ERP software in the „smart factory“

Digital age – where will Industry 4.0 take us?

Initial situation – current demand for Industry 4.0

Germany is one of the leading industrial nations worldwide and a market leader in many sectors of industry. But the competition never sleeps. Intensive international rivalry between European nations and rapidly growing emerging economies is constantly increasing pressure on German companies to improve their own competitiveness.

Following mechanisation, electrification and informatisation of our companies and of society, we are now experiencing the beginning of the fourth industrial revolution – collectively termed Industry 4.0 – and our reflexes tend to respond to these structural changes with scepticism and conventional thinking patterns. Yet our odds will be poor should we try to improve our own competitive position whilst remaining on the sidelines!

Neither politics nor the economy will these days offer panaceas to so-called “disruptive innovation”, i.e. our response to fundamental changes to tried and tested rules of the game and the displacement of established technologies. The demand for entrepreneurial creativity and capability – i.e. not so much academic but rather practical approaches - is therefore stronger than ever here.

The four steps of the “industrial revolution” to our age (source: DFKI 2011)
Horizontal value creation network (source: HP 2013)
Definition: Industry 4.0

What exactly is Industry 4.0?

First and foremost, Industry 4.0 is not a software or hardware theme or a set of traditional rules requiring only slight "modification" to meet our requirements, but rather a cross-disciplinary (learning) process which will keep us all intensely busy in coming years. Especially since Google & Co. is a powerful driver of our value chain even now, increasingly impacting commercial and private use of the Internet and its associated data. For the first time, the public became intensively aware of the Industry 4.0 concept at the 2011 Hanover Fair. The German Federal government was and still remains the driving force behind this trail-blazing project. Study groups, research groups and promoters have since been convened with the objective of developing proposals for intensified informatisation among German companies. The focus is, among other, on intelligently linked machines, storage systems and operating resources among all the partners participating in the value chain. Everything will be interlinked, rendered transparent and controlled. Sounds familiar somehow? We experienced all of this before with the so-called CIM architecture, back in the eighties. Not so, because the CIM – Computer-Integration-Manufacturing – concept was all about linking man and machine, solely focussing on manufacturing processes. This refers to man transmitting programming commands to machine, instructing the machine what to do next – nothing more and without any intelligence or dynamic influence by external factors.

Information these days is and will remain to be automatically exchanged worldwide via the Internet, optimised as needed and in real time. This happens across the entire process – from the customer’s product selection via ordering and production down to delivery. This process logic, based on cyber-physical systems, is also referred to as “smart factory”. Communication and interaction between man and machine will tap into novel potentials of the future value creation chain.

Industrie 4.0 and the smart factory as a component of the Internet of Things and Services (Acatech 2013)
Internet of Things and Services – networking of people, things and cyber-physical systems (source: Bosch 2012)
Industry 4.0 for medium-sized companies

Industry 4.0 for medium-sized companies

Apart from the prerequisites facing a company and the “smart factory” challenges described in terms of the initial situation already, the trend of customer influence on products produced or supplied by the company, combined with constantly smaller batches down to customised individual items and of shortening delivery times (key word assemble-to-order / make-to-order) will remain strong in Germany. eBay, Amazon or other mail order portals such as Mö are already influencing the end customer’s buying behaviour, thereby calling the tune of your company.

In principle, the business potential is enormous and even more pronounced if your company is able to keep pace, i.e. to produce numerous variants or even individual items flexibly, profitably and fast and ultimately to dynamically create business and engineering processes. Completely new forms of value creation will develop based on information transparency, optimal decision making processes (e.g. make or buy) and the integration of external resources across entire lean, self-organising and real time optimising processes, optimised also in terms of availability, resources and cost. Add to this the increasing flexibility and quality assurance aspects of engineering, planning, production, operational and logistics processes which optimal scenarios and standards will guarantee.

That means, no more rigid relationships and individual handling of locations will also fall away completely. It will be irrelevant whether you are producing or simply delivering. Knowing who may be integrated into the process, at what conditions of delivery, cost and scheduling and – most importantly – including a variety of “data spaces” across the process chain, will be decisive.

This, therefore, describes the most significant difference compared to past CIM architecture. No human will tell a machine or resource what to do next, but external influencing factors will change and regulate the processes across the entire value creation chain. This may also be referred to as “working in the open” or as the “Internet of Things and People”.

Disciplines and the Internet of Things

Disciplines and the Internet of Things

Concrete spheres of activity will therefore be found especially in the fields of:

        » Standardisation and reference architectures
            □ technical description of collaborative processes

        » Control of complex systems
            □ explanatory models of complex products

        » Extensive broadband infrastructure
            □ within Germany and the partner countries

       » System security
            □ security from attack, protection of people at the production facilities, risk management

        » Work organisation and structuring
            □ adequate qualifications of staff, work organisation

        » Legal framework conditions
            □ data protection, liability issues, contracts, company agreements

        » Resource efficiency
            □ raw material and energy consumption, environmental protection

smart factory - Vision & Reality

smart factory - Vision & Reality

Some light now deserves to be shed on the conventional status quo of companies. Every company will have come across Industry 4.0 and preparations are naturally in the pipeline already – theoretically or as a concept. On taking a closer look we soon discover that this topic is certainly discussed widely - a positive factor – yet few have thus far started on their required strategic “homework”. Industry 4.0, therefore, is not yet properly understood and has not truly embedded itself in the companies – referring here especially to traditional medium sized companies, not so much larger corporations. The need for information is enormous and companies should urgently be brought up to date. .

