„The Industrial Big Change“ – Prof. August-Wilhelm Scheer

The new information technologies directed by the Internet of Things have an effect on all essential functions of the industrial enterprise and are leading to new business models with new products, services and business processes. This is demonstrated in the following article by Prof. Dr. August-Wilhelm Scheer by means of his “Y” model.

“Y” model (source: Prof. August-Wilhelm Scheer)

The “Y” model (see diagram) shows the essential types of productive process of an industrial enterprise and the effects of Industry 4.0 on these are explained in the following. In the “Y” model, the graphic symbols denote the functions and the bars contain the economic drivers of Industry 4.0. The essential technologies associated with Industry 4.0 are detailed on the outside.

  • The left branch of the “Y” model indicates the business processes of an industrial enterprise which are driven by orders (sales, procurement and production orders), referred to as Logistics in the following.
  • The right branch of the “Y” model denotes the (development) processes driven by the product, referred to as Product Development in the following.
  • In the lower part of the “Y” model (the Factory), the logistical and product-related processes converge; effected here are allocation of the parts to be produced to the resources, near-term management and the carrying out of manufacturing.

The three process areas Factory, Product Development and Logistics are gone into in more detail in the following.

Factory process area

The essential new Industry 4.0 technology in the Factory is CPS (Cyber-Physical Systems). These are software-intensive production systems which are connected to the internet and can communicate with each other as well as with intelligent materials. Materials are designated as intelligent when they carry their characteristics—such as quality and manufacturing steps required—with them on a data carrier (chip). By means of RFID technologies, the materials can then find their way through the manufacturing virtually independently. If a CPS suddenly fails, another system automatically takes over its task.

The high flexibility of the CPS permits great individualization in manufacturing because the modification of the system takes place without loss of time and thus without costs. The manufacturing of quantities with batch size 1 is therefore possible at the same cost as mass production.

A further essential technology is the inexpensive storage of mass data in the manufacturing (big data) which is made possible by the fall in the price of storage media and new in-memory database technologies. By means of sensors, machine, material and environment statuses can be recorded in real time. Analytical evaluation procedures use the present status for immediate intervention and also give indications about the future system behavior to be expected.

Taken as a whole, the combination of technologies leads to the vision of an extremely decentralized factory that manages itself in real time (the smart factory).

Product Development process area

The upper right part of the “Y” model indicates the Development of Products as well as product-related Services. The greater flexibilization of manufacturing as pointed out supports greater individualization of the products. The number of variants of products can be increased right up to purely customized manufacturing.

New technologies such as 3D printing increase the speed of development for new products through the faster development of prototypes (rapid prototyping). Concepts like speedfactory from Adidas even allow customized production of the running shoe after scanning in the fit. In an Industry 4.0 environment with intelligent materials and processing units, all the activities undertaken over the entire lifetime of a product such as repairs, maintenance, alterations etc. as well as the use and conditions of use of the product can be automatically captured and stored. This leads to the concept of transparent Product Lifecycle Management (PLM).

Evaluation of the PLM data by the manufacturer entails new possibilities for product-related services.

An extreme form of further development in maintenance services is for the manufacturer itself to take over the operation of the produced facilities. This concept is denoted as BOO = Build, Own, Operate. The manufacturer knows its machinery and facilities best; through the PLM data, it can analyze their behavior according to all conditions of use and can optimize their use. So the obvious step is for the manufacturer itself to take on the operation of the systems at the customer’s or in production facilities set up by it. The customer no longer purchases a set of machines but gets and pays for a service.

Logistics process area

The upper left part of the “Y” model—i.e. Logistics—is also changed substantially by Industry 4.0. First of all, the customer can place, cancel or change an order through a variety of channels (omnichannel) like a standard computer, laptop or smart phone. All channels must be usable throughout. The customer’s easy access to the supplier along with the individualization results in an increased incidence of changes and thus to greater requirements on flexibility in manufacturing and product development. Until shortly before the start of manufacturing, the customer can still change the order with regard to the customer’s original product definition.

With the individualization of products through a greater number of variants and customized manufacturing, the number of suppliers increases and the company’s production depth diminishes. This means that the company’s logistics network must react faster. The entire supply-chain network must therefore be transparent.

The description of the three starting points for Industry 4.0—i.e. factory, product and logistics—clearly shows how deeply the economic drivers of individualization, decentralization, self-management, service orientation and transparency will change industrial companies. The age of Industry 4.0 has begun!


You can find more on the subject of Industry 4.0 in the detailed white paper by Prof. Dr. Scheer: http://scheer-management.com/scheer-whitepaper-industrie-4-0/

As part of IT2Industry – trade fair for intelligent, digitally networked working environments – Prof. August-Wilhelm Scheer will be giving the keynote speech on November 11 at 11:30 in Hall B3 of Messe München.

More information: www.it2industry.de

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