The Rise of the Internet of Goods: A New Perspective on the Digital Future for Manufacturers >> HOME

Building the Digital Vision for Manufacturing


The term Industry 4.0 started out as an advertising slogan, with more flash than substance, coined by the German Federal Ministry of Education and Research. Its emphasis is on data and coordination added to existing equipment.

“Machines that communicate with each other, inform each other about defects in the production process, identify and re-order scarce material inventories—this is an intelligent factory. This vision is behind the keyword Industry 4.0.”

Some manufacturers extended this emphasis on data to their customers. Samsung built and sold internet-enabled home appliances. John Deere added sensors to its farm machinery, to create a new source of revenue offering farmers information on precision farming.

Most notably, GE staked its digital future on the industrial internet:

“The idea would be that, for instance, software could harness the data produced by a jet engine to predict when the engine needed maintenance, saving time and money. The technology could be used across GE’s businesses, whether medical equipment or wind turbines.”

A central part of GE’s plan was the development of Predix, a software platform that connects equipment like turbines and elevators to computers that can predict failures and reduce operating costs. But in 2017 and 2018, GE was forced to reset its strategy, replacing its CEO and cutting back on digital spending.

“No one disputes the overarching vision of the so-called industrial internet of things — which includes low-cost sensors and a flood of data and clever software that should deliver insights to cut costs, conserve fuel and design better products, faster. But the company greatly underestimated the challenges of creating all the software needed to achieve that grand vision, said analysts and former GE managers.”

Moreover, the “grand vision” of the industrial internet of things may not have been grand enough. The emphasis on adding technology and data connections to existing equipment is good, as far as it goes. But simply adding technology to existing processes doesn’t transform the factory floor or give manufacturers new business models that create whole new markets.   
So beyond data, what might an alternative digital future for manufacturers look like? The clues come from three places:

  1. Amazon’s re-imagining of the distribution process, the first successful full-scale digital transformation of a physical industry.
  2. The rapidly growing momentum to digitize the production process through 3D printing, which in turn is putting new emphasis on innovation in materials to broaden the range of applications.
  3. The use of cloud computing to build a manufacturing platform that treats design, production, sales, and distribution as separate services running on a network, enabling even small factories to tap into new technology and best practices rapidly.

Let us consider each of these in turn.