Lighting the Way to Industry 4.0

Companies embracing new technologies and business models need beacons to show the path.

With all the talk of rapid advancements in digital technology, it’s important to remember that while this issue of Longitudes may have been delivered digitally, it’s consumed from a physical device.

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The digital and physical worlds are colliding in a phenomenon known as the Fourth Industrial Revolution.

Our lives are built around physical items that start with the sourcing of physical materials manufactured, assembled, stored and shipped to a home or store, eventually becoming the laptop, smartphone or monitor you’re reading on right now.

While this may sound straightforward, what’s happening under the surface to bring your laptop or literally any other product to your door is undergoing a massive transformation that will forever change companies, industries and countries.

When industrial and digital worlds collide

The digital and physical worlds are colliding in a phenomenon known as the Fourth Industrial Revolution (4IR). Previous industrial revolutions brought the power of water and steam to mechanize production, electricity and the assembly line to create mass production and information technology to automate production.

The internet and a range of new technological breakthroughs in fields such as robotics, artificial intelligence, sensor-based networks, biotechnology, material science, quantum computing and 3D printing fuel this new revolution.

These innovations are fundamentally altering how physical products are manufactured and delivered and in their wake, we’ll see the modern-day buggy whip, kerosene and VHS tape.

While 4IR is expected to create up to $3.7 trillion in value to global manufacturing, progress has been predictably slow as businesses try to put their arms around the new technologies and business models. They need beacons to light the way to 4IR.

To this end, the World Economic Forum, in collaboration with McKinsey, set out to find the beacons of the new industrial revolution, which they termed “4IR Production Lighthouses.”

The idea is to replicate the success of the Toyota Production System during the Third industrial Revolution. Companies would travel to Japan to learn about the system and then implement those leading-edge practices at home.

To find these 4IR Lighthouses the WEF surveyed more than 1,000 manufacturing sites with a successful record of implementing 4IR technologies. An expert panel then embarked on an exhaustive analysis to determine the top nine 4IR manufacturing sites in the world, which could serve as leaders of the new industrial revolution.

The winners announced last month were almost exclusively found in Europe and Asia, including Bayer, Bosch Automotive, Haier, Johnson & Johnson, Procter & Gamble and Schneider Electric.

The lone 4IR Lighthouse in the U.S. was an unlikely pairing: A startup additive manufacturing company with a 111-year-old logistics company – Fast Radius and UPS.

Industry 4.0

Additive manufacturing is a fast-growing Industry 4.0 technology that involves building parts and products by adding layer upon layer of material.  While this may seem unrelated to the business of UPS, it’s actually a logistics solution. It is the fourth modality of logistics – air, ocean, ground and now digital.

Parts and products are increasingly transported digitally for on-demand production closer to the point of use, radically transforming supply chains and enabling new business models such as virtual inventory, mass customization and more.

Fast Radius is bringing new applications to life, including virtual warehouse solutions for industrial and aerospace parts, previously “unmakeable” components for athletic equipment OEMs, new flow-mixing components for global industrial clients and more.

By integrating this new production capability with the UPS global logistics network, Fast Radius and UPS have created a business model that blurs the line between those who make things and those who move things.

The World Economic Forum recognizes this business model as a global leader. As always, with recognition comes responsibility.

We now have the privilege and honor of lighting the way for other companies navigating the choppy and uncertain seas between the industrial economy and the digital economy.

Alan Amling is Vice President of Corporate Strategy at UPS. He previously oversaw marketing efforts for UPS's global logistics and distribution services.

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