The promise of the Fourth Industrial Revolution, or Industry 4.0 (I4.0), has often been portrayed as a complete, revolutionary transformation of manufacturing. However, new research suggests a more gradual, “evolutionary” path is unfolding in practice. A study published in the Journal of Manufacturing Technology Management by Krisztina Demeter, Levente Szász, Béla-Gergely Rácz and Lehel-Zoltán Győrfy, challenges the idea of a radical, digital-only shift by investigating how new I4.0 technologies are actually being combined with existing, traditional manufacturing systems in the real world.
The research, which surveyed 165 manufacturing plants across 11 countries, found that rather than replacing old technologies, I4.0 tools are being bundled together with them. This finding supports the complementarity theory, which posits that combining technologies can create a greater performance improvement than the technologies could achieve individually.
Unpacking the Technology Bundles
The study empirically derived three distinct technology bundles used by manufacturing companies:
- Base Technologies: This bundle includes core physical manufacturing technologies like computer numerically controlled (CNC) machines, flexible manufacturing systems (FMS), and additive manufacturing (3D printing). While these are essential for staying competitive, the study found they do not offer an immediate advantage over rivals. This suggests they have become qualifying technologies—necessary to be in the game but not sufficient to win it.
- Data-enabled Technologies: This group encompasses systems for data generation and processing, such as manufacturing resource planning (MRP II)/enterprise resource planning (ERP), automatic identification (RFID), and smart ICT applications. These technologies have a strong positive relationship with Base Technologies, indicating that companies first need to establish their physical manufacturing systems before they can effectively collect and use data from them. Interestingly, the research shows that these technologies can initially harm a company’s cost performance. This is likely due to the complexity and high cost of implementing and maintaining these systems, which require additional ICT experts and data scientists.
- Automation and Robotization: This bundle focuses on technologies that automate physical processes, including industrial robots and automated material storage and retrieval systems. Of the three bundles, this was the only one that showed an immediate, positive impact on cost efficiency. However, this cost advantage was found to be significant almost exclusively for large manufacturing units, not for small and medium-sized enterprises (SMEs). This highlights that the economic return from automation is most pronounced in environments with a substantial production scale, where it can directly replace or augment human labor.
The Lack of a “Revolutionary” Breakthrough
The study’s findings directly contradict the idea that I4.0 is a standalone technological revolution. The analysis showed that I4.0 technologies like advanced manufacturing (AMT) and “smart” ICT applications do not form their own distinct factor but are instead embedded within the existing technology bundles. This suggests that companies are not building purely smart, digital factories from scratch. Instead, they are integrating the new with the old, an approach that the authors argue is a more realistic and practical way to implement emerging technologies.
The research also found that even with these bundles, there was no strong evidence of an immediate financial return on investment. The link between improved operational performance and higher business performance (such as increased sales or profitability) was positive but weak. This implies that the full financial benefits of technology investments may take a considerable amount of time to be achived.
For businesses, the key takeaway is a call for a strategic, long-term perspective. The study advises that companies should not expect quick business returns from investments in base and data-enabled technologies. While these are necessary to stay in the market, they won’t necessarily give a competitive edge. However, investments in automation and robotization can quickly yield cost advantages, especially for larger firms.
The authors acknowledge that their study has limitations, including its focus on a specific time period (2016-2017) and the high-level measurement of technologies. They suggest that future research should explore whether the performance effects of these technology bundles have changed in the years since the data was collected. Further investigation is also needed into the specific “use cases” of individual technologies and how factors beyond the technology itself, such as the human element, influence the success of I4.0 projects.
The findings of this study are promoted by UBB Core, The Career Guidance for Researchers Center from ”Babeș-Bolyai” University in Cluj-Napoca, Romania.
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