As the world changes, the practices and concepts associated with the original industrial revolution have changed along with it, bringing us to what is now called Industry 4.0. In this world, we see the increased ability to harness information generated by products, allowing humans to drive further innovation in new service offerings and improved physical product iterations. Industry 4.0 highlights the smart management of energy, relying on templates for IT development, taking advantage of digital assets, intelligent scheduling, and more.

The impact of Industry 4.0 can be seen across the manufacturing industry, wherever digital disruption due to the Internet of Things (IoT), Artificial Intelligence (AI), Big Data, and Digital Factories is present. The increase in manufacturing tech startups is proof that digital disruption is real and changing how the manufacturing industry operates. These startups are shaping a more diverse and complex supply chain, putting pressure on traditional market leaders to stay competitive in this new reality.

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Six Key Developments in Industry 4.0

Let’s take a look at some of the exciting – and highly disruptive – developments associated with Industry 4.0.

Additive manufacturing

Additive manufacturing is the next evolution of 3D printing, going beyond simple prototyping. Leading engineering and manufacturing companies are now using additive manufacturing technology to design and produce a range of products, from complex engine parts to simpler, yet customized items, such as food trays. Additive manufacturing has helped manufacturers reduce warehouse management and inventory costs by manufacturing parts on-demand and reducing overall time-to-market.

Digital factories

Digital factories use real-time production data to create predictive data as a product. This predictive data is then applied to processes and product, allowing manufacturers to see where improvements can be made. Digital factories have a clear advantage over the more common static, retroactive approach of data-gathering and analysis, allowing those with digital factories to see great cost-savings, process improvements, and increased agility, due to the proactive nature of data analysis.

Digital twins

Digital twins are the virtual equivalent of a physical product, containing all the information needed to design, build, and use the product. These product “twins” are used as the basis for testing, experimentation, and improvement on the physical good, and they act as the digital fingerprint for future versions of improved physical products. Digital twins offer a significant increase in agility by which an organization can offer new iterations of existing products to a more diversified customer base and simply iterate faster for increased product innovation.

Information technology

In Industry 4.0, we see information technology is playing a significantly bigger role in manufacturing than it has in years past, allowing manufacturers to produce more high-tech services and products and explore new markets. As an example, the defense sector has been seen retrofitting big weapons platforms with offensive and defensive encryption and electronic warfare solutions. For these companies, this is a logical extension of the physical goods already being manufactured and is changing the foundation on which their companies are built.


The rise of systems thinking is a key component of Industry 4.0, as System Lifecycle Management (SysLM) becomes a more prevalent term. SysLM refers to the concept of combining the tools and processes associated with Application Lifecycle Management, Product Lifecycle Management, and Enterprise Resources Planning into a cohesive, unified value stream. In many ways, SysLM represents a logical evolution in manufacturing; as technology begins to play a bigger role in the products and services offered, software engineers, product engineers and designers, and resource planners are brought together, and so must their tools and processes.

Data-based decision-making

Data-based decision-making, using Big Data, IoT, and AI, enables manufacturers to offer smart products that can predict user needs that benefit the consumer, and usage patterns and opportunities for improvement or revenue to benefit the producer. This creates a clear competitive advantage and attractive proposition for both the consumer and manufacturer. This development is especially relevant to the after-sales market, where preventative maintenance is often a key goal of complex product manufacturers, and therefore also a potential source of new information-based, service-driven revenue.

Is There Room for Lean Thinking in Industry 4.0?

The short answer is Yes. Not only is there room for Lean thinking, but manufacturers must turn to Lean principles to remain agile enough to stay ahead of the competition. The real question should be, is your company Lean enough to adapt to opportunities presented by Industry 4.0?

As the industry is transforming, so too must processes and tools which foster innovation, retain top talent, and attract the next generation of innovators and thinkers.

Modern engineering and manufacturing value streams are looking more like software development value streams – because increasingly, they are. Manufacturers are hiring more software engineers as their product lines evolve to incorporate more software.

This means that software development practices and tools are significantly influencing the culture of these organizations. Leading manufacturers are turning to proven methods in software development practices to achieve sustainability, agility, and growth in a volatile market.

Industry 4.0 represents both a threat and an opportunity for complex goods manufacturing companies. Industry 4.0 and its associated disruptive technologies are forcing engineering and manufacturing companies to not just do different, but to think different. Organizations that adopt a Lean mindset will be in the best position to identify their priorities in this new reality, adapt their processes, and flourish.