Industry 4.0 : Will it benefit India?

Introduction

It was 10 p.m. at night on a chilly January evening in Delhi. Mr. Gagandeep Makkar, a Partner
with a reputed Consulting Firm was looking at the traffic jam across the street from his cabin.
Though he was looking at his laptop every now and then, his mind was still in the traffic
situation at that hour. He was thinking whether the pillars of Industry 4.0 can be leveraged to let
people know in advance which roads to take. But he had a bigger problem at hand. The head of
Consulting, Mr. Vikram Bhosle had given him a mandate to offer Industry 4.0 as a service line in
India.

Industry 4.0 is a name for the current trend of automation and data exchange in manufacturing
technologies. It includes cyber-physical systems, the Internet of things, cloud computing and
cognitive computing.

Industry 4.0 creates what has been called a "smart factory". Within the modular structured smart
factories, cyber-physical systems monitor physical processes, create a virtual copy of the
physical world and make decentralized decisions. Over the Internet of Things, cyber-physical
systems communicate and cooperate with each other and with humans in real time, and via the
Internet of Services, both internal and cross-organizational services are offered and used by
participants of the value chain.

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
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1
 EXHIBIT 1: Four Industrial Revolutions

Source: "Christoph Roser [http://www.allaboutlean.com]

Origin of Industry 4.0

The term "Industrie 4.0" originates from a project in the high-tech strategy of the German
government, which promotes the computerization of manufacturing.

The term "Industrie 4.0" was revived in 2011 at the Hannover Fair. In October 2012 the Working
Group on Industry 4.0 presented a set of Industry 4.0 implementation recommendations to the
German federal government. The Industry 4.0 workgroup members are recognized as the
founding fathers and driving force behind Industry 4.0.

On 8 April 2013 at the Hannover Fair, the final report of the Working Group Industry 4.0 was
presented.

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
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Design Principles

There are 4 design principles in Industry 4.0. These principles support companies in identifying
and implementing Industry 4.0 scenarios.

• Interoperability: The ability of machines, devices, sensors, and people to connect and
communicate with each other via the Internet of Things (IoT) or the Internet of People
(IoP)

o Adding IoT will further automate the process to a large extent

• Information transparency: The ability of information systems to create a virtual copy of

the physical world by enriching digital plant models with sensor data. This requires the
aggregation of raw sensor data to higher-value context information.

• Technical assistance: First, the ability of assistance systems to support humans by

aggregating and visualizing information comprehensibly for making informed decisions
and solving urgent problems on short notice. Second, the ability of cyber physical
systems to physically support humans by conducting a range of tasks that are unpleasant,
too exhausting, or unsafe for their human co-workers.

• Decentralized decisions: The ability of cyber physical systems to make decisions on their
own and to perform their tasks as autonomously as possible. Only in the case of
exceptions, interferences, or conflicting goals, are tasks delegated to a higher level.

Challenges

Following are the challenges in implementation of Industry 4.0:

• IT security issues, which are greatly aggravated by the inherent need to open up those
previously closed production shops

• Reliability and stability needed for critical machine-to-machine communication (M2M),

including very short and stable latency times

• Need to maintain the integrity of production processes

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
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 • Need to avoid any IT snags, as those would cause expensive production outages

• Need to protect industrial know how (contained also in the control files for the industrial
automation gear)

• Lack of adequate skill-sets to expedite the march towards fourth industrial revolution

• Threat of redundancy of the corporate IT department

• General reluctance to change by stakeholders

• Loss of many jobs to automatic processes and IT-controlled processes, especially for
lower educated parts of society

Role of Big data and analytics

Modern information and communication technologies like cyber-physical system, big data
analytics and cloud computing, will help early detection of defects and production failures, thus
enabling their prevention and increasing productivity, quality, and agility benefits that have
significant competitive value.

