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Of course, there are numerous blogs on this topic. I also read few of them but could not co-relate what was the thought process and what was envisioned with this terminology. Let me try to add the missing point.

What is Industry 4.0?

A term coined in Germany, I believe, by automotive giants, in 2011. They had a mission and a vision. In order to understand the mission let’s understand the industrial revolution via the below diagram.


Mission of “Industry 4.0”

  • Customer centricity         :  To completely transform the focus from factory/production/scale to Customer.

  • Transformation Speed    :  To consistently increase the speed at which market changes and design can be adopted

  • Flexibility                         : To transform the production like into a flexible infrastructure to adopt to the transformation speed

  • Automation                      : To automate the production lines to reduce the costs. Build automations using disruptive technologies.

Vision of “Industry 4.0”

As I understand, the vision of “Industry 4.0”, in an automotive industry, is to achieve production optimization and profitability for a product lot size 1.

This is still a very big statement which seems to be dreams away but the world and driving technologies are disruptive enough to achieve it.

If not 1, the production industry still aspires to achieve the ability to produce highly customizable products, in small lots at a price to produce bigger lots and of course with the flexibility to rapidly change the production line to adapt to market changes.

Why I believe the Industry 4.0 vision is “dreams away”?

Have we ever wondered why are cars not getting cheaper even with better economies of scale?

Although from a pure engineering/operations standpoint, the price of a product has to go down over time (due to better scale and fixed costs spread over a large number of products), car prices don't go down.

  • R & D          :         Developing a new car can cost as high as $6 billion in R&D

  • Design        :         Design requires a lot of manpower and retooling. Millions of dollars are also spent on market research, testing, marketing and customer support when a new card is designed

  • Input Cost   :         Increasing consistently

  • Labor Cost  :         Increasing consistently

  • Overheads  :         Increasing consistently

My thought process revolves around the fact that cost reduction can never be achieved. It’s been a decade that I have heard the most attractive word it used to be in any business “breakeven”. What I believe can be achieved now is “cost optimization” with every product being developed.


This is what we are trying to build and forms the basis of all emerging technologies. All solutions being developed converge to create

  • Intelligent Products

  • Intelligent Processes

  • Intelligent Factories

  • Intelligent Assets

Technologies like Machine Leaning and Deep Learning are being used to improve the intelligence consistently and automatically with each variation in inputs.

Contribution to Industry 4.0

I also wanted to give you a glimpse of who are the brains contributing to Industry4.0 with the below screen shot (old though);

Source :

There are 2 arms in the above screen shot;

  1. Connected Industry Building Blocks

  2. Other Industry 4.0 supporting technologies

SAP is visible under the Connected Industry Building Blocks developing 2 building blocks;

  1. Industrial IoT Platform

IoT is a trending topic today and which will form the backbone of all future technologies to achieve the vision of Industry 4.0.

  1. Analytics

The solution which converts data to intelligent insights. SAP Predictive Maintenance is one such solution with this embedded intelligence to help run assets at full potential at less cost and least downtime.

Key Takeaway:

  1. Understanding the vision of Industry 4.0

  2. How building “Intelligence” help to achieve this vision

  3. SAP’s contribution to Industry 4.0

Having come to the end of the blog i expect the reader to visualize the evolution of manufacturing process from hardcore independent machines to todays connected robotic machines. Also what is the expectation of the manufacturing industries from the emerging and evolving technologies which is to build the most flexible manufacturing process that could adapt and change quickly to ever changing customers unique requirement.

Readers are requested to provide your feedback or thoughts via the comment section.