Industry 4.0: What Manufacturing Looks Like in the Digital Era
It might sound futuristic, but the Fourth Industrial Revolution—also known as Industry 4.0—has already begun.
Following the Industrial Revolution’s steam power, electrification in the 1800s, and the Digital Revolution of the late 20th century, Industry 4.0’s innovative smart technology is unlocking the next steps in automation.
So what does the next major evolution of manufacturing look like? This graphic from ASE Global breaks down the rollout of Industry 4.0, from increased robotization to lights-out manufacturing.
The Basics of Industry 4.0
Each industrial revolution has built on what came before, incorporating new technologies and knowledge of manufacturing. Industry 4.0 has four core principles paving the way:
- Interconnection: Machines, devices, sensors, and people in the manufacturing process all connecting and communicating with each other.
- Information transparency: Comprehensive data and information being collected from all points in the manufacturing process, allowing for more informed decisions.
- Technical assistance: Improved technological facility of systems assisting humans in decision-making, problem-solving, and difficult or unsafe tasks.
- Decentralized decisions: Cyber physical systems that are able to make decisions on their own and perform tasks autonomously.
Combining these principles is what makes the ongoing Fourth Industrial Revolution unique. Much of the underlying technology has been available for decades, including robotics and networks, but properly using them together unlocks a massive stride in manufacturing capabilities.
Already, the market size for Industry 4.0 specific technology was estimated to be $116.1 billion in 2021. By 2028, it’s projected to grow almost three times to $337.1 billion, with core components leading the way.
|Industry 4.0 Technologies||Components|
|Cyber physical systems||Machines (computer systems) controlled by algorithms.|
|Internet of things (IoT)||Network of machines exchanging data.|
|On-demand availability||Computer system resources that are able to be utilized at any time.|
|Cognitive computing||Systems with artificial intelligence that adapt, iterate, and improve over time.|
These technologies are already being rolled out in smart factories around the globe, and the most robust and up-to-date versions are being used to unlock the next evolution: lights-out manufacturing.
What is Lights-Out Manufacturing?
Where traditional factories and even smart factories require some direct human interaction, true lights-out factories operate completely autonomously.
Though it might sound like a dream, lights-out factories are fully automated, 24/7 factories with no on-floor human presence. And they already exist in the modern world.
Japanese robotics designer FANUC has been using robots to build themselves in a lights-out factory for 20 years, and even electronics company Philips uses 128 robots in a lights-out manufacturing line to produce electric razors.
One industry that uses lights-out manufacturing extensively is semiconductor manufacturing. ASE Global, the world’s leading provider of semiconductor manufacturing services in assembly and test, used 18 completely automated factories in 2020 alone.
Unlocking Lights-Out Factories
Different businesses and industries will be able to utilize Industry 4.0 technologies in different capacities, and lights-out manufacturing is no different.
Though incorporating fully autonomous factories can unlock huge potential, there are also significant challenges to first overcome.
|Effects of Lights-Out Factories||Opportunity Unlocked||Challenge to Unlocking|
|Cost||Savings on material, inventory and management costs.||Implementation requires purchasing machines, setting up the line, and working out early issues.|
|Efficiency||Products can be made more quickly and accurately with trained machines.||Significant changes to manufacturing (different products or setup) need to be made by humans.|
|Scale||Operations can continue uninterrupted for days or even weeks at a time.||Full utilization requires a large volume of products, usually interchangeable or modular.|
|Staff||Workers can be upskilled and better utilized outside of the factory floor, resulting in better wages and time management, and a safer working environment.||Skilled workers are needed to implement the factory, and they need to be continuously trained to keep up-to-date with improving technology.|
Which industries will implement lights-out manufacturing? New robot installations in 2019 show that the automotive, electronics, and metal and machinery sectors are unsurprisingly leading the way in Industry 4.0 implementation.
The Industry 4.0 Snowball Rollout
As 4.0 technology improves and costs decrease, the implementation of lights-out capabilities is expected to surge.
A global survey of businesses for their 2025 production plans show that 17% are anticipating having completely lights-out manufacturing, while 79% of manufacturing will be human-driven but digitally-augmented to some degree.
And like other industrial revolutions before, the technological rollout quickly creates a snowball effect that speeds its growth:
- Demand increases for cyber physical systems and smart machines.
- The supply of smart-capable machines with semiconductors increases.
- Bigger and more robust networks of machines are assembled.
- Improved capabilities further increase demand.
Many industries are capable of benefiting from 5G, IoT, and more robust usage of data and machines in some way. The question of when your sector will see Industry 4.0 is either sooner than you think, or it has already begun.
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ESG Data: The Four Motivations Driving Usage
ESG controversies can damage a company’s value, but ESG data may be able to help manage this risk. What are other reasons for using ESG data?
ESG Data: The Four Motivations Driving Usage
Data is key to the environmental, social, and governance (ESG) revolution. Access to granular ESG data can help boost transparency for market participants. Unfortunately, 63% of U.S. and European asset managers say a lack of quantitative data inhibits their ESG implementation.
Being clear on the potential application of this data is equally important.
- Investors and banks can use ESG data for risk assessment, to spot opportunities, and to push companies for change.
- Companies can publish their own ESG data, quantify progress on their ESG goals, and use data to inform decisions.
- Policymakers can use ESG data to inform regulatory frameworks and measure policy effectiveness.
This graphic from ICE, the second in a three part series on the ESG toolkit, explores four primary motivations of ESG data users.
1. Right Thing
The objective: Having a positive social or environmental impact.
For investors, this can involve screening out companies that conflict with their values and selecting companies that align with their ESG objectives.
