AWS Smart Business Blog

A Small and Medium Business Guide to Industry 4.0: What It Is and Why It Matters

We’re in the midst of the fourth Industrial Revolution—what is your company doing to improve its operations? While larger businesses have been working toward this for years, small and medium businesses (SMBs) can also optimize and enhance their manufacturing capabilities to drive quality, speed, and flexibility.

At Amazon Web Services, we help you focus your resources on optimizing production, creating new smart products, and improving operational efficiencies across the value chain—not on the underlying infrastructure to make it happen. If you are eager to modernize your manufacturing plant, but aren’t sure where to start, we’ll provide the context you need to make the case to your leadership team. In this blog post we will define what this movement is about, explain benefits most relevant to SMBs, show how to overcome challenges, and more.

What is Industry 4.0?

Industry 4.0 is characterized by the use of smart, interconnected technologies to transform manufacturing. As described by the World Economic Forum, the rapid evolution and adoption of Industry 4.0 heralds the transformation of entire systems of production, management, and governance.

These technologies are evolving at historically unprecedented rates. The past decade alone has seen the development and adoption of cloud computing, Internet of Things (IoT) sensors, big data analytics, artificial intelligence (AI), augmented reality (AR), autonomous robots, and cybersecurity. These technologies build on each other to produce transformational breakthroughs. IoT devices operate at the edge, making decisions and sending data to cloud computing environments, which provide the resilient, flexible, and secure foundation to store and process data. Big data analytics and AI consume the data to produce insights and make recommendations that are consumed by IoT devices to make smarter decisions. For example, companies adopting smart manufacturing can implement more automation in the production process. Utility companies implementing a smart grid could also optimize power delivery and reliability with self-healing grids.

What are the benefits of Industry 4.0 and why should SMBs adopt it?

The integration of technologies mentioned above help companies optimize production, make better decisions, and improve throughput. Industry 4.0 also enhances the customer experience, which will be gained through more intelligent and personalized products. While large enterprises have made significant advances, cloud offers a competitive advantage to SMBs who currently lack scale but have big dreams. The cloud democratizes access to this industry-changing technology.

For example, 3D printing was once a novelty for early adopters and companies with large research and development budgets. Now, even SMBs can implement on-demand production of customized products tailored to individual customer requirements. This ranges from personalized footwear, to clothing, and electronic devices. Beyond printing, healthcare organizations can use big data analytics and IoT device data help collect and analyze patient vitals to develop personalized treatment plans.

According to Jumpstart Industry 4.0 with AWS Connect Factory Solution, companies only realize 20-30 percent of the value of the data they collect from their factory and fleet assets. Using Artificial Intelligence(AI)/Machine Learning (ML) for deeper analytics, they could achieve the following:

  • Reduce product development costs up to 50 percent
  • Reduce operating costs up to 25 percent
  • Increase gross margins by 33 percent or more, extracting up to five times more value overall

Applying AI/ML-driven analytics to connected machine data can reduce the time to understand the root cause of production micro-stoppages, improve throughput, and identify trends that lead to sub-optimal manufacturing. According to McKinsey, predictive maintenance typically reduces machine downtime by 30 to 50 percent and increases machine life by 20 to 40 percent.

In addition to deeper analytics, SMBs can improve visibility at all levels of their business—back office, plant, line, machine, process, and product—with a solution that combines all the data in near real-time. Modernizing the use of operational and IoT data enables near real-time visibility into operations through dashboards. Dashboards can be customized to the specific needs of a role to maximize productivity. If you are one of the many SMBs facing a talent shortage, insights can help you better prioritize your team’s time. Additionally, if your key stakeholders don’t have engineering backgrounds, operational data points in dashboards can provide detail into areas where improvements—or investment—is needed.

Two executives walking the plant floor in a manufacturing facility

What challenges do SMBs face in adopting Industry 4.0?

When compared to previous industrial revolutions, Industry 4.0 breakthroughs are evolving at exponential rates. The velocity, breadth, and depth of the changes makes it challenging for companies to assess the potential impacts to their business and mobilize their organization to adopt and deploy Industry 4.0. Once deployed, companies need to keep up with the changes and adapt as needed to extract value from enhancements and innovations.

SMBs face challenges in adopting Industry 4.0, chief among them being resource constraints and skill gaps. The cost of capital has risen. Together with an uncertain economic future, there is an increased risk of making long-term capital investments in Industry 4.0 technologies. Adding to this, SMBs face a shortage in skilled personnel to develop new technologies and/or design and implement solutions for Industry 4.0 using available technologies. What makes this journey more interesting is the need to deal with the large number of legacy protocols at every level, data connectivity, and poor data security. We know it’s common for SMBs to not update their standard operating procedures due to lack of time or general ambiguity, but it could hinder your transformation journey.

