There is now increasing coverage in the manufacturing industry of the phenomenon of Industry 4.0. This new age in manufacturing follows the mechanisation seen in the original industrial revolution and builds on the first period of mass production (Industry 2.0) and the digital revolution of Industry 3.0.
The term Industry 4.0 was first coined at the Hannover Messe in 2011 to describe the evolution of the “smart factory” and the adoption of productivity indicators. The idea behind this initiative is that different elements of the production and supply chain can be monitored, controlled and integrated in order to create a sequence of intuitive systems that drive unparalleled efficiency gains.
The concepts within Industry 4.0 are heavily linked to the fast-moving developments within the Internet of Things (IoT) where physical objects are embedded with sensors and software to make them almost naturally connected to other objects. This idea is taking machine-to-machine communications (M2M) to another level where manufactured items with embedded electronics can seamlessly communicate with each other via the Internet.
The potential for IoT extends right across the manufacturing industry, as well as into the energy market including the Smart Grid. The opportunity exists for discrete manufacturing sectors such as aerospace, automotive, consumer products and machinery to exploit the inter-operation of different production and supply systems beyond what is traditionally seen in Enterprise Resource Planning (ERP).
With the increased standardisation of IoT devices and operating standards, the market has already seen the first wave of mergers and acquisitions amongst some of the players on the technology supply side – with the likes of Apple, Google, IBM, Intel and Microsoft all involved in relevant M&A. Meanwhile, the M&A activity involving IoT-focused industrial and manufacturing businesses is also beginning to build – starting with smaller and mid-sized transactions. In April, Swiss automation systems manufacturer Swisslog AG acquired FORTE Industries Inc – a US developer and integrator of materials handling automation systems which offer efficiencies within distribution and logistics facilities. In the same month, another Swiss automation systems manufacturer – ABB Ltd – acquired Gomtec GmbH in order to reinforce its product portfolio in the fields of mechatronics and human-robot collaborative automation.
The Industrials team at Clearwater International is following these developments closely and we are actively in discussion with numerous players in the fast-developing sector. Many of these are talking about the efficiency gains and cost savings associated with IoT, as well as the increased control and operations brought to users within manufacturing businesses. Interestingly, these events are only likely to spur the reshoring of manufacturing operations to Western economies, bring a new dimension to the concept of closely managing a supply chain and make these market-leading manufacturing companies even more attractive to acquisitive suitors.