Risk Insider: Dan Holden

The Internet of Things: Industry 4.0 and the Massive Manufacturing Paradigm Shift

By: | March 1, 2018 • 3 min read

Dan Holden is Manager of Corporate Risk & Insurance for Daimler Trucks North America (formerly “Freightliner”). He manages the risk management program in the U.S., Canada and Mexico. He can be reached at [email protected]

Imagine a manufacturing process that governs itself via interconnected methodology and connects formerly distinct production and business domains all with very limited human intervention. It’s mind-boggling … and yet it shouldn’t be.

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According to Kevin Davenport, Cisco Systems, Inc., “The internet arguably is the most transformative and pervasive driver of change and improvement in our history.” The internet revolution — in just a short amount of time — has transformed civilization and is now making its way into the manufacturing process.

Such technologies already exist and many industry leaders believe “The Internet of Things”(IoT) is the fourth industrial revolution following the steam engine, the conveyor belt and the first phase of IT and automation technology.

2018 is purported to be an historic year in manufacturing for many reasons, one of which is advances in industrial technology via co-bots and IoT. This is especially concerning for risk managers as they know that no system is without fault. There are glitches in the internet that occur daily.

In IoT, the physical world is an information system via sensors and actuators embedded in physical objects, and linked through wired and wireless networks via the Internet Protocol. Factories and plants that are connected to the internet have already proven to be more efficient than competitors who are not.

From the moment an order is placed, the manufacturing control system engages and pulls the parts and material needed for assembly thus eliminating potential time lags between supply, orders, product design, operations and customer management. Imagine the time saved.

According to John Nesi, vice president of market development at Rockwell Automation, King’s Hawaiian, was able to put out an additional 180,000 pounds of bread every day, doubling their previous production amount, after installing 11 new connected machines in a new factory.

As a result of the upgraded technology, King’s Hawaiian was able to get their product to the market faster and lower their overall costs, gaining a huge advantage over their competition.

However, this massive paradigm shift in manufacturing won’t come without risk. When innovation is tied to a complex system — and we become over-reliant on technology — there are ample opportunities for failure. With the Internet of Things, those failures could amplify.

The risk of losing privacy increases, so how well encrypted will be the data that is transmitted and stored, and who is ultimately responsible for a data breach?

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There are compatibility issues as well, as there are no international standards, so it could be a challenge for one machine to speak to another. This is particularly disconcerting in the manufacturing process where a failure in the software or hardware could compromise the assembly process.

There is also the human element. The interconnection of manufacturing devices to the Internet could result in the loss of jobs as less humans are needed, especially those without formal education or technical training.

2018 is purported to be an historic year in manufacturing for many reasons, one of which is advances in industrial technology via co-bots and IoT. This is especially concerning for risk managers as they know that no system is without fault. There are glitches in the internet that occur daily.

Over-dependence on the internet — and the data supplied — could be detrimental if the whole thing comes crashing down one day.

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The R&I Editorial Team can be reached at [email protected]