Big data analytics consists of 6Cs in the integrated Industry 4.0 and cyber physical systems
environment. The 6C system comprises:

• Connection (sensor and networks)

• Cloud (computing and data on demand)

• Cyber (model & memory)

• Content/context (meaning and correlation)

• Community (sharing & collaboration)

• Customization (personalization and value)

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
4
In this scenario and in order to provide useful insight to the factory management, data has to be
processed with advanced tools (analytics and algorithms) to generate meaningful information.
Considering the presence of visible and invisible issues in an industrial factory, the information
generation algorithm has to be capable of detecting and addressing invisible issues such as
machine degradation, component wear, etc. in the factory floor.

Impact of Industry 4.0

Proponents of the term claim Industry 4.0 will affect many areas, most notably:

• Services and business models

• Reliability and continuous productivity

• IT security: Companies like Symantec, Cisco, and Penta Security have already begun to
address the issue of IoT security

• Machine safety

• Product lifecycles

• Industry value chain

• Workers' education and skills

• Socio-economic factors

• Industry Demonstration: To help industry understand the impact of Industry 4.0,

Cincinnati Mayor John Cranley, signed a proclamation to state "Cincinnati to be Industry
4.0 Demonstration City".

• An article published in February 2016 suggests that Industry 4.0 may have a beneficial
effects for emerging economies such as India.

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
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Stepping Stones to Industry 4.0

1. Cloud Computing. A single instance, multi-tenant environment scales with your business.
Companies from startups to multinational global corporations are running on the same set
of manufacturing software code and same database technology. This is the platform on
which manufacturers need to build their Industry 4.0 environment.

2. Industrial Internet of Things (IIoT). Leading manufacturing companies are automatically

receiving goods into the facility and the next thing a human does is drive the truck out the
door -- which may be changing in upcoming years once vehicle automation is a reality.
Everything in between receiving and shipping is done today through automation. It's all
done through PLC integration and controls, which is highly efficient, higher product
quality, and better customer satisfaction. IIoT connects devices from the shop floor and to
ERP.

3. Agility and Sequencing. Similar to just-in-time (JIT) inventory strategy, sequencing is

where components and parts arrive at a production line, in a specific configuration, at the
exact time the product is required for the customer’s specific product configuration. This
method of manufacturing will be a requirement for all manufacturing companies across
the industry spectrum.

4. On-Demand Manufacturing. Consumer preference and demand patterns are starting to

drive how the companies are going to be providing products to the market. In order to
stay competitive, manufacturing companies need to be able to react and rapidly change
the production process to align with the evolving demand patterns of its customer base.
These variable demand patterns will be flowing through the enterprise business systems
straight down to the shop floor manufacturing technology. The shop floor technology will
then auto-configure the manufacturing production lines so the specific products can be
manufactured. The days of large manufacturing plants making the same part or product,
are gone. It's going to be localized manufacturing, supporting customers within a very
specific region. You're going to need to be able to manufacture what the customer
demands, based upon agility and sequencing.

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
6
Industry 4.0 and India

The complete manufacturing ecosystem is undergoing a phenomenal shift with technological

advancements happening at a fast pace. The need to understand and adopt the advanced
manufacturing techniques is the need of hour. In current times, Industry 4.0 is talked about at
various levels. The Government of India’s push to manufacturing through the “Make in India”
initiative has garnered considerable attention from the industry and brought the spotlight back on
the manufacturing sector. It is now formulating a National Policy for Advanced Manufacturing,
which would be one of the key tools to attain its objective of increasing the contribution of
manufacturing output. Consideration is being given to the framework for introduction of
‘Industry 4.0’. There will be tremendous impetus towards modern manufacturing including
advanced materials, advanced robotics and 3D printing, among others. Industry 4.0 has many
facets to it including the upcoming trend of automation and data exchange in manufacturing
technologies, cyber-physical systems, the Internet of things, cloud computing and lot more. It
creates what has been called a “smart factory”. In smart factories, machinery, storage systems
and production are capable of carrying out complex tasks, exchanging information and giving
instructions to each other, without the need for human involvement.