In industrial environments, securing inter-connectivity between various devices is often challenging, especially when considering some are no longer supported. So it’s essential to promote secure solutions which are designed for Industry 4.0 devices with legacy systems. This is often the case with different networks or traditional legacy protocols. Ultimately, unifying a common cybersecurity layer across all devices becomes a very challenging issue.

New to digitization or looking to add more cloud capabilities to your SMB? Explore solutions by industry, benefit, use case, and more on AWS Smart Business

How does cloud computing help SMBs overcome these challenges?

Cloud computing, with its pay-as-you-go model, minimizes the need for a large capital investment. SMB customers can start adopting Industry 4.0 technologies and stop if the ROI becomes untenable. The cloud will scale as SMB business fluctuates without the need for large, fixed-cost expenditures that may result in expensive, unused capacity. Cloud provides a secure operating environment to safeguard the large amounts of data produced by IoT devices, helping SMBs meet regulatory and privacy requirements.

Cloud computing democratizes Industry 4.0 technologies so that SMB customers can consume cloud services rather than investing in developing these technologies. Example services include:

  • Amazon Monitron: Helps save on costly repairs and prevent factory downtime with an end-to-end system that uses ML to identify possible issues. It automatically detects abnormal behavior in industrial machinery, enabling you to take proactive action on potential failures and reduce unplanned downtime. It includes sensor devices to capture vibration and temperature data, and a gateway device to securely transfer data to the AWS Cloud.
  • AWS IoT SiteWise: Discover and act upon opportunities to improve assembly line robots. AWS IoT SiteWise simplifies collecting, organizing, and analyzing industrial equipment data which will help you skip months of developing undifferentiated data collection and cataloging solutions. Instead, you can focus on using your data to detect and fix equipment issues, spot inefficiencies, and improve production output.

Operational efficiency powered by predictive maintenance

Baxter International is a global medical technology company that helps facilitate patient care through its portfolio of outpatient, hospital, critical care, kidney, and surgical innovations that are available in over 100 countries. Baxter looked to AWS for a predictive maintenance solution that was simple to deploy, equipment agnostic, cost efficient, and scalable.

Amazon Monitron uses ML to automatically detect abnormal conditions in industrial equipment and lets users implement predictive maintenance. Because of this, Baxter significantly improved its operational efficiencies by preventing unplanned equipment downtime and emergency repairs. In fact, they avoided 500 machine hours of unplanned equipment downtime by using AI to monitor equipment and predict when they would need maintenance.

Sensors to help reduce utility costs

Taggle is Australia’s leading supplier of smart water solutions for local and regional councils as well as water utilities. Taggle has more than 270,000 meters and sensors deployed throughout Australia, reading over 2 billion data points annually. The sensors accumulate data on water flow for metering, water levels for floodplains, and more. Taggle’s network delivers more than 5 million readings to councils and water utilities daily.

By running its IoT platform on AWS, Taggle can scale on demand to support high volumes of IoT data as the company grows. Taggle is also taking advantage of the high availability and reliability of AWS services to ensure it meets its customers’ requirements for data continuity.

Next steps

Adopting Industry 4.0 technologies can make your SMB more competitive because it addresses plant productivity, throughput, and data collection. Using AWS technologies scales without the need for large, fixed-cost expenditures that may result in expensive, unused capacity. To start on your Industry 4.0 journey, contact us today or setup a consultation with AWS Partners specializing in SMBs.

Read next: Forrester identifies disruptive innovations in manufacturing that will reshape entire industries

Pranjit Biswas

Pranjit Biswas

Pranjit Biswas is a Solutions Architect at AWS. He has over 16 years of experience leading, developing, and supporting B2B tech integration scenarios. Before joining AWS, he was a lead technical architect for a large American retail client at Infosys. Pranjit holds a bachelor's degree from the Indian Institute of Engineering Science and Technology and is based in Arizona (US).

Adil Can

Adil Can

Adil Can is a Sr. Solutions Architect who specializes in delivering innovative solutions to customers, accelerating their cloud adoption to realize value, and allowing them to maximize their investment in AWS. Before joining AWS, he was a Sr. Consulting Engineer for Advanced Network Management (ANM). Adil holds an MBA from Yeditepe University. He is based in California (US).

John Sol

John Sol

John Sol is a Sr. Solutions Architect at AWS who is interested in business and technology strategy. Prior to AWS, he worked in both the private and public sector. He also founded the 501(c)(3) non-profit, Next Generation Focus, which gives children academic and financial support, including free tutoring, college scholarships, and more. John holds an MBA from Duke University and is based in Georgia (US).