By Kevin Baker | August 18, 2022
Editor’s note: In a report on industry for Orange leadership prepared this summer, Orange Silicon Valley analyst Kevin Baker examined the technological innovations driving transformation through the interconnection of physical and digital systems. The shift, referred to in this report as the fourth industrial revolution, will shape production and distribution in the years to come in ways we are just beginning to understand. This report is now being made available for our Orange Silicon Valley website readers in a series of five weekly articles. Part 1 introduces key concepts. Other articles in the series include part 2, strategy and planning; part 3, procurement and sourcing; part 4, manufacturing; and part 5, distribution. For questions or additional information, please contact Kevin Baker.
Industry 4.0 — more than manufacturing, part 1: introduction
The first three industrial revolutions are each characterized as paradigms in which specific technological innovations disrupted traditional means of manufacturing goods. In the first, steam power enabled mechanization of industrial equipment. In the second, electricity enabled the assembly line and mass production. In the third, transistors enabled high-level automation and robotics. These first three industrial revolutions also disrupted more than manufacturing.
Steam power enabled the steamboat, which lowered the time and cost to transport goods. Electricity enabled the telegraph, which reduced the cost to transport information and led to more cohesive communication within and among businesses. The transistor enabled the internet, which ushered in a digital era and paved the way for globalization. The fourth industrial revolution (i.e., Industry 4.0), while more nebulous and convoluted, shares the same characteristics of the first three in that it is disrupting every aspect involved in the means of production and distribution, not only manufacturing.
The three primary technologies that define the fourth industrial revolution are the Internet of Things (IoT), cloud/edge computing, and Artificial Intelligence (AI). When these technologies are used in combination, the resulting system mimics a capability previously unique to the mind — cognition, or the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses. Tasks requiring ad-hoc decision making in the face of uncertainty are now being tackled via technology. From the strategy/planning phase all the way through to last-mile distribution, the solutions emerging in the fourth industrial revolution compete with human intuition and intelligence to drive efficiencies and reduce costs throughout the supply chain.
Kevin Baker is an analyst covering Industry 4.0 in Orange Silicon Valley’s Business Group. He investigates trends related to enhancements in connectivity between the physical world and the digital world and believes that future convergence of the physical and digital will create profound transformations in industry and society. Kevin’s professional background is a combination of Management Consulting, Equity Research, Program Management, and Engineering. He holds a Bachelor of Science in Materials Science & Engineering from Stanford University.
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