The Impact of Industry 4.0 on the Manufacturing Industry


We are reaching a point in the life of Industry 4.0 where the narrative is beginning to shift. Where we once asked forward looking questions like ‘what will the impact of Industry 4.0 be on manufacturing?’ we are now starting to ask, ‘what has the impact of Industry 4.0 been on manufacturing?’ This is understandable. After several years of intense discussion and promise, along with a liberal dose of hype, surely, we now have the right to start asking for evidence that these prior claims are bearing fruit…don’t we?

Of course, we do, but I would not be overly optimistic with the answers. A simple Google search will unearth many case-studies and real-world examples that show the benefits of specific projects of what is purported to be an Industry 4.0 solution. These are great as isolated examples, but they are exactly that, isolated examples. While these are typically driven by vendors to increase the credibility and tangibility of their promises, independent organisations such as analysts seek out those on the bleeding edge, the ‘beacons’ or ‘lighthouses’ at the forefront of the Industry 4.0 revolution. The problem is we are looking at an infinitesimal slice of the global manufacturing industry through a very narrow and highly polarised viewpoint.

We cannot also attempt to find evidence from macro-economic measures such as manufacturing output, productivity, employment or GDP, as they are so complex and abstract that it would be almost impossible to attribute any trends directly or indirectly to Industry 4.0. For example, what economists call the productivity paradox fails to reconcile increased investment in technology with a decline in, or stagnant, productivity growth.

Another aspect is our bias towards grossly overestimating the short-term impact of technology while grossly underestimating the long-term impact (an adage known as Amara’s law, named after Roy Amara an influential researcher and scientist). It is likely to be decades before the foundational and structural changes we are seeing in the manufacturing industry today begin to manifest themselves as significant influences in macro-economic trends. Even then we may not even be able to create a tangible and causal link to what we term today as Industry 4.0. Do we understand the impact of the broad swathe of industrial automation that took place in the 1970’s, 80’s and 90’s has had on our economy today?

However, the absence of evidence is not evidence of absence, and just because we cannot put our fingers directly on proof of wide scale successes or impacts of Industry 4.0 on the manufacturing industry, does not mean that such impacts and success do not exist.

I am not privy to the successes (or failures) that other technology vendors and equipment manufacturers have with their clients, other than the ones they publicise, but what I am acutely aware of is our own success with clients. We work with manufacturers, partners and customers across the world who are transforming their industrial, manufacturing or quality processes every day. By integrating data from their physical equipment into our advanced intelligence and analytics platforms, they are able to leverage this digital transformation by gaining significant cost savings, productivity and quality improvements, and minimising and mitigating operational risks. If the impacts of those successes were not real and significant, then we would not be succeeding at the rate we are.

Do our customers put an Industry 4.0 badge on these projects and outcomes? No. Does the nature of these projects and their success fall under the umbrella of Industry 4.0? Yes. Industry 4.0 is an umbrella term for a whole spectrum of technologies and methods that involves the integration of physical systems, processes and advanced digital solutions, with the objective of driving further towards manufacturing optimisation. Therefore, trying to find evidence of the success of Industry 4.0 today will be like trying to spot a mythical beast, and while there will be many alleged sightings, the impact of this trend will not be evident for many years, possibly even decades.

For manufacturing leaders hoping to see such evidence before they make a move, it could leave them waiting a long time in the cold and the dark waiting to spot the Loch Ness Monster.

Jason Chester, Director of Global Channel Programs, InfinityQS

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