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Benefits of Industry 4.0

Eric Whitley
By Eric Whitley Director of Smart Manufacturing, L2L
The goal of implementing Industry 4.0 is make a higher quality product with a shorter time to market. (Photo courtesy of Unsplash)

The automotive industry has been a frontrunner in the race to install Industry 4.0 into daily business processes. It is easy to see why: The technology opens up doors for significant improvements in efficiency and quality.

Industry 4.0 is not about manufacturing assembly lines capable of producing more cars with fewer employees, or just decreasing product lifetime costs during production. It’s about adding value by integrating the supply chain in a new way that improves communication between all stakeholders involved.

Suppliers working with OEMs can enjoy increased flexibility in production planning and more efficient ordering, logistics, and quality assurance processes.

At the same time, Industry 4.0 paves the way for a more innovative and more sustainable business model that impacts society. The ever-increasing trend towards electric vehicles comes with questions like:

  • Where does the energy come from to power these cars?
  • How do we replenish their batteries?
  • And how can we ensure these resources don’t deplete at an accelerated rate?

That’s what this guide seeks to answer. It offers insights into how Industry 4.0 is changing the automotive industry, what this means for suppliers, and what you can do to prepare your business.

How is Industry 4.0 Impacting the Automotive Industry?

Industry 4.0 refers to the current automation, data exchange, and connectivity between machines, devices, and factories in an industrial setting.

It involves digitizing, integrating, and networking physical products, production lines, company networks, and supply chains.

In the automotive industry context, Industry 4.0 involves a focus on intelligent factories that brands can improve via digital updates made possible by big data analytics.

The goal is to provide a higher quality product with a shorter time to market.

To achieve this, you need to make sure all parts of the production process and the supply chain work together: automation, robotics, IoT, data, analytics, and connected workers have to interlink in a synchronized fashion.

Benefits for Automotive Suppliers

The next revolution in smart manufacturing is supposed to bring together the physical, digital, and biological worlds. As a result, industry 4.0 comes with many benefits for automotive suppliers.

Some of the benefits include:

  1. Increased Efficiency: Industry 4.0 helps you cut costs by automating processes that were previously carried out manually, allowing your employees to focus on more strategic tasks that set your business apart from the competition.

    The machine data exchange enables you to track performance and flag issues before escalating into more significant problems.

    This means you can lower inventory levels and avoid carrying excess stock, which helps you cut costs.

  2. Reduced Waste: Industry 4.0 creates a closed loop that allows you to track your production process and reduce necessary waste.

    It can also help you pinpoint the cause of production problems much faster than before, which will save your company money in terms of raw materials, time, and energy.

  3. Improved Product Quality: The data exchanged between machines allows them to communicate their operational issues. The problem can thus be dealt with much faster, which helps you prevent defective products from being shipped to your customers.

    The automated systems that are part of Industry 4.0 can be made in line with the traceability standards required by automotive manufacturers.

    Therefore, you can supply quality parts while avoiding costly delays and penalties for not meeting delivery dates.

Industry 4.0 is intended to help manufacturers remain one step ahead. (Photo courtesy of Unsplash)

Making the Most From Industry 4.0

The benefits of Industry 4.0 for automotive suppliers are clear, but how can they make the most out of this revolution?

There is no one-size-fits-all approach to achieving success with Industry 4.0 as it depends on several factors, such as your company’s size and business goals.

However, some of the actions you can take to get started include:

  1. Instill a Culture of Continuous Improvement and Learning: Industry 4.0 is about embracing and adopting new technologies so your employees can work together on implementing new solutions - ones that provide tangible benefits for your company’s processes and performance.

    They also need to learn how to create closed-loop systems monitored by software programs.

  2. Work with Solution Providers for Added Expertise and Resources: System integrators and cloud-based software providers bring the required expertise in Industry 4.0, making them a valuable resource for implementation support, process reengineering, training your workforce, etc.

    These experts can also help you develop an intelligent manufacturing strategy that helps you meet your goals.

  3. Learn by Doing: Your business leaders must support the initiative and promote agile, adaptive learning throughout your workforce. This will allow them to adjust to Industry 4.0 as it becomes more established in the automotive industry.

  4. Work with Your Suppliers to Create a Partner Approach: Industry 4.0 can be challenging to implement in isolation, which is why it’s essential to establish strong relationships with your automotive suppliers. It also makes sense for you and your suppliers to work together on reengineering processes, so they are improved across your entire supply chain.

    This way, you can keep your value stream optimized and help the different departments in the company cooperate on a common goal.

How to Get Started with Industry 4.0?

To get started with Industry 4.0, you first need to embrace automation and analytics technology in your processes.

These support human operators and help them make better decisions on the factory floor—and they’re already becoming an integral part of Industry 4.0 even before it has become widespread in the automotive industry.

Case Study of Automotive Suppliers Who Have Successfully Implemented Industry 4.0 into Their Businesses

Various case studies on the Industry 4.0 topic show how big, established companies and small and medium-sized businesses enjoy the benefits of new technologies.

An example of how companies like Volkswagen use Industry 4.0 technology in its production process comes from the Volkswagen plant in Bratislava. Volkswagen has been using Industry 4.0 technologies in its production process to increase flexibility and efficiency within the factory.

Challenges of Transitioning to Industry 4.0

Despite its many benefits, the Industry 4.0 revolution isn’t without its challenges, and one of the biggest ones is how to overcome them.

Some of the challenges include:

  1. Data Sensitivity and Security The Industrial Internet of Things (IIoT) is a vital part of Industry 4.0. Still, because it’s internet-connected devices that collect and transmit data, there are also serious security challenges to overcome.

  2. Standardization Issues: Industry 4.0 promises to help bring all the different systems in your factory together by connecting them via the cloud. However, without a common set of industry standards—like those established by OPC (Open Platform Communications)—these systems won’t communicate.

    To make your Industry 4.0 project more cost-effective and less time-consuming, you need to work with reliable suppliers who can configure their hardware for specific applications on factory floors.

  3. Lack of Technical Skills: For manufacturers just starting to explore Industry 4.0, getting their workforce up to speed on all the new technologies can be a challenge. Providing the tools that help make their jobs easier (rather than mandating the use of systems that may not fit their needs) is key to the successful adoption of new technologies.

  4. Interoperability Issues: Industry 4.0 technologies are designed to work together seamlessly, but that doesn’t necessarily mean they all do—at least not yet. You may find that some systems don’t play well with others, so it’s essential to choose a supplier who can configure their hardware to meet your interoperability requirements.

  5. Hardware Compatibility Issues: As already mentioned, Industry 4.0 promises to connect devices throughout your factory floor via the cloud. However, some hardware components are more compatible with this system than others, especially those designed for Industry 4.0 from the ground up.


The automotive industry is turning to Industry 4.0, the next step in developing more intelligent factories. Companies are finding ways around their traditional approach to benefit from the technology by speeding up product development times.

Industry 4.0 has already started to impact supplier development, helping them speed up the product development process. By being more collaborative, suppliers can enjoy the emerging technology by making their operations more efficient -- and thus creating a better product.

Eric Whitley has 30 years of manufacturing experience and is now senior account manager of L2L, which has a smart manufacturing platform.

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