Sunday, January 7, 2018

Industrial Engineering 4.0 - IE in the Era of Industry 4.0 - Blog Book

K.V.S.S. Narayana Rao

Industrial Engineering is Industry Expansion Engineering  - Narayana Rao

Industrial engineering increases productivity of resources used in production systems or operating systems and thus decreases unit cost of producing goods or services. Each decrease in cost contributes  to the  price reduction, which a company can offer. Price reductions  lead to expansion of an industry and thus industrial engineering is industry expansion engineering. Invention  and innovation engineers create new industries and industrial engineers expand the industry.

The methods, techniques and tools used to do industrial engineering get modified and new ones get developed  with changes in technology and management methods related to industry. Applied industrial engineering is given the punch sentence - "IE in New Technology, IE with New Technology " by Prof. Narayana Rao. The world recognises revolutions in industry, and now the world talks of  Industry 4.0. Industry 4.0 is the result of number of new technologies, many of them in the field of information and communication technologies that make a connected network of machines and equipment possible. Machines can communicate with each other based on the sensors mounted on them and also can pass instructions and make the necessary adjustments on other machines through actuators which respond to digital messages sent to them. While, the new connected engineering systems are in their early days of innovation, the concept's potential to become the main mode of engineering activity (in design, production, operation and maintenance) is well recognized. National governments and international agencies have taken note of this, and strategic initiatives to adopt the technology and become global  leaders in the technology have been started. Germany is a leader in this initiative at the moment.   Industrial Engineering 4.0 is a naturally ally of engineers and managers in Industry 4.0 to supplement as well as complement their work to increase productivity in industries and companies using Industry 4.0 technologies. The industrial engineering profession Germany has taken lead in this evolution of industrial engineering and already organized a seminar.

In Germany, in 2016, a seminar with the theme, "Industrial Engineering 4.0 – Neue Ansätze in vernetzten Produktionen" was organized. The brief details can be seen in the brochures available at
(Full brochure).

A book with selected papers form a conference with the title "Industrial Engineering in the Industry 4.0 Era: Selected papers from the Global Joint Conference on Industrial Engineering and Its Application Areas, GJCIE 2017, July 20–21, Vienna, Austria" is also available, Its editors are Calisir, Fethi, Camgoz Akdag, Hatice (Eds.). The details of the book can be accessed from and

The material so far available does not yet clarify the direction in which the profession has to move to make valuable contribution to the engineering industry activity that is likely to evolve. I am making an effort to explain the content of "Industrial Engineering 4.0" based on the Taylor - Narayana Rao Principles of Industrial Engineering, Functions of Industrial Engineering and explanation of Productivity Science, Productivity Engineering and Productivity Management being developed by me and the existing literature and IE practices

The three functions of IE in Industry 4.0 context are being explored and the ideas so far developed are being  circulated in IE social media communities seeking suggestions to enrich them.

Industrial Engineering 4.0

Industry 4.0 - IIoT Technology - Industrial Engineering - Productivity Science

Industry 4.0 - IIoT - Productivity Engineering

Industry 4.0 - IIoT - Productivity Management

Why Industrial Engineering 4.0?

Leading consulting firms and technology analysts are foreseeing and forecasting productivity improvements due to implementation of industry 4.0 technologies. Some of them made qualitative statements and some have made quantitative estimate regarding the productivity potential. They also say that the productivity or cost reduction estimates will not be realized without creative engineering and management. Industrial engineers have to get into this productivity opportunity and understand this new technology. They have to combine the existing IE practices with the new technologies, develop new productivity science, productivity engineering inventions and manage the implementation process. There is an opportunity for industrial engineers and they have to rise up to the challenge to remain the value adding profession in the new industrial environment like to emerge, which is termed Industry 4.0. 

The Opinions and Thoughts of Consultants and Technology Analysts

The Growth Game-Changer: How the Industrial Internet of Things can drive progress and prosperity
Mark Purdy and Ladan Davarzani

"In the 20 countries we analyzed, current policy and investment trends in IIoT products and technologies point to cumulative real GDP contributions of US$10.6 trillion by 2030. With greater investment and the enactment of key measures to absorb IIoT technologies, that figure could rise to US$14.2 trillion."

Benefit to United States

"In our model, the IIoT is projected to add US$6,132 billion to United States’ GDP in the next 15 years under current conditions. However, by taking additional measures such as improving the country’s broadband infrastructure, this figure could grow to US$7,146 billion."

One can observe the significance of the impact of Industry 4.0 and can also the see importance being given to creative engineering and management of the applications of these technologies in Accenture report.



"Many of the nine advances in technology that form the foundation for Industry 4.0 are already used in manufacturing, but with Industry 4.0, they will transform production: isolated, optimized cells will come together as a fully integrated, automated, and optimized production flow, leading to greater efficiencies and changing traditional production relationships among suppliers, producers, and customers—as well as between human and machine."

Productivity Potential in Germany 

"During the next five to ten years, Industry 4.0 will be embraced by more companies, boosting productivity across all German manufacturing sectors by €90 billion to €150 billion. Productivity improvements on conversion costs, which exclude the cost of materials, will range from 15 to 25 percent. When the materials costs are factored in, productivity gains of 5 to 8 percent will be achieved. "

Digitalization in industrial products Harnessing the power of digital

Maximum potential economic benefits in factory settings by 2015 in  US$ billion are provided by possible benefit areas (Implies focused and successful design and implementation of IoT projects) . