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Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.

Industry 4.0 is the next major phase of the industrial revolution. It has roots in manufacturing but it is now increasingly gathering pace across all industries and sectors.

The term is often used interchangeably with 'smart manufacturing', 'digital manufacturing' and 'digital transformation'.

Industry 4.0 definition

There isn't a singular definition of Industry 4.0. Explanations vary greatly depending on the source, but collectively they describe a move towards digital transformation in business.

Industry 4.0 refers to an industrial or business environment where machines can:

• bridge digital and physical worlds
• exchange information with each other and with people
• collect, analyse and act upon real-time information

These environments are known as and are the cornerstone of the Industry 4.0 vision.

Before explaining the characteristics and business applications of Industry 4.0, it helps to understand its origins.

Four types of the industrial revolution

Since the 1800s, the manufacturing industry has undergone several distinct periods of change:

• first industrial revolution - used steam and water to mechanise production
• second industrial revolution - used electricity to enable mass production
• third industrial revolution - used electronics and IT to automate production

Today, the fourth industrial revolution is underway. It is driven by three strong technological currents: the rise in data volumes, the growth of computational power and connectivity.

Core components of Industry 4.0

Industry 4.0 does not rely on a solitary tool or technology. It builds on digital innovations from recent decades and elevates them by joining connected 'things', systems or people with real-time data.

Nine core technologies - or pillars of Industry 4.0 - play a key role in this approach:

• big data and analytics
• autonomous robots
• simulation
• horizontal and vertical integration
• the industrial Internet of Things (IIoT)
• cyber security
• cloud computing
• additive manufacturing (3D printing)
• augmented and virtual reality

Find out more about Industry 4.0 technologies.

How Industry 4.0 works

Four design principles characterise how Industry 4.0 works. These are:

• Interconnection - the ability for objects, machines and people to communicate and exchange information through a range of connected devices and sensors.
• Virtualisation - the ability to simulate and create a virtual copy of the real world (eg a virtual factory).
• Decentralisation - the ability for the systems to work independently, make decisions and perform tasks autonomously (eg self-configure and self-optimise).
• Real-time capability - the ability to collect, store and analyse real-time data, and act on the findings (eg when detecting failure, defects or safety concerns).

Find examples of digital innovation in business.

Industry 4.0 is fuelled by the developments in automation, robotics and the Industrial Internet of Things (IIoT). These technologies, alongside cloud and data analytics, form the building blocks of the next industrial revolution.

Below, we explain the nine fundamental technologies that drive digital transformation. For a more basic introduction into how Industry 4.0 works, see what is Industry 4.0.

Industrial Internet of Things

IIoT is a subset of the aimed especially at industrial applications. It refers to a network of physical objects, equipped with connected technologies such as sensors and radio frequency identification (RFID).

These technologies collect real-time data about the condition and performance of the IoT objects, for example, data regarding movement, location, temperature, state of health, etc. IIoT typically requires integration into corporate software such as manufacturing resource planning, product lifecycle management or asset management software.

Big data

refers to large and complex data sets often generated by IoT devices, or by cloud and enterprise applications, websites, sensors, etc. This data often exists in different formats, sometimes making it difficult to capture, store, analyse and convert into actionable business insights.

In the context of Industry 4.0, data analytics and machine learning can be used to interrogate this vast amount of data and provide insight that can help, for example, 91Ï㽶»ÆÉ«ÊÓƵ real-time decision making, predict machine failures or detect possible cyber breaches.

Cloud computing

The term cloud computing describes a way of storing and accessing data, software and services on remote servers over the internet. It enables companies to use computer resources without having to develop the required infrastructure on their premises. Cloud capability allows you to access or process data whenever and wherever you need it, including across sites and company boundaries.

In Industry 4.0 setting, cloud can deliver real-time information and scalability, and 91Ï㽶»ÆÉ«ÊÓƵ a multitude of connected devices and sensors along with all the data they generate.

Autonomous robots

The use of robotics in manufacturing isn't new. However, Industry 4.0 is giving it new life. A new generation of robots is emerging that boast greater speed, accuracy and autonomy. These advanced robots are capable of learning from their environments, interacting with one another and working safely side by side with humans as  or 'cobots' - designed to free workers from repetitive and dangerous tasks.