Corporate IT (infrastructures, Cloud models, ERP software, production systems) and their integration into external architectures within the framework of the abovementioned fields of activity should absolutely be examined, since this will ultimately determine the success of a company. Optimal hardware and database platforms to deploy, implemented security architectures and the software solutions to use for which utilisation models, should all be examined. A cross-company Cloud may here provide a promising base on which classical licensing models may be superseded or at the least modified (hybrid).

Present: Information between IT systems is currently communicated mainly via high maintenance interfaces (source: Siemens 2013)

Deployed ERP systems will here have a key functionality, since ERP (Enterprise Resource Planning) is the backbone of security and coordination of business processes, of the structure and stability of applications, the use and consolidation of all existing data and, as such, also the control of complex, collaborative systems – this aspect will not change.

Customisation of products and the rising influence your customer has on your products will furthermore lead to complex production processes. Remaining cost-effective and competitive will be hard without flexible, automated ERP system rules and standards.

Future: Picture: Consistent systems engineering: cyber-physical systems allow consistent digital communication within the framework of defining all mutual dependencies in the value added chain (source: Siemens 2013)
A look into the crystal ball

A look into the crystal ball

Industry 4.0 is a project for the future. If we regard Industry 4.0 as an evolutionary and sector-spanning platform, Germany has the potential of becoming the global driver for the provisioning and implementation of supporting instruments. Policies, research and the economy must to this end create a united front of successful collaboration. Completely new markets and novel working environments are bound to develop. The synchronisation of all participants will be crucial to the success of each specific market.

The battle for personal data has already been lost to Google & Co. We have all willingly contributed here in one way or another through our information and user habits. Your whereabouts and movements can be tracked via your mobile phone. What you search for on the Internet is well-known, as are your purchases via Amazon & Co., the persons you phone and e-mail and, via your credit or bonus card, what you are buying and what your credit rating is.

Spotify and YouTube reveal your taste in music, your EC card will tell when and where you filled up and which restaurants or hotels your will normally frequent. Your holiday destinations are revealed through your navigation system or your route planning on Google Maps. Your family photos on the beach will be found at Dropbox or whatsApp. The electronic medical record folder will know your health risk class and your body better than you yourself; Apple’s iWatch is already looking forward to updates of your data, etc., etc. The data transparency list may be extended virtually unlimited. But oh, let us not forget Facebook and Twitter – your friends and family are made public here. “Private 5.0”?

Let us now imagine for a moment that all these data will be interlinked, thereby directly impacting your business model, your products and your processes – in combination with your commercial corporate data. This is what we call additional data spaces – or simply Industry 4.0? All the more reason therefore for Germany, as an industrial nation, and for you, as a company, not to disclose (or limit disclosure) of your process- and product-related data, leaving this to the IT gurus of Silicon Valley.

ERP software for Industry 4.0

ERP software for Industry 4.0

Constant exchange of experience is important. You should therefore join working groups where genuine Industry 4.0 know-how can be shared, not where the focus will be on selling a supplier’s products. You will certainly find qualified contact persons in your industry association or other organisations in your field. Avoid, as a company, thinking in cycles of 2 to 3 years, but rather deliberate on what markets (and especially your target market) may look like in 10 to 15 years.

Also deliberate the impact digitalisation will have on us personally. Not only are new business or production models bound to change, but our entire working world will undergo drastic changes. Our familiar professional profiles and models of working time and remuneration will change. Entire professional sectors will disappear off the market and new ones will be created. Socio-economists are already developing schools of thought in this respect.

n route to Industry 4.0

n route to Industry 4.0

Companies are bound to benefit from actively setting the proper course for this train into our future today already. It should not be Google & Co. telling you when to buy or sell or store or produce something and at what price – this is what you should be doing yourself.

Of course, software producers such as VLEXsoftware+consulting gmbh are also affected by this change. This is why we are strategising about this topic today already, based on our individual customer demands and in cooperation with leading representatives of industry. Based on state-of-the-art Web and Cloud technologies for the optimal support of collaborative processes, we have already negotiated part of this route based on our successful approach to product customisation and associated processes via state of the art „Variant management“.

The ERP system is destined in this respect to make significant contributions to “Industry 4.0 compliance”. In order to create sales and purchasing transparency via a consistently available set of automated rules, this system must administrate rule based product information. Data must also be available, interlinked (“Internet of Things”) and evaluated in real time. The underlying architectures will be crucial to real time integration, interlinking XML with Web services, mobile access and final provisioning via a customer or partner interface. Companies must have the capacity to design their products and processes in-house within the framework of technical parameters and automate the production path.

Information must be centrally aggregated even for batch size 1, to be optimised within the system, to enable strategic purchasing and allow partners, suppliers and customers to access the requisite information online and bi-directionally. In manufacturing, on the other hand, job information towards optimal resource utilisation will be available for release in early stages already and freight forwarders will already be planning their relevant trips from their logistics and operational vantage points. Customer will already have been notified of their delivery, allowing them to track order statuses online. Man will now be organising, steering and controlling all the processes.

It is likely that the greater part of our route to an Industry 4.0 partner still lies ahead. We look forward to travelling this road together with you, our customer. Times are certainly exciting!


Mr. Thomas Feike is at your disposal for any queries you may have.

Phone +49 92 21 - 691 7744 or write directly to

Kind regards from your Thomas Feike
Head of Department Sales+Marketing