Germany​ ​at​ ​the​ ​Front​ ​of​ ​the​ ​Race​ ​for​ ​the​ ​4th​ ​Industrial​ ​Revolution

The term Industry 4.0 is on everyone’s lips. It creates a big buzz in the business world right now. We hear about optimization, digitization, Big Data, deep learning, artificial intelligence, the Internet of objects, ERPs, and so on. For the consulting firm Boston Consulting Group, the capacity of companies to collect data is a matter of life or death. It is especially a possibility to get 20% to 30% more on earnings before interest and taxes (EBIT) through the use of data in business management, for any type of industry.

The avenues leading to the Fourth Industrial Revolution are innumerable. Choosing the right one for a given case can be a tricky exercise, especially since the movement is still very young in Quebec. Returns on investment remain difficult to estimate, fueling an inevitable reluctance to change.

Although the Smart Factory concept is still quite young in the province of Quebec and the rest of the country, it has already come a long way in Germany. A study conducted by the BDC in May 2017 noted a worrying delay in Canada when compared to American, European and Asian companies. The same study shows that only 39% of the participating Canadian companies had already implemented strategies associated with this industrial revolution and that the majority of its participants had invested less than $ 100,000 in their projects. For comparison purposes, a study carried out last year by Ingenics following the request of Fraunhofer IAO, the Institute of Industrial Engineering and the Stuttgart organization estimated that 65% of the participating firms had advanced 4.0 solutions. It is no coincidence that our Prime Minister Philippe Couillard paid a visit to Bavaria last July with the goal of ensuring the rapid implementation of the Smart Factory processes in Quebec manufacturing companies.

Amongst the results provided by a study including 844 German manufacturers [3], the most fascinating ones are certainly those resulting from the evaluation of the concrete effects of the implementation of 4.0 solutions. Although only some of the participants in the study have already been able to quantify the performance of their digital strategy, those who could have seen a reduction in travel times of 14.5% on average. It’s logical, once machines and employees are connected, workers on the production line no longer need to move around to request new raw materials, for example.

A simple click in their integrated ERP is required to launch an order, the materials should not be delayed. On average, the German example shows a variety of productivity gains leading to a 10% reduction in costs and an increase in revenues of 7.9% (see Figure 1). According to Ingenics, less than 1% of participants said their technology projects were not successful. While it is true that return on investment is difficult to assess accurately, it is nonetheless guaranteed.