech Laguna Seca Raceway https://www.prnewswire.com/news-releases/czinger-21c-smashes-laprecord-at-weathertech-laguna-seca-raceway-816521292.html Relativity Space - GLHF https://www.relativityspace.com/glhf The White House - Using Additive Manufacturing to Improve Supply Chain Resilience and Bolster Small and Mid-Size Firms https://www.whitehouse.gov/cea/written-materials/2022/05/09/usingadditive-manufacturing-to-improve-supply-chain-resilience-and-bolstersmall-and-mid-size-firms/ SME - The Future of AM https://www.sme.org/technologies/articles/2023/may/the-future-of-am/ Project DIAMOnD https://www.projectdiamond.org/ Intel - Understanding the Advantages of 5G https://www.intel.com/content/www/us/en/wireless-network/5g-benefitsfeatures.html SP Global - 5G tracker: 94 markets worldwide have commercial 5G services https://www.spglobal.com/marketintelligence/en/news-insights/ research/5g-tracker-94-markets-worldwide-have-commercial-5g-services Electronics Sourcing - Sensor Demand Will Remain Strong and Prices Will Rise https://electronics-sourcing.com/2022/06/29/sensor-demand-will-remainstrong-and-prices-will-rise/ European Parliament - EU AI Act: first regulation on artificial intelligence https://www.europarl.europa.eu/news/en/headlines/ society/20230601STO93804/eu-ai-act-first-regulation-on-artificialintelligence The White House - President Biden Issues Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence https://www.whitehouse.gov/briefing-room/statementsreleases/2023/10/30/fact-sheet-president-biden-issues-executive-orderon-safe-secure-and-trustworthy-artificial-intelligence/ European Commission - EU-US Data Transfers https://commission.europa.eu/law/law-topic/data-protection/internationaldimension-data-protection/eu-us-data-transfers_en United Nations - Sustainable Development Goals https://sdgs.un.org/goals
Dodge Construction Network - Total Construction Starts Increase in May https://www.construction.com/total-construction-starts/may-2022-starts/ Morgan Stanley - Mexico is Poised to Ride the Nearshoring Wave https://www.morganstanley.com/ideas/mexico-nearshoring-gdp-growth Reuters - China starts WTO dispute against U.S. chip export curbs https://www.reuters.com/world/china/china-launches-suit-wto-against-uschip-export-curbs-global-times-2022-12-12/ Reuters - China's rare earths dominance in focus after it limits germanium and gallium exports https://www.reuters.com/markets/commodities/chinas-rare-earthsdominance-focus-after-mineral-export-curbs-2023-07-05/ Wall Street Journal - Chinese Laser Sensor Maker Targeted as Tech Trade War Spreads https://www.wsj.com/tech/the-latest-tech-caught-in-the-u-s-china-tradewar-lasers-64d582c0 CNBC - Earth is ‘big enough’ for U.S. and China to succeed, Xi says as he meets Biden https://www.cnbc.com/2023/11/15/xi-biden-at-apec-summit-china-usleaders-meet-in-san-francisco.html Reuters - Ukraine sees higher 2023 steel output, could double production if seaports open https://www.reuters.com/markets/commodities/ukraine-sees-higher-2023steel-output-could-double-production-if-seaports-open-2023-10-05/ GLG Insights - Steel Market: The Impact of Russia’s Invasion of Ukraine https://glginsights.com/articles/steel-market-the-impact-of-russiasinvasion-of-ukraine/ Bloomberg - Israeli Ports Operate Through Disruptions to Trade https://www.bloomberg.com/news/newsletters/2023-10-17/supply-chainlatest-israeli-sea-ports-and-air-cargo-operations AAG – The Latest Cyber Crime Statistics https://aag-it.com/the-latest-cyber-crime-statistics/ Deloitte - Creating pathways for tomorrow’s workforce today https://www2.deloitte.com/us/en/insights/industry/manufacturing/ manufacturing-industry-diversity.html World Economic Forum - What is a Lighthouse? https://initiatives.weforum.org/global-lighthouse-network/lighthouses# New York Times - Modi Wants to Make India a Chip-Making Superpower. Can He? https://www.nytimes.com/2023/09/13/business/india-semiconductors.html Reuters - EU sets out green industry deal to take on U.S. and China https://www.reuters.com/business/sustainable-business/eu-lay-out-greenindustry-plan-counter-us-china-subsidies-2023-02-01/ The Guardian - ChatGPT reaches 100 million users two months after launch https://www.theguardian.com/technology/2023/feb/02/chatgpt-100-millionusers-open-ai-fastest-growing-app
38
Thank you to our Foundation Members!
Made possible in part through ongoing support from the