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Getting In on Industry 4.0: Operators Need a Wide (Area) Perspective

Simon Sherrington
Heavy Lifting Analyst Notes
Simon Sherrington
12/22/2016

The Industry 4.0 vision sees factories transformed into modular, programmable, automated, moving systems. Everything is connected. Big data and cloud-located artificial intelligence systems generate insights that deliver new levels of efficiency and productivity. Factories use those insights to optimize themselves and customize orders.

However, this vision is very different from the reality of where manufacturing is at now. Factories are built to last decades. Factory floor units are typically wired, if connected at all. They are not easy to reconfigure (although some manufacturers can offer degrees of product customization). Data sits in silos.

Given the requirement for the new manufacturing era to be built on connectivity and cloud services, surely there is a role for network operators? The trouble is, this is not a market in which they have a lead role. Manufacturing engineering companies and systems integrators rule. And while there are many telecom companies (vendors typically) offering very valuable networking services to manufacturers, there is a reluctance on the part of the buyers to put operators in charge of their new networked systems. Although, Industry 4.0 is built on a bed rock of connectivity, it may not be the network operators that are best placed to support manufacturers inside the factory building, at least not in the short term.

The good news for operators is that there is a long road to travel before the Industry 4.0 vision of manufacturing coalesces into a widespread state of reality, and it is on that road that operators will find their opportunity. Beyond the factory floor, materials and components will be tracked from source. Manufactured products will be tracked to destination, and monitored in use. Insights from the wider world will be fed back into a manufacturer's "intelligence machine" to improve products, services and processes in a virtuous circle. Next-generation manufacturers will be seeking to link their entire supply chains.

To track materials, products, plant, equipment and vehicles wherever they go, manufacturers will need wide area connectivity. This is where the Internet of Things (IoT) and Industry 4.0 meet. Operators are well placed to help manufacturers with everything that enters or leaves the factory floor, and with the availability of NB-IoT they finally have a network infrastructure with the potential to meet customers' needs for wide area, low power connectivity that can be easily integrated with wider cellular services. Operators such as Deutsche Telekom, Sonera, Telia and Vodafone are already trialling or preparing NB-IoT for launch. By integrating themselves into the manufacturing supply chain in the wider area, and establishing trust as suppliers of IoT solutions in that context, they have more chance of being allowed onto the factory floor. There are other routes into the market, too, as partnerships will play a critical role in delivering all the requirements that manufacturers will need; opportunities will open up for those operators successful in integrating them into the different vertical sector ecosystem.

Heavy Reading's latest report, "Industry 4.0: Opportunities for Telecom in Manufacturing," assesses the roles that telecom operators and their vendors might play in the manufacturing revolution. It looks at what Industry 4.0 is, and how that fits with other visions of the industrial future -- such as the Industrial Internet of Things (IIoT). The study discusses how value chains are evolving and where telecom companies might fit into those value chains. Further, it looks at which connectivity technologies might fit within a factory environment and considers the state of Industry 4.0 now. Finally, it profiles companies from various parts of the value chain to show how they are addressing the Industry 4.0 opportunity.

— Simon Sherrington, Contributing Analyst, Heavy Reading

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Joe Stanganelli
Joe Stanganelli
12/24/2016 | 7:18:23 PM
Re: Factories
@danielcawrey: Indeed, you need to have the connectivity, and you need to have it affordable -- and 2G/3G/4G/XG solutions have traditionally been far too expensive for IIoT.  LP-WAN solutions seem promising, but so do many others...  NB-IoT is all the rage right now, but other technologies were all the rage two years ago.  So let's check back in on this subject around Christmas 2018.  ;)
danielcawrey
danielcawrey
12/23/2016 | 11:05:58 AM
Factories
Interesting read. In the US, we're certainly seeing much more advanced factories. The are filled with robotics and sensors. This is an opportunity for telecom companies that did not exist before. Getting telecom services in these factory spaces are going to be a huge money maker for them. 
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