As the technology matures, these robots will become more affordable and will expand their range of capabilities and industrial applications.

Simulation

Much like robotics, computer simulations aren't entirely new although the advent of Industry 4.0 is making them more widespread. Activities like of product development or simulation of production processes allow operators to, for example, run tests on virtual models or drive down machine set up times by optimising machine settings in the virtual world before the actual physical changeover.

Horizontal and vertical integration

refers to the integration of IT systems and information flows across production and business planning processes, taking in the full value and supply chain from supplier to consumer. seeks to integrate IT systems at various hierarchical levels by connecting diverse systems from field level and shop floor, through production and operations to enterprise planning level.

In Industry 4.0, these cross-company networks are expected to evolve and enable truly automated value chains where different departments, functions and capabilities are much more cohesive.

Cyber security

Increased connectivity is integral to Industry 4.0. However, it can leave businesses exposed to cyber attacks, theft or damage, as well as the risk of network or process disruptions due to software errors, device failures and misconfigurations.

Cyber security utilises technologies, processes and controls to protect critical industrial systems, networks and connected machines, as well as sensitive personal or business data, from this unwanted exposure.

Virtual and augmented reality

(VR) and (AR) systems bridge the gap between the digital and physical worlds by superimposing data and virtual images onto a physical object. They can 91Ï㽶»ÆÉ«ÊÓƵ a variety of services across different fields, including rapid prototyping, design, maintenance, assembly, skills development and training.

You can use AR applications to:

• create digital overlays on handheld devices, such as smartphones or tablets
• display schematics on real-world objects via projectors
• show graphical data via immersive head-mounted displays

As the VR/AR capabilities mature, companies will be able to make broader use of these to provide workers with real-time information to improve decision making and work procedures.

Additive manufacturing

Known also as , additive manufacturing uses 3D models to create parts with a 3D printer. For decades now, 3D printing has been used for prototyping. However, in recent years, the greater affordability of digital scanners and printers has grown additive manufacturing into an increasingly valuable technology across virtually all industries. It offers a wide scope of possibilities, from rapid prototyping and tooling to mass customisation, allowing complex designs to be made in significantly less time and at reduced costs.

Under the umbrella of Industry 4.0, these nine technologies can potentially be used separately or in combination to create business value and improve business outcomes. To find out how, see examples of digital innovation in business.

You can also read more about the business benefits of Industry 4.0.

Much of the discussion around Industry 4.0 centres on the application of the latest digital innovations in business and the creation of 'smart factories'. However, the actual examples and business use cases are as varied as the Industry 4.0 technologies themselves.

Industry 4.0 examples and use cases

Regardless of your size and sector, you can apply Industry 4.0 principles and the associated digital technologies across many areas of your business. For example:

• At the very least, you can go paperless. Use technology to digitise your business documents (such as forms and product specifications). This can help you save time and money and reduce the likelihood of keeping outdated or incorrect information.


• You can use the Internet of Things (IoT) technologies, such as shelf-fitted sensors and weighing devices to track and trace your assets and resources. For example, you can send inventory information to a warehouse management system to prevent understocking or overstocking. You can also use IoT systems to monitor the structural health of all sorts of objects, from production assets and machinery to entire buildings.


• You can embed sensors to factory machines and use them to collect data about the machines' conditions and cycle times. Advanced analytical tools can then process and analyse this data in real-time to identify the best production and maintenance scenarios, identify and correct problems (eg equipment failure) and optimise asset utilisation.


• When it comes to business intelligence, you can use machine learning models and data visualisation tools to help convert data into actionable business insights. For example, you can use big data to reduce risk in the delivery of raw materials - eg you can analyse weather patterns, identify potential problems, calculate the probability of delays, etc. You can use the findings to help you identify backup suppliers or develop contingency plans.


• You can embrace cloud computing to transform virtually every facet of the business. Whether by accessing software and services over the internet, or by using remote servers to store, process and share volumes of data, you can harness the power of the cloud to improve agility, scalability and flexibility across the different area of your business.


• You can use autonomous moving robots to help track, locate and move inventory, and improve your warehouse operations. Advanced robotics can help reduce order cycle time and improve productivity gains, or relieve the workers from monotonous or dangerous tasks.


