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What does Industry 4.0 mean for small business?

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The technology behind the fourth industrial revolution, or ‘Industry 4.0’, is frequently showcased in the media, but how can smaller businesses, with a smaller budget, put them to use? What does the next stage in digital evolution mean for a local business and how can you make the most of the new opportunities it opens up?

What is Industry 4.0?

The fourth revolutionary advancement in technology includes a huge jump in cloud computing, the realisation of artificial intelligence and machine learning, and the introduction of 3D printing, digital currencies and smart devices.

As connectivity and computer processing power continue to advance, new opportunities are opening up in every corner of the economy. From automated supply chains to new digital payment methods to big data analysis, new technology is fundamentally changing the way we interact with the world and how we do business at every level.

Where does small business fit in?

As technology becomes more affordable and filters down to a local level, the efficiencies and quality assurance that Industry 4.0 offers, can’t be ignored. At the very least, small to medium-sized enterprises (SMEs) need to be aware of the changing landscape around them in order to stay competitive.

Cloud computing, for example, offers SMEs the chance to make use of the wide range of analytical data that they perhaps wouldn’t have the capacity to store or process on their own physical systems. By effectively renting space on an external server, SMEs gain access to the growing world of big data-led customer insight, that was once reserved for only large corporations.

Smart factories

One of the largest shifts occurring in manufacturing is the digitisation of supply chains, otherwise known as ‘smart factories’. Whereas before, producers would manually keep track of materials and components moving in and out of their factory, new software allows an automated system to keep track of and automatically adjust orders, while simultaneously ensuring quality and efficiency by staying hooked into every stage of production.

This kind of synced system, while once only seen in the most cutting-edge facilities, is fast becoming standard, and is likely to become required as part of some larger retailers’ quality assurance or sustainability standards. Clients now expect detailed, tailored reports more or less on demand, that can only be achieved with this kind of software.

As these new supply chain models become commonplace, businesses will need to be able to replicate and meet these standards if they wish to remain competitive.

The connected store

In retail and hospitality, ‘connected stores’ are leveraging a similar vein of software, whereby inventory is automatically tracked via hooked up tills, security alerts are logged through RFID Radio Frequency Identification) tags and unexpected sales peaks or lulls are flagged.

Going even further, all of this data can then feed into predicative algorithms that, as they learn over time, can inform business decisions on future promotions, orders or even opening times.

Digital payment methods are now also becoming standard, making it essential for even a small local shop to be set up for the growing number of contactless payment apps, including Apple Pay, Samsung Pay, PayPal and Google Pay.

3D printing

New advances in smart materials are making a huge impact on producers’ ability to manufacture custom products on demand. Ministry of Supply, a US company operating six stores, is 3D printing clothing items in store in under 90 minutes and now offering custom printed face masks on demand.

As 3D printing technology continues to develop, retailers are starting to find it possible to manufacture or customise products after purchase, allowing for a much more flexible inventory. No more guessing which styles will sell out the fastest.

Where to start

The first step for any business considering Industry 4.0 is to look at where upgrades can be made in their current systems. You may find that your factory floor monitoring software or the till systems at your checkout actually already offer Industry 4.0 compatibility if you upgrade to the latest versions. This can help you slowly investigate the key benefits for your business and find where you want to invest more.

For small manufacturers looking to take advantage of smart factory software, the best road forward is likely to be in many small-scale upgrades. Once you have the software in place, it’s easy to hook up parts of your process little by little. Thanks to the accuracy of Industry 4.0 monitoring, you’ll be able to track small efficiency savings and reinvest in the next stage.

What are the risks?

More automation, connectivity and stored data unfortunately means more vulnerability to cybercrime threats, if you’re not fully prepared. If, for example, you begin storing more customer data, you are obligated to keep that data safe and to store and use it within the terms set out by the General Data Protection Regulation or GDPR. It’s more important than ever, even if you’re not upgrading your systems, to make sure you have the latest protection from viruses, malware and spyware and that you’re stay knowledgeable about the latest threats. You can read more about staying safe from cybercrime here.

Is this really for me?

SMEs are particularly at risk, especially in today’s climate, from cash flow complications, inventory mismanagement and unexpected supply chain breakdowns. Industry 4.0 technology can offer you a level of insight into your business that can help manage these problems. If anything, Industry 4.0 is more important to small businesses than anyone else.

On top of this, small businesses are more likely to be impacted by small savings or losses, meaning a few tiny efficiency savings, only visible through Industry 4.0, may actually be the make or break for the business.

The fourth industrial revolution is making waves in all sectors. Even if you decide not to upgrade, it’s important to take note and keep an eye on what your partners, competitors and suppliers are looking at for the future of their business, so you don’t get left behind.

To get access to the latest insights and resources on cash flow management, business resilience, exporting and much more, you can visit our Tomorrow Ready Hub here.

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