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What is Digital Transformation and Industry 4.0

Victoria Puzhevich
Published: August 9, 2022

Many businesses have undergone a digital transformation which helped them to significantly facilitate and automate many production processes as well as improve customer services. However, digitization isn’t the final step companies can take to enhance their business workflows.

Currently, companies are embedding the latest technologies in their digital infrastructures which help them improve data transparency, enhance digital security, optimize workflows, and more. The transformation process has already become known as the fourth industrial revolution.

In this article, we explain what the benefits of industrial revolution 4.0 are and how companies could implement Industry 4.0 digital solutions to keep the competitive edge in the market.

What Is Industry 4.0?

Since the first industrial revolution, when Thomas Savery introduced his steam engine for commercial purposes in the 18th century in Britain, industries have undergone 3 more. All these changes were aimed at improving the way companies manufacture and distribute their products.

Today, it’s hard to imagine a manufacturing process without the use of computers. The massive digitization of factories and plants started in the middle of the 20th century and continues today. It allows companies to greatly automate their processes as well as extract and collect more manufacturing-related data. Nevertheless, industry development hasn’t stopped with computer implementation. Many experts claim that we’ve entered the fourth industrial revolution.

The fourth industrial revolution, also known as Industry 4.0 is the industry improvement process when companies, factories, and plants enhance their workflows with the help of smart machines and technologies. They allow businesses to efficiently manage data and manufacture products more sustainably across their value chains.

The technologies and smart machines that constitute the motive force of the fourth industrial revolution are Artificial Intelligence (AI), cloud computing, Big Data and advanced analytics, the Internet of Things (IoT), advanced security empowered by Blockchain and other security-related technologies, and many others.

Benefits of Industrial Revolution 4.0

Digital transformation has had a great impact on the industrial sector. It allowed businesses to automate many of their workflows and gather much data about the production processes. Yet, the data analysis and exchange between departments as well as business partners and customers remained at a rather low level.

Industry 4.0 technologies effectively address the mentioned issues. They connect each manufacturing process to the network, improving data exchange and workflow monitoring, allowing remote task management, and optimizing processes in real time.

Here are the main benefits companies get when implementing Industry 4.0 solutions:

  • Production flexibility – by monitoring the materials available for manufacturing and customer demands, companies can effectively manage their production processes. This helps businesses to avoid excessive spending when procuring resources for their products as well as focus only on the manufacturing of those goods that are really reclaimed by buyers.
  • Optimized logistics and transparent supply chain – using 4.0 industry technologies, companies can make their supply and procurement chains more transparent for their inner departments and all the chain partners involved in the process. This way, companies can significantly reduce their costs when buying and transporting the needed materials as well as selling and delivering the ready products.
  • Smart supply of resources – many enterprise-level platforms such as ERPs (Enterprise Resources Planning Systems), PLMs (Product Lifecycle Management), SCM (Supply Chain Management), WMS (Warehouse Management Systems), and others can automate the resource supply processes. The various devices embedded into the company’s workflow can monitor materials in stock and automatically place orders, picking the most reliable providers with the best pricing.
  • Enhanced customer experience – Industry 4.0 technologies make marketing more customer-centric. Various tools and gadgets gather customer-related data and adjust companies’ marketing content and offerings to customer demands and needs. This way, customers can simply find and order the products they want that will be customized specially for them.
  • Efficient use of data – in the last decade the amount of data produced by people and machines has grown massively. Much of this data has never been processed and analyzed before the emergence of Big Data technology and advanced analytics. Those companies that enhance their digital ecosystems with these technologies gain deeper insights on how to improve their workflows and customer relationships and, therefore, easier gain a competitive advantage in the market.

Industry 4.0 Case Studies

There are many examples of technologies that drive Industry 4.0. Many businesses and organizations are already successfully implementing them in their working processes today. Here are the key Industry 4.0 technologies that facilitate manufacturing and business operations in companies today.

Big Data & Analytics

Wide dissemination of IoT technologies across industries and private households has led to a significant increase in raw data produced by various IoT gadgets and embedded sensors. The application of Big Data and deep analytics tools to the gathered data allows businesses and manufacturers to better study historical trends, and identify human behavior and technology working patterns. As a result, companies can make informed decisions on further business development and product manufacturing.

For example, companies can analyze the data on sales and how they correlate with manufacturing and optimize their production flows and warehousing. A full digital representation of working processes can alert businesses on future possible breakdowns in manufacturing lines or give more information on how to improve separate procedures.

Artificial Intelligence

Artificial intelligence entirely transforms the way companies gather information and make decisions. AI algorithms process large amounts of data and make predictions on consumer behavior, societal changes, or workflows in a standalone factory. The algorithms serve as a basis for many Industry 4.0 technologies, including deep analytics, Big Data processing, enterprise software, and more.

