How to prepare your products for Industry 4.0

“We are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. In its scale, scope and complexity, what I consider to be the fourth industrial revolution is unlike anything humankind has experienced before” (“The fourth industrial revolution” by Klaus Schwab, Executive Chairman, World Economic Forum Geneva). These words may seem exaggerated and dramatic, but nevertheless, they very well describe the situation that many of the senior executives need to relate to.

Industry 4.0 is one of the most frequently used industry buzzwords these days. But, what is it and how can you prepare for this megatrend to maximize the benefits out of it?

What does Industry 4.0 mean?

Industry 4.0 could mean the full digitalization of the company and its processes. However, the major focus of Industry 4.0 is the value chain and more specifically the production system which can be coordinated, controlled or automated using digital technology. Digital equipment is connected to the Internet and data can be used extensively.

Many companies are planning further investments in digitalization today. But, before considering investing in robotics and digital equipment for the production system, it is necessary to be well prepared. This has not so much to do with an approved business case or a perfect project plan, but rather start with the right things in time, i.e. with the things you would want to realize in a consistent process with the upgraded production system – the products.

Today, the customers’ demand for product variety and shorter time to delivery is increasing. And, having a wide product range might be the future of the company, but only if it could be delivered in a cost-efficient way. The more complex the products are, the less efficient and costlier the production usually is.

The full potential of Industry 4.0 requires structured products

What can I do?

Preparing for Industry 4.0 requires streamlining of the product structure and adjustment of current processes. Streamlining is the key to a successful implementation and does not mean reducing the number of product variants, but rather reducing the parts used to build them. This is called product modularization.

In a modularized product range, the parts important for realizing customers’ different needs have different performance levels but still have the same structure and interfaces. The rest of the parts are common and standardized as far as it makes sense from a cost perspective. All parts are consistent to the company’s internal processes as they build on common concepts. The flexible and the standardized parts are independent of each other as they are split through well-defined interfaces.

From the customers’ point of view, the end products are different and from a part point of view they are very similar, which supports process consistency as a basis for Industry 4.0.

MQB – Volkswagen’s modular platform as a basis for about 60 car models

Here is how to do it

Structuring a product range using a modularization approach can be challenging. There are several pitfalls and things to consider for a successful implementation. In addition to a regular project setup and a decision-making process, there is usually also a need for intense change management, tweaking of the development process, front-loading of resources and substantial cross-functional work to consider the total value chain and product range instead of a narrow product scope.

This is what we propose as a general approach:

1. Set targets: agree on targets and business case to keep complexity to its minimum and avoid scope creep
2. Understand customer needs: collect your market’s needs and the value chain requirements to explore what needs to vary and what doesn’t in the product range, preferably for the foreseeable product range lifetime
3. Define product architecture: explore technical concepts that could be common across the range, examine functions and make the design independent as far as possible, in terms of required customization and standardization
4. Standardize interfaces: standardize interfaces as the common denominator between modules, pay extra attention to significant interfaces or “hard points” and divide the variable from the standardized to enable variance creation as late as possible in the value chain
5. Implement modular product architecture: document the design requirements in PLM systems and develop the modular products you planned for. Having prepared the products for Industry 4.0 will maximize the benefits from your investments.

Brick Strategy’s leading approach to modular products

Brick Strategy’s approach to implement modular products is based on our consultants’ long experience from Scania, dialogues with former Scania colleagues, combined with consulting projects with leading industrial companies in different industries for almost 20 years.

Contact Brick Strategy if you are curious to learn more about how you can use modularity to prepare your business for Industry 4.0.