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Era 4.0 – a completely connected supply chain

Industry 4.0, Production 4.0, Logistics 4.0 – the number “4.0” is in vogue in the different industry segments. It stands for digitalization and connectivity. Which opportunities arise from it and where are the risks?

Supply chain

According to the usual counting method, Industry 1.0 (or: the first industrial revolution) arose from the steam engine and the consequent mass production. Industry 2.0 was characterized by electrification and the production lane. Industry 3.0 came into being with the introduction of computers and the rise of automation. Industry 4.0 finally is characterized by connectivity.

Born in 2006

Machines, supply chains, business partners and customers are interwoven through information and communication technology – and with them, order and production processes, added value and logistics. The term Industry 4.0 was probably used for the first time in 2006 by the “Research union economy - science”, an advisory council put into action by the German Federal Government.

Industry 4.0 - inc. 2006

Digitalization and networking take place along the whole “supply chain”, from the sourcing of resources, primary products and order management to production, storage, delivery logistics, use and maintenance. 

Along with gains in efficiency and process optimization, they promise novelties in products, forms of production, organization and distribution – and therefore new business models.

Booming market for solution providers

Practically all providers of industrial machines and many more are focusing on Industry 4.0.

  • Bosch
  • MAN
  • Siemens
  • ThyssenKrupp
  • Voith

Also the IT and telecommunication industry partakes in this new and growing market.

For instance, Deutsche Telekom and itsdaughter T-Systems, but also Amazon, Google, Hewlett-Packard, IBM, Microsoft, Salesforce, Samsung, SAP and Toshiba, as well as hundreds of highly specialized medium-sized service providers are strongly committed to Industry 4.0. Michael Kleinemeier, presidium member at Bitkom says: 

"Industry 4.0 will become standard in the manufacturing industry and IT providers are the main driver"

​Felix Müller, project manager at the Fraunhofer Institute for Production Technology and Automation warns that the topic is often presented too theoretically. So practical solutions are needed.

Industry 4.0: from 'batch size one' to humane workplace

The linkage of order systems, machines, sensors and other components in the industrial production is considered the pioneer for the frequently quoted “batch size one”.

This means that the customer can already make customizations when they order. Since the order system and production belt are linked, tailor-made products can be made. 

Sensor data, which is collected during production, promises increased information transparency which will enable planners and management to have an up to date overview of capacities, error rates and other parameters at all times.

In addition, machine sensor systems can detect shortages of products or maintenance requirements early on.

Man and machine

Depending on the sector, digitalization is about the cooperation between man and machine as well, for example in the form of assistance systems that support the human worker.

This ranges from real-time information to cyber-physical support solutions. Companies like Audi are already utilizing Exo-Skeletons – robotic suits or support equipment, which assist humans in physically strenuous work.

This in turn involves new requirements in terms of work safety and work organization: when humans and robots work in close proximity, sensors and auto-shutdown mechanisms must ensure that no human is injured by a robot. 

Logistics 4.0: on time, reliable and efficient

Logistics are changed by connectivity and digitalizationas well. Armin Günther, Manager Research & Innovation Strategy Transport and Logistics at DB Schenker explains: 

"Affected are communication and cooperation with customers and partners, as well as planning and management of delivery and freight traffic on roads or rails”

The interconnection of all supply chain partners promises increased efficiency, transparency, flexibility and production speed.

Dreams of the future?

On the other hand, concepts like just-in-time production aren’t new. However, now they are complemented by software assistants and physical assistance systems like sensors, detectors and product tracking along the whole transport route.

Furthermore, the industry is already considering the future effects of autonomous transport vehicles and -systems on their business models.

The latter are still dreams of the future – but digital delivery notes instead of paper documents or the electronic linkage of drivers and vehicles for purposes of route optimization and prevention of empty runs have been around for a long time.

Challenge IT safety

The digitalizatio of the entire production and supply chain also leads to new challenges – for example in IT security. These systems are a target for hackers, digital saboteurs and racketeers as well. The higher the values, the more attractive targets become to cybercriminals.

The higher the value, the more attractive the target

An important field of activity emerges for IT suppliers and service providers. In this context, T-Systems just presented a Honeypot solution for connected industrial systems: the security system attracts digital attacks on industry typical protocols and interfaces.

If it detects attempts of that kind, it can sound the alarm and enable companies, IT service and network providers to take counter measures immediately. This example shows that a digital supply chain brings new risks and challenges, which in spite of all the advantages and opportunities, companies and suppliers must counter.

Earlier, this article appeared on

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