Apart from forecasting abilities, AI technology can also mimic human learning patterns. This helps the technology to automatically learn and train on data sets, making fewer and fewer mistakes each time it works with familiar patterns. Empowered with AI technologies, machinery produces high-quality goods in less time and uses fewer materials while ensuring higher efficiency and more uptime.

Cloud computing

Cloud computing is another key technology the fourth industrial revolution wouldn’t be possible without. The technology makes the core for systems’ connectivity and integration as well as data processing. Cloud creates an entirely digital environment where businesses can interconnect various processes from engineering to supply chain management, to production, to sales and distribution into one coherent system.

Moreover, cloud systems can significantly reduce costs for SME manufacturers as they don’t need to spend large sums on installing and maintaining hardware. Instead, they can scale up their data storing and processing needs as their businesses expand.

IoT and Digital Industry 4.0

IoT is not only a buzzword; it is the reality with 9 bln devices being connected to the Internet, including smartphones, computers, RFID readers, and sensors. In the coming decade, the specialists are predicting a drastic growth up to 1 trl connected things. These figures show a serious shift in the paradigm, which brings the necessity to avoid the obsolescence in the environment of constantly changing operations and consumer demands. This challenge can only be addressed by designing the products with the embedded software to control their continuous improvement and update. Sometimes you can meet the term: 4th Industrial revolution (Digital Industry 4.0) enabled by IoT when highly intelligent connected systems create fully digital value chains.

Legacy PLM Solutions and Digital Industry 4.0

The physical objects around us are designed and produced with the certain kind of PLM system touch. The development of product process differs from one company to another. Some use CAD to create 3D models and this is enough for them but some operate scalable PLM platforms with dozens of customers and millions of products stored. Irrespective of the level of PLM system usage, the most global organizations expect them to address the IoT reality. When the PLM engineering is subjected to the Digital Industry 4.0, we think of embedded sensors, processors, and software in products connected to the cloud via the Internet, which analyze and store product usage data. The open discussion is though should we manage the product or the information received from the product.

On the way to approach the IoT software implementation, any PLM development company should realize the importance of digital connectedness between mechanical, electronic and software development, as well as, cross-enterprise expertise from manufacturing to support, service, and maintenance.

The majority of legacy PLM solutions are hard to turn into IoT digitally transformed ones. Over the half of PLM system vendors claim that their products do not enable the collaboration across disciplines. Another salient feature and the obstacle for IoT solution implementation is that, typically, the extended enterprise value chain supports very few users to get access to the system. Only 21% of global manufacturers could support more than a thousand of users with their PLM systems. Finally, 75% of vendors confess that their PLM systems are hard to handle the changing business requirements.

The dangers of the today’s PLM systems status is that the fragmented processes could become a real headache. It brings into life data and system gaps, unaddressed business processes, lack of data sharing and lack of general flexibility that can undercut the new product initiatives. For the truly digital transformation and IoT implementation to be a success, the PLM platform is required to fill in gaps to connect system silos into a holistic solution that meets current and future business requirements.

PLM and IoT

Scand engineers have relevant expertise in the development and support of huge PLM systems based on Microsoft.NET technologies and on AML/XML meta-model description language. We have a clear understanding how to turn legacy PLM systems into digitally transformed ones. In this particular situation, the discussion is about the cooperation between the engineering branches. Some companies manufacture sensors, some have the expertise to program them. Others know the marketing and business trends or how to use the sensors to the most effective way. And finally, some companies, including us, know how to proceed the data received from the sensors efficiently with the help of Big Data Analytics and cloud storage.

3D Manufacturing

3D manufacturing for mass production is in its inception. Nevertheless, the technology is actively developing and the 3D printing industry is becoming more accessible to more companies.

For example, it’s successfully implemented in vehicle production. Volkswagen is planning to 3D print 100,000 car parts annually by 2025. Meanwhile, more and more companies specializing in 3D printing are emerging. It’s expected that by 2030, 21.5 mln units of 3D printers will be shipped globally by 2023.

Cyber Security Technology

An increasing dependency on cloud connectivity and interconnected IoT gadgets places new demands on cybersecurity levels at companies. Therefore, those companies that undergo a digital transformation to Industry 4.0 should also consider the digital security of their operational equipment. The cyber security procedures in industrial automation can be:

  • Threat and risk analysis
  • Staff training
  • Network security evaluation
  • Security certification
  • Product testing
  • Strengthening digital infrastructure with the latest and time-tested security technologies such as Blockchain-based apps, multi-factor authentication, role-based access to systems, and more.


With the manufacturing and customer service digitization businesses managed to automate many repetitive tasks and provide a better customer experience. However, going digital isn’t enough to stay competitive in the market. Today, digitization is increasingly perceived as a “must-have” for a business rather than an unconventional approach.

What really helps businesses stand out and optimize their working procedures is incorporating the latest digital technologies into their infrastructures. This approach has become known as industrial revolution 4.0. If you’re also seeking ways to empower your business with emerging technologies then we’re ready to help with this undertaking. Feel free to contact us and present your transformation idea.