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What is Industry 4.0?

Breakthroughs in information technology, mobile communications and robotics have led to the growing use of digital technologies in businesses around the world.

5-minute read

Industry 4.0 has received a lot of media attention in recent years, but the concept remains abstract for many entrepreneurs. Beyond the buzz, Industry 4.0 has the potential to significantly boost your productivity, reduce costs and improve the quality of your products.

“The core application of Industry 4.0 is to monitor and control your machinery and equipment in real time by putting sensors at every step of the production process,” says Pierre Cléroux, Vice President, Research and Chief Economist at BDC.

Essentially, the technology allows you to check on your production at every step of the process, therefore improving quality. It also helps reduce and even eliminate downtime, because the data from your equipment tells you when your machine needs maintenance or when it’s about to break down.

Is Industry 4.0 the same as advanced robotics?

In factories, robotics and digitalization work together very well, but they are not the same thing.

Robots are very good at doing repetitive precision work. Industry 4.0 technologies collect data about processes and can, for example, connect robots together or with other parts of the production process.

“We often hear in the media that we’ll all be replaced by robots in five years,” says Cléroux. “That’s not going to happen. But the technology is advancing step by step. Canadian businesses still have time to adjust, but they shouldn’t wait too long if they don’t want to be left out.”

Why is it called Industry 4.0?

Industry 4.0 is the latest evolution of manufacturing. Over the past 250 years, several industrial revolutions transformed how manufacturers produce goods.

Like the mechanization, electrification, automation and globalization revolutions that preceded it, this “Fourth Industrial Revolution” promises to have a remarkable impact on how we make and sell goods.

c. 1780
Industry 1.0


Industrial production based on machines powered by water and steam

c. 1870
Industry 2.0


Mass production based on the assembly line

c. 1970
Industry 3.0


Automation based on electronics and computers

c. 1980
Industry 3.5


Offshoring of production to low-cost economies based on lower communication and containerization costs

Industry 4.0


Introduction of digital technologies

Why is Industry 4.0 important for my business?

Recent developments in technology have made digital technologies more affordable, user-friendly and robust than ever before. This has made it easier and cheaper for businesses of all sizes to invest in the technology.

Meanwhile, results from several studies, including research by BDC, is showing that the productivity gains brought on by Industry 4.0 technologies will eventually create such an advantage that businesses will find it hard to compete if they are not using it.

What are the main applications of Industry 4.0?

There’s a wide variety of Industry 4.0 applications that range in costs and complexity. The following are some of the common Industry 4.0 applications you could implement in your business:

  • Go paperless—Digitize your business documents (e.g., work instructions, forms, purchase and shipping orders, product specifications) to save time and money, and to reduce errors due to incorrect and outdated information.
  • Monitor and control machinery and equipment in real time—Install wireless sensors on your machinery and equipment to monitor your production and collect data in real time. This allows you to accurately track production, identify and correct problems, and make more informed strategic decisions. This is known as the Industrial Internet of Things.
  • Introduce smart processes—Introduce machines that can analyze their own data to predict when maintenance is needed and even book an appointment with a technician. Advanced control technologies measure quality in real time during production and take action to correct defects.
  • Optimize processes—Use advanced analytic software to mine data to identify the best production and maintenance scenarios to improve production and optimize asset utilization.
  • Experiment with 3-D printing—Use 3-D printers to make prototypes quickly, fabricate complex forms and make ultra-personalized products tailored to your customers’ specifications.
  • Connect products to the Internet—Equip products with sensors to monitor usage. Use them to alert your customers when maintenance is needed and other issues arise. You can also use smart products to add services based on usage, shift to a product-as-a-service business model or develop new, innovative products.
  • Integrate computer networks—Use the Internet to connect with your customers, suppliers and business partners. You might use an extranet or an electronic data interchange system (EDI) for B2B connections and a transactional website for B2C connections.

To learn more about Industry 4.0, download your free copy of BDC’s report Industry 4.0: The New Industrial Revolution.

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