• You can use artificial intelligence (AI) and associated innovations such as smart 'chatbots' to change how you interact with your customers. There is a whole field of generative AI that can help you generate new and original content including images, text, music, code and much more.


• You can experiment with 3D printing to make prototypes quickly, fabricate complex parts and produce them on-demand, with fast turnaround, closer to the point of need. You can also use it to produce personalised products, tailored to your customer specifications.


• You can use automation to offer customisation of your products. Digital platforms can provide means for your customers to co-create, add custom features or adapt characteristics of your products before you send it into production. This can open up new sources of revenue or help you develop innovative capabilities in your business.


• You can use virtual reality (VR) and augmented reality (AR) systems to improve many areas of your business, including staff training, assembly processes, equipment maintenance, etc. For example, you can use AR glasses to deliver work instructions to the worker's field of view rather than them having to track down the instructions in a physical manual. You can project layouts, assembly guidelines or component's serial numbers on real-world parts to facilitate faster, easier or safer work procedures.

Digital twin manufacturing

are virtual models that allow for digital simulation, validation and optimisation of parts, products and processes. A digital twin is considered a key part of digital manufacturing and can be a major asset in driving automation value. When used effectively, it can significantly shorten the time to market.

Evaluate the relevant technologies

There is no single prescribed path to digital transformation. You can't implement all the technologies at once. It is generally a good idea to start with a pilot project. A pilot will help you justify the cost and determine the benefits you can expect to achieve from a specific digital transformation initiative.

Read more about the business benefits of Industry 4.0.

Ultimately, you should choose to take forward those technologies that best suit the needs of your business and your industry. For best practice, see six tips for Industry 4.0 adoption.

Adoption of Industry 4.0 comes with a long list of benefits - including increases in productivity and efficiency, greater profitability, business flexibility and enhanced customer satisfaction.

Advantages of digital transformation

In simple terms, Industry 4.0 technologies enable you to get the information you need to make the best decisions for your business. This allows you to optimise your processes and deliver more products and services in less time and with less resources.

In general, the common benefits of digital transformation include:

• cost savings
• increased outputs
• increased profitability
• reduced downtime
• better collaboration and knowledge sharing
• better talent acquisition
• increased competitiveness

Depending on their nature and purpose, digital technologies can also help:

• reduce waste, errors, costly defects and delays
• increase speed of production
• improve product quality
• improve and accelerate decision-making
• enable real-time forecasting and monitoring
• increase innovation capacity
• make compliance with regulations easier

Benefits of digital technologies can also extend to improving:

• customer experience
• ability to anticipate market demands
• delivery and service performance
• supply chain relationships
• ability to mitigate risk and fraud
• organisational security

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

Cost and complexity of digital transformation

Implementing digital transformation often requires planning and businesses can frequently experience challenges. These can include the up-front capital investment, data security and skills gaps. For your initiative to succeed, it's important to understand the common Industry 4.0 challenges and risks you may encounter.

When you're ready to move forward, see six tips for Industry 4.0 adoption.

Industry 4.0 technologies are evolving fast, helping businesses to become 'smart' and more efficient. To remain competitive, companies should look to embrace - or at least acknowledge - these changes.

Making use of digital transformation tools is not always straightforward. Industry 4.0 adoption can present certain challenges and risks for many businesses.

Barriers to digital transformation

According to recent research, five common barriers to digital transformation include:

• lack of skills or talent to manage complex Industry 4.0 structures
• concerns regarding cyber security
• other priorities for capital expenditure
• lack of appropriate digital infrastructure
• lack of knowledge of digitalisation and how it can help the business

Source: .

Lack of skills

Access to skills is often cited as the biggest barrier to digital transformation. Technology adopters report difficulties with finding, training and re-skilling staff, particularly around the areas of user interface, data science, software development and machine-level controls. Problems also sometimes occur around the accessibility of technology, with people not willing - or finding it too difficult - to use new digital tools and applications. If this is a concern in your business, it may help to conduct a training needs analysis to determine what training your staff may need. See how to identify staff training needs.