As another example, it can involve comparing the social impact of municipal bonds. One way investors can measure social impact is through scores that quantify the potential socioeconomic need of an area, using metrics like poverty and education levels. Here are the social impact scores for three actual municipal bonds issued in Florida.
|State||Bond Issuer||Social Impact Score
(Higher = larger potential impact)
Issuer #1’s bond is projected to have a community impact that is nearly twice as high/positive as Issuer #3’s bond.
For companies, doing the right thing can include assessing their progress on ESG goals and benchmarking themselves to peers. For example, gender and racial representation is a growing area of focus.
The objective: Managing ESG risks, such as climate and reputational risks.
For investors, this can involve back-testing or analysis around specific risk events before they materialize. Here are the risk profiles of two actual municipal bonds in California. The shown bonds are practically identical in many ways, except their wildlife score.
|Issuer #1||Issuer #2|
|Current Coupon Rate||5.0%||5.0%|
|Maturity Date||Aug 01, 2048||August 01, 2048|
|Price to Date (Call Date)||Aug 01, 2027||Aug 01, 2027|
|Wildfire Score (Higher = more risk)||3.6||2.7|
Managing ESG risk can also involve analyzing a company’s policies and governance for weaknesses. This is important as an ESG controversy can have long-lasting effects on the valuation of a company.
In one study, companies with ESG controversies dropped more than 10% in value relative to the S&P 500. They hadn’t fully recovered a year after the incident.
The objective: Targeting outperformance through ESG analysis.
Selecting companies with strong ESG data can align with long-term growth trends and may help boost performance. For heavy emitting industries, research indicates that European companies with lower emissions trade at much higher valuations. The chart below shows companies’ price-to-book ratio relative to the Stoxx 600* sector median.
|Above Median Emission Intensity (Bad)||1.9||1.1||2.0|
|Below Median Emissions Intensity (Good)||2.7||1.9||2.1|
*The Stoxx 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Energy companies with low emissions trade at a valuation nearly two times higher than energy companies with high emissions.
The objective: Understanding and complying with relevant ESG regulation.
The International Sustainability Standards Board has announced a global reporting proposal aligned with the Task Force on Climate-related Financial Disclosures (TCFD). In addition, a growing number of jurisdictions will require organizational reporting that aligns with the TCFD.
- European Union
- Hong Kong
- New Zealand
Not only that, a European Union regulation known as Sustainable Finance Disclosure Regulation (SFDR) came into effect in 2021. It seeks greater transparency in disclosures from firms marketing investment products. Even firms located outside the EU could be impacted if they serve EU customers. In total, the market cap of these non-EU companies exposed to SFDR amounts to $3.2 trillion.
Matching ESG Data with Motivation
There will be growing demand for transparent data as ESG investing flourishes. To remain competitive, investors, policymakers, and companies need access to ESG data that meets their unique objectives.
In Part 3 of the ESG Toolkit series sponsored by ICE, we’ll look at key sustainability index types.
The Hierarchy of Zero Waste
In a world that generates 2 billion tonnes of waste every year, waste management has become a global concern. Here are some strategies to help guide zero waste policies.
The Hierarchy of Zero Waste
Many cities have set ambitious zero waste targets in the upcoming decades.
The idea is to have communities where waste generation is avoided, and products are shared, reused, or refurbished.
This graphic, sponsored by Northstar Clean Technologies, shows the main strategies and hierarchy to guide zero waste policies.
What is Zero Waste?
In a world that generates approximately 2 billion tons of waste every year, waste management has become a global concern. Thus, countries and cities are increasing efforts to reduce or even eliminate waste when possible.
The Zero Waste International Alliance defines zero waste as “the conservation of all resources by means of responsible production, consumption, reuse, and recovery of products, packaging, and materials without burning and with no discharges to land, water, or air that threaten the environment or human health.”
Becoming a zero waste community, however, is a complex task.
Currently, Sweden recycles 99% of locally-produced waste and is considered the best country in the world when it comes to recycling and reusing waste. However, such results only came after almost 40 years of recycling and reuse policies.
In line with this, here are seven commonly accepted steps you can use to achieve zero waste:
1. Rethink, Redesign Products
The global population consumes 110 billion tons of materials each year, but only 8.6% is reused or recycled. In a zero waste society, single-use products are avoided and products are designed with sustainable practices and materials.
Consumption must be planned carefully to reduce the unnecessary use of materials. Consumers must choose products that maximize the usable lifespan and opportunities for continuous reuse. Companies must minimize the quantity and toxicity of materials used.
The value of products is maintained by reusing, repairing, or refurbishing for alternative uses.
Products are diverted from waste streams and recirculated into use. Resilient local markets are developed, allowing the highest and best use of materials.
5. Material Recovery
Component materials like cement, metals, or asphalt are recovered from mixed waste and collected for other applications.
In the U.S. alone, around 12 million tons of asphalt shingle tear-off waste and installation scrap are generated from roof installation each year. Currently, more than 90% of this is discarded in landfills. This material can be repurposed to create new products like liquid asphalt, fiber, and aggregate.
6. Residuals Management
Waste is biologically stabilized and sent to responsibly managed landfills.
The production of materials that are not recoverable and can negatively impact the environment must be avoided.
Reducing our Climate Impact
Reducing, recycling, and recovering materials can be a key part of a climate change strategy to reduce our greenhouse gas emissions.
According to the U.S. Environmental Protection Agency, about 42% of all greenhouse gas emissions are caused by the production and use of goods, including food, products, and packaging.
Even though 100% zero waste may sound difficult to achieve in the near future, a zero waste approach is essential to reduce our impact on the environment.
Northstar Clean Technologies aims to become the leading recovery and reprocessing company for asphalt shingles in North America.
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