What managers need to know about Industry 4.0

    December 1, 2018

    Smart factories with systems that monitor when raw materials are low and trigger new deliveries. Machines that are equipped with sensors that alert maintenance technicians when parts are worn or need replacing. Production processes that are optimized by analyzing wide swaths of data pertaining to workplace layout, human output, product quality, and even consumer feedback.

    These are all examples of how Industry 4.0 — also referred to as i4.0 or the Fourth Industrial Revolution — is impacting the manufacturing process and supply chain. But what does this mean for managers?

    What is Industry 4.0?

    According to Mike Moore in his article “What is Industry 4.0? Everything you need to know” for TechRadar, Industry 4.0 refers to the combination of traditional industrial and manufacturing practices with our increasingly digitized, technological environment. It involves the use of machine-to-machine (M2M) deployments, the Internet of Things (IoT), and the collection and analysis of big data to continuously increase automation. In addition, it involves improving processes, monitoring, and communication. In the report “Beyond the hype: Separating ambition from reality in i4.0,” KPMG estimates that by 2020, the Industry 4.0 market will be worth more than $4 trillion. 

    How Industry 4.0 is impacting the workplace

    Naturally, the impact of Industry 4.0 reaches far beyond the factory floor. It extends to all business units that are involved with the design, development, production, transportation, and sale of products. Because of this, managers need to understand the challenges and opportunities associated with the rapid technological advancements of Industry 4.0. One of the most comprehensive reports on this topic is “The Future of Jobs Report 2018” from the World Economic Forum, which covers predictions between 2018 and 2022. Some of its key findings include:

    • Accelerated adoption of technology: The majority of companies will expand their use of big data analytics, the IoT, cloud computing, machine learning, virtual reality, and augmented reality.

    • Greater use of robotics: There’s a growing business interest for the use of robotics, including stationary robots, non-humanoid land robots, and aerial drones. 

    • Changing employment types: Many companies will reduce their full-time workforce, as well as make more use of flex work and remote work arrangements. In addition, there will be a rise in the engagement of independent contractors.  

    • A shift on the human-machine frontier: Currently, 71 percent of task hours are performed by humans and 29 by machines. By 2022, that’s expected to shift to humans performing 58 percent of task hours and machines performing 42 percent. Human-machine interaction will become more focused on letting machines handle automatable actions, so humans can concentrate on more complex tasks.  

    • A net positive job outlook: Although there will be fewer jobs in some professions, the growth in emerging roles will offset this decline. 

    • Emerging roles: There will be a surge of in-demand roles related to new technologies, as well as jobs that leverage people skills. 

    • Growing skills instability and a need for reskilling: Thanks to new technologies, the skills required to do a job will shift considerably, which will result in a need to upskill or reskill workers.

    Stay informed

    These findings indicate that we’re headed for a time of significant transformation — and in order to navigate it successfully, companies will need managers who are informed about technological developments that impact their industry and workplace. So make sure to read trade magazines, follow subject-matter experts in your field, and stay up to date on technological developments. By being prepared for the changes in your field, you can enhance your ability to lead your team through the coming transitions while at the same time demonstrating your leadership, problem-solving, and strategic thinking skills to your employer.


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