Data and IT security

IT security can pose substantial risks in Industry 4.0 setting. Online integration of processes, systems and people potentially give room to security breaches and data leaks. Bear in mind, IT security is not limited to cyber attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures that can potentially disrupt business operations and production. Your IT infrastructure will also need to be up to the task of coping with the extra connectivity required for your digital transformation. See more on IT risk management.

New business models

Another common hurdle faced by businesses adopting Industry 4.0 is the lack of internal alignment about which strategies to pursue. With the advent of digital technologies, new business models are emerging requiring companies to rethink the way they do business. Without a consensus on business strategy, or the right people in place to drive it, it can be difficult to overcome these internal challenges.

Culture change

Managing culture change is a vital part of Industry 4.0 success, as well as a potential hindrance if not executed well. If your workers aren't ready for the changes, they can be unwilling, resistant or unable to adapt. Preparing them for the technology shift and gaining their buy-in is critical to the success of your digital project. Leadership and leading from the top can play an important role in bringing about the cultural change needed for digital transformation. Read more about change management.

Capital investment

Depending on what you're looking to change, Industry 4.0 adoption sometimes involves high upfront costs. However, a large investment is not always required to transform the business. You can think big, but start small. Begin with a simple scalable solution, perhaps a smart section of lighting, and see how it works. You don't need to commit a huge investment to make a significant step forward.

Read about the business benefits of Industry 4.0 and check out some examples of digital innovation in business.

Help with Industry 4.0 implementation

Support is available to help you overcome some of the key challenges around Industry 4.0 adoption. For help with skills development, you can consider:

• further education: skills development programmes
• higher education business 91Ï㽶»ÆÉ«ÊÓƵ
• Knowledge Transfer Partnerships

For technical 91Ï㽶»ÆÉ«ÊÓƵ with technology solutions, you can look at:

You can also find innovation advice, inspiration and 91Ï㽶»ÆÉ«ÊÓƵ via or browse our range of innovation, research and development guides.

How to assess your digital readiness?

If you're keen to invest in digitalisation but not sure what will work best for your business, there are resources such as online tools to help you assess your digital readiness. For example, you can use the that helps manufacturers to deploy digital technologies. 4Manufacturing was developed in partnership with the industry by the Knowledge Transfer Network and Innovate UK.

The best advice for adopting Industry 4.0 technologies in your business is to start small and keep implementation simple. Follow these six tips to get digital transformation underway:

1. Assess your readiness to adopt digital technologies and the implications for your business strategy by using tools such as the . These will provide insights on areas to prioritise to improve your business productivity.


2. Develop a digital roadmap to help plan decisions and implications across your business - eg technology, processes, investments, skills and re-training. Be clear about how you will work collaboratively with suppliers, customers and partners across the value chain.


3. Prepare for the practicalities of digital transformation. Find the talent you need and, if it's not readily available, find ways of developing it within your business. Bolster your infrastructure, secure the necessary capital and allocate resources to manage and implement your digital project. Engage with your workforce at an early stage to gain buy-in - this can be critical if you need to, for example, re-skill staff to enable them to use new technologies.


4. Gradually move beyond operational upgrades to your legacy systems. Seek opportunities to pilot new digital technologies that can drive innovation as well as operational efficiencies in your business.


5. Invest in the future - don't neglect long-term opportunities for innovation and value creation in pursuit of short-term objectives. Transformative benefits often take time to accrue.


6. Finally, avoid investing in technology for its own sake. Yes, Industry 4.0 technologies open up a range of possibilities, but not all of them will be equally valuable to your business. To ensure there's a return on your investment, be clear on what exactly you hope to transform, understand how the technology will enable this and evaluate whether it meets your specific strategy and business goals.

Learn more about Industry 4.0 technologies and find examples of digital innovation in business.

GRAHAM has a 200-year history, specialising in building, civil engineering, interior fit-outs, facilities management and investments. The company operates through a network of regional offices across the UK and Ireland.

Aspiring to be 'digital by default', GRAHAM has been actively exploring - and adopting - ways to move beyond traditional construction methods. By using virtual and augmented reality, geospatial technologies and other digital tools in their daily workflows, they were able to find smarter, more efficient ways of working and resolving potential problems.

In this case study, Shervin Yousefzadeh and Victoria Allen from GRAHAM's Digital Construction Team talk about their digital strategy, their commitment to adding value through technology and the benefits this has provided to the business.