Greater individuality, speed, economic value – according to Linus Schleupner, Professor in Strategic Management at the Cologne University of Applied Sciences, consumers, like businesses, could soon take advantage of Industry 4.0. However, all players have to follow the rules of the game.
Prof. Schleupner, everyone is talking about Industry 4.0. But what has it done for me?
Schleupner: At first, everything is very confusing. Industry 4.0 refers to global digitalization and networking, beginning in the production phase. However, keywords like ‘batch size 1’ or ‘individualization of products’ have not yet become reality. However, in the next ten years or so, the implementation could be completed. The first tendrils of digitalization are already affecting us; for example, insurers use our data to understand our behavioral patterns and to use them in calculating their premiums. Another example would affect people who wear glasses. They will soon be able to have information projected onto their lenses. The new smart glasses for the Galaxy phone from Samsung already provide a taste of this. The display produces digital images which the user sees through a dual lens system. The glasses provide of feeling of immersion in a completely new world.
That sounds either superfluous or frightening. Is there anything else?
Schleupner: The vision is that Industry 4.0 will make life easier and better. End users expect individualized solutions: Industry 4.0 facilitates them. Soon I will be able to design my sport shoes online according to my own color preferences. However, it’s not just about luxury items. Digitalization will help us to save food and provide it to people, who previously had no access to it. Businesses have been producing globally for a long time; however, intelligent networking of their production lines is still very much in its infancy. Industry 4.0 will be able to stem both overproduction and food shortages when we find algorithms that enable optimal distribution and resource investment into all areas through global value added chains.
Will products by more expensive due to Industry 4.0? Will mass production stop?
Schleupner: You should consider instead that products will resemble their value more closely. The effects of scaling will no longer result from the current methods of increases in quantity, but through the ability to produce intelligently. Smart productions processes bring savings because fewer resources are wasted due to targeted production. Businesses naturally benefit from digitalization because it enables real increases in efficiency during production. And not only there. Let’s use a retailer as an example. Thanks to digitalization, our retailer can precisely record our purchasing behavior and thus optimize the goods for sale. The result is a range tailored to customer preferences and thus less waste. Production companies also benefit from the customer information provided by the retailers, because it allows them to optimize the products that they offer.
But doesn’t Industry 4.0 lead to massive stress on the value-added chain? Customers want individualized products, and they want them now. Won’t manufacturers in turn demand a high level of flexibility from their suppliers?
Schleupner: I really don’t think so. Granted, the supplier has to react more quickly. On the other hand, customers will also have to accept that their desires cannot be satisfied all the time. Things are no different today: if you order a car, you can combine certain colors and features, but not all of them. Thus, in the future, a company will not have to fulfill 100% of a customer’s desires, rather 80% will probably suffice. From my point of view, things will tend to average out. Suppliers will have to accommodate this; however, they may also choose not to follow certain trends. This means that companies should build up their core competencies. This will be easier due to digitalization and increased information.
That sounds easy, but it is often medium-sized companies that lack the expertise and financial strength to become drivers of digitalization. How can they be convinced?
Schleupner: This is where we are, indeed, coming slowly off the starting blocks. Medium-sized companies do not have the resources to continuously follow the topic, and it is difficult for them to recruit the necessary people. They have technicians and engineers, but they don’t yet have any engineers trained in Industry 4.0 who they can rely on. The Industry 4.0 platform, which was launched by the Federal Government and is supposed to enable the relevant participants to exchange information, has not had any noticeable effect. At the moment, it would appear that medium-sized companies are cut off from essential information and are stranded between the ivory towers of the universities and the visions of technicians. This is why we urgently need a platform that provides access to Industry 4.0 to medium-sized companies. Without access to advice, the uncertainty will remain, and when people have doubts, theydo not invest in change.
If businesses themselves are so unsure about digitalization, how secure is my data with them?
Schleupner: That’s a difficult question. We have to acknowledge that we leave a digital trail behind, and that we cannot always control what happens with our information. There will be no magic bullet protecting us from misuse. The problem, however, can be contained. Legislatures have already ensured that our personal data trail cannot be evaluated in its entirety. However, internet users should also receive greater flexibility and more options for opting out. If I don’t want Facebook or Google to have access to certain data, then I should be able to enforce that decision. However, we, as users, also have to be more responsible in the way we handle our data. We simply click agree with regard to co this case.
Shouldn’t the law makers hurry up and pass suitable data protection guidelines? Industry 4.0 is already here.
Schleupner: They should at least adapt the current Data Protection Act to present needs. In principle, it is well structured and requires companies to have data protection officers, who are responsible for data security from a legal, informal, and technical point of view. However, when we consider the sheer speed of the digitalization process and the advancements in systems in all areas, many criteria are either already obsolete or have not yet been introduced. Consider the digital factory or the digital house, in which the electrical supply is controlled through automation. This is happening now, which is why we need guidelines as quickly as possible.
What if we forego the revolution and choose evolution instead.
Schleupner: That will hardly be possible, as digitalization cannot be slowed down, let along stopped. Look at the services and products offered on the internet: current generations have to accept this path because certain things can’t function any other way. This means that we have to rise to the challenges posed by digitalization. This doesn’t imply dramatics. In my opinion, there are more opportunities than risks. If we abide by certain rules and adopt the right measures, we can all benefit from it.
Professor Schleupner, thank you very much for sharing your insights.