Examining COVID-19’s Impact on Industry 4.0

Colin McMahon
Apr 20, 2020

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Industry 4.0 has been a subject of debate and discussion for the last decade. While experts argue over what stage of technology we are in (some consider this period to be the fifth revolution, centered upon information and telecommunications technology), the majority agree that Industry 4.0 began with the arrival of the Internet and mainstream digital technology—specifically IoT devices such as smartphones, tablets, and wearables.

That said, few would dispute that we’re currently in a period of immense change. COVID-19 is causing radical shifts in workflow across the planet as millions practice social distancing and/or comply with self-quarantine recommendations. The pandemic’s dramatic appearance has accelerated numerous trends while slowing others. So, with all this disruption, could it be possible that the coronavirus has caused a premature change in industry operation? While there is no doubt that COVID-19 is a transformative force, it is not bringing us into Industry 5.0. It is merely accelerating Industry 4.0 adoption, leading companies across industries into a more mature state of IoT technology and workflow.

A Truer Industry 4.0

Experts believe there are four central concepts to Industry 4.0. These include smart manufacturing, the smart factory, dark factories (also called “lights-out manufacturing”), and industrial IoT technology. All four of these reflect a greater trend: Automation. Much of Industry 4.0 involves using improved data collection (made possible by IoT devices) to streamline workflow and manufacturing processes.

Industrialization Stages Industry 4.0

For those unfamiliar with dark factories, these reflect the pinnacle of automation. Lights-out manufacturing refers to a fully automated work environment. Whereas people and machines work alongside one another in a smart factory, dark factories do not need a single person present on the premises.

This concept has taken on immediate value as the COVID-19 pandemic takes hold. The idea of a fully functional factory floor that needs no permanent human staff means uninterrupted production output. Nevertheless, many organizations are unable or unwilling to commit to this level of automation. Smart factories still dramatically reduce the number of workers needed as most simple tasks are automated.

Even small manufacturing sites tend to have more staff than the average retail environment. Adopting more smart manufacturing processes reduces the dependency on human workers—factories can reduce the size of a shift without downsizing production. It also means guaranteeing the workers who are present have a lower chance of exposure. People must be close together for the COVID-19 virus to transmit, and maintaining a physical distance of at least six feet dramatically reduces the chance of infection.

Although businesses have had reason to embrace digital workflows in the past, the coronavirus has provided another strong incentive to move toward a smart factory, complete with smart manufacturing or smart printing processes. Keypoint Intelligence would not be surprised to find that the organizations least impacted by the COVID-19 pandemic were the ones with the best automation practices and digital workflow empowerments already in place.

Industry 4.0 Comes to the Office

In many ways, the average office space is no different than a typical industrial factory. Both involve on-site collaboration between employees to create a specialized product to fulfill a certain need. In years past, it could be argued that offices were doing a stronger job of adopting digital workflows than factories, if only because more of their work could be easily digitized. Even so, many businesses have clung to the office mentality of a centralized, physical space where employees gather. Data gathered by JLL shows that this is primarily true for the tech sector, which leased almost 10 million more offices in 2019 than the runner-up (insurance & finance).

This means that a portion of these companies’ revenues are tied up in leasing costs, with some areas costing considerably more than others. Organizations pay these bills for a variety of reasons, including reputation, convenience, or even tradition. Some firms have a central office location simply because things have always been that way.

Now, this is likely to change. While conventional wisdom says that a dedicated office space is required to maximize productivity, this theory is being put to the ultimate test as we speak. The majority of offices across the United States and elsewhere are already fully remote or are in the process of shifting to fully remote workflows. These companies have no choice now but to test their performance without the support of a traditional office space.

Should these organizations function at peak productivity (or close to it), the demand for office space may see a significant drop. This could mark a true shift in global workflow—the end of a tradition and a full embrace of the potential of digital workflows.

Examining Other COVID-19 Disruptions

Although some print service providers may need to preserve their physical space, they must be aware that nearly every industry impacts their business. COVID-19 has hit the restaurant industry—never stable, even in times of economic prosperity—and the movie theater industry particularly hard. AMC, one of the largest cinema chains in North America, has already reported that it may not survive the COVID-19 pandemic.

Damage to these industries and others results in a loss of printed products, as theaters and restaurants are the traditional home to numerous types of signage. At the same time, however, new revenue streams may open up as industries shift in reaction to COVID-19. Today’s print providers must be ready to expand their horizons. The landscape has changed, and it will likely change a lot more in the coming year. It is still too early to predict how industries will be altered and which percentage of these shifts will be permanent, but an evolution is occurring

There must be an added asterisk when it comes to remote work evaluation. Many businesses hesitate to embrace work-from-home workflows on the idea that employee productivity will suffer. While the data is not yet available to support or condemn mass remote workflow, COVID-19 might serve as a good test. Although the idea of a remote workforce is initially sound, it has inherent flaws due to the immense personal disruptions caused by the coronavirus.

For instance, the closure of schools means that working parents will have their children at home with them full-time. Many of these parents won’t be accustomed to being teachers as well as caregivers, and their kids will likely be feeling the effects of a lack of stimulation.

In addition, this shift was not planned. Employees did not necessarily have time to prepare their at-home infrastructure and technology. The pandemic came very quickly and, at least in the US, workflows changed dramatically within a week’s time. This has meant that employees without strong at-home internet capabilities are still forced to rely on said capabilities, no matter how lacking they may be.

Organizations, too, are playing catch up. Although improvements are being made, the shift was abrupt and in some cases unexpected. As such, it is not logical to evaluate the full premise of remote workflows based on what happens during the COVID-19 pandemic, unless the news is positive. If companies—spurred to remote workflows during a time of tremendous stress—can maintain relatively normal levels of productivity, this shows enormous potential.

For now, it’s a waiting game. Keypoint Intelligence will be monitoring the productivity of PSPs, as well as the workflow of other organizations, to better assess how well the transfer to a fuller industry 4.0 is progressing. IoT devices have offered organizations a path toward preserving revenue streams during this pandemic. The future is here, but only the savviest businesses will be able to bring it to its full potential, while maintaining realistic expectations.

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