According to IBEF, the Government of India has set an ambitious target of increasing the
contribution of manufacturing output to 25 percent of Gross Domestic Product (GDP) by 2025,
from 16 percent currently. IoT, being one of the most important aspects of Industry 4.0 for
India, is expected to capture close to 20 percent share in global IoT market in the next five years.
According to IBEF forecast, the IoT market in India is projected to grow at a CAGR of more
than 28 percent during 2015-2020. Government of India has taken initiatives such as Green
Corridors and ‘Make in India’

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
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Aftermath

The following diagram shows the various applications of Industry 4.0:

EXHIBIT 2: Applications of Industry 4.0

Source: https://bridgr.co/wp-content/uploads/2017/06/bdc-etude-manufacturing-en.pdf

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
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Investments

The diagram below shows the investment in the Canadian manufacturing industry

EXHIBIT 3: Investment in Industry 4.0

Source: https://bridgr.co/wp-content/uploads/2017/06/bdc-etude-manufacturing-en.pdf

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
9
Mr. Gagandeep has the following questions to answer:

1. What is the estimated market for Industry 4.0 in the coming years?

2. He needs to prepare a use case and work on the cost-benefit analysis. Can you help
him on this?

3. Will India benefit from Industry 4.0? Will the prohibitive costs of technology be a
hindrance?

4. How industry 4.0 will help Indian companies to boost trade?

5. How digitization can help in easing trade process across the globe?

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
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References:

1. Hermann, Pentek, Otto, 2016: Design Principles for Industrie 4.0 Scenarios

2. Jürgen Jasperneite:Was hinter Begriffen wie Industrie 4.0 steckt in Computer &
Automation, 19 Dezember 2012

3. Kagermann, H., W. Wahlster and J. Helbig, eds., 2013: Recommendations for

implementing the strategic initiative Industrie 4.0: Final report of the Industrie 4.0
Working Group

4. Heiner Lasi, Hans-Georg Kemper, Peter Fettke, Thomas Feld, Michael Hoffmann:
Industry 4.0. In: Business & Information Systems Engineering 4 (6), pp. 239-242

5. BMBF-Internetredaktion (2016-01-21). "Zukunftsprojekt Industrie 4.0 - BMBF".

Bmbf.de. Retrieved 2016-11-30.

6. Industrie 4.0: Mit dem Internet der Dinge auf dem Weg zur 4. industriellen
Revolution". Vdi-nachrichten.com (in German). 2011-04-01. Retrieved 2016-11-30.

7. IOT role in industry 4.0". 19 May 2016 – via TechiExpert.

8. "Cincinnati Mayor Proclaimed "Cincinnati to be Industry 4.0 Demonstration City"".

Imscenter.net. Retrieved 2016-07-30

9. Anil K Rajvanshi (2016-02-24). "India Can Gain By Leapfrogging Into Fourth

Industrial Revolution". The Quint. Retrieved 2016-11-30.

10. Lee, Jay; Bagheri, Behrad; Kao, Hung-An (2014). "Recent Advances and Trends of
Cyber-Physical Systems and Big Data Analytics in Industrial Informatics". IEEE Int.
Conference on Industrial Informatics (INDIN) 2014.

11. Lee, Jay; Lapira, Edzel; Bagheri, Behrad; Kao, Hung-an. "Recent advances and
trends in predictive manufacturing systems in big data environment". Manufacturing
Letters. 1 (1): 38–41. doi:10.1016/j.mfglet.2013.09.005

12. https://www.plex.com/blogs/industry-4-0-advancements-in-manufacturing-
technology.html

This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Senior Manager, Deloitte Touche
Tohmatsu Services, Inc. for ISCEA SCNext. No part of this text may be reproduced in any form by any electronic or mechanical
means (including photocopying, recording, or information storage and retrieval) without permission in writing from the author
except for reading and browsing via the World Wide Web.
© Copyright - Sandeep Chatterjee, Deloitte Touche Tohmatsu Services, Inc., 2017. All rights reserved.
11