What Is Industry 4.0 and How Does It Impact Manufacturing?


The Industrial Revolution transformed the globe, from fueling economic growth to changing the ways society looked and operated. And nearly 200 years from the end of the First Industrial Revolution, industrial manufacturing began its fourth significant period of advancement, one that has had — and will continue to have — a major impact on the world. 

The Fourth Industrial Revolution, commonly called Industry 4.0, began in the early 2010s and has quickly become a top strategic priority for industrial manufacturers. But what is Industry 4.0 exactly, and why do industrial manufacturers need to embrace it? Let’s take a closer look. 

What is Industry 4.0? 

Industry 4.0 refers to the rise of smart technologies and expanded digitization of the industrial process. Where the Third Industrial Revolution introduced computers and advanced data analysis into manufacturing, Industry 4.0 introduced industrial automation, cloud computing, artificial intelligence, and various other smart technologies. 

Also, Industry 4.0 builds on the introduction of data analytics into manufacturing, advancing the ability to collect data across manufacturing processes with technologies like sensors and smart machines. This improves a company’s ability to identify potential areas of improvement and make informed decisions. 

Industry 4.0 Technologies 

While there are many components of Industry 4.0, several key technologies are driving the movement. 

Industrial Internet of Things (IIoT) 

IIoT is arguably the primary driving force of Industry 4.0, influencing many of the capabilities that define it. IIoT refers to the network of connected devices and equipment used in industrial processes. This network, consisting of smart machines, sensors, and various other intelligent devices, enhances a manufacturer’s ability to collect and analyze data. 

Cloud Computing 

Many people utilize “The Cloud” in their daily lives, and Industry 4.0 takes full advantage of Cloud capabilities. Cloud computing refers to the on-demand access of computing resources, which are hosted at remote data centers by cloud service providers (CSPs). Cloud computing provides many benefits compared to traditional, on-site IT, including improved scalability and lower costs. 

Industrial Automation & Robotics 

Industrial automation and robotics refer to a variety of ways to improve the efficiency and performance of industrial processes. Automation utilizes software, machines, and other technologies to perform tasks that would otherwise be done by humans. Processes may be automated using robots, which can be programmed to complete physical tasks. 

Benefits of Industry 4.0 

Embracing and investing in Industry 4.0 provides many benefits for industrial manufacturers. Let’s look at a few of the top ways Industry 4.0 can positively affect the manufacturing process. 

Increased productivity and efficiency 

The number one benefit of Industry 4.0 solutions is their significant impact on productivity and efficiency. According to McKinsey, Industry 4.0 technologies contribute to a 30 to 50% reduction in downtime, a 10 to 30% increase in throughput, and a 15 to 30% improvement in labor productivity. 

Improved decision-making ability 

Industry 4.0 technologies provide access to better data that manufacturers can use to make well-informed, data-driven decisions. In addition to making better decisions, this also allows manufacturers to make decisions more quickly and make their operations more agile.  

Better customer experience 

Customers will also feel the impact of Industry 4.0 in a variety of ways. Industry 4.0 solutions can greatly reduce manufacturing lead times and improve product quality and availability, all of which can lead to higher customer satisfaction. 

Challenges of Industry 4.0 

Industry 4.0 is rapidly transforming the manufacturing process, but modernizing facilities and building out Industry 4.0 solutions come with challenges, especially for smaller manufacturers. Let’s look at some common challenges of implementing Industry 4.0. 


With the increased digitization and connectivity within industrial facilities comes the rising risk of cyber threats. According to a 2019 study by Deloitte, 40% of manufacturers had been affected by a cyber incident within the prior year. These attacks are likely to become more prevalent as more facilities invest in connected technologies. This means it’s absolutely essential for manufacturers that are investing in Industry 4.0 solutions to have robust cybersecurity measures in place. 

Skill Gaps 

Industry 4.0 technologies can be highly advanced and sophisticated. This may create the need to hire additional personnel, but it also requires companies to reskill and upskill workers as their job requirements change. In addition to helping workers perform their job functions well, this will also help keep workers safe as new technologies are introduced. 


Many manufacturers have identified Industry 4.0 as a priority, but implementing these solutions at scale is a challenge that most companies face. In fact, a 2019 survey by McKinsey showed that only 29% of companies were deploying Industry 4.0 solutions at scale, despite nearly 70% viewing it as a top strategic priority. 

This is often referred to as “pilot purgatory.” Manufacturers begin Industry 4.0 programs, but various factors influence their ability to scale them across their business — from high costs to lack of resources. 

The fact is that Industry 4.0 requires organizational transformation, and that starts at the top. Companies with leaders who support these initiatives and can mobilize their organizations are far more likely to successfully implement Industry 4.0 solutions. 

How Crescent Can Help 

Industry 4.0 represents an exciting moment in industrial manufacturing – but as impactful as Industry 4.0 is, Industry 5.0 is already underway. With the speed at which the industry is evolving, it’s more important than ever for industrial manufacturers to take advantage of Industry 4.0 and 5.0 solutions. Investing in these technologies will not only help manufacturers grow their businesses, but it’ll also help them keep up with competitors who are aggressively pursuing these initiatives. 

Want to take advantage of this critical moment in industrial manufacturing? We want to help. We’re committed to helping our customers modernize processes — from our wide range of industrial products to our team of Application Engineers who can guide you on the path to becoming more productive and efficient with Industry 4.0 and 5.0 technologies. 

Learn more about how we can help at our Modernization and Aging Assets page or contact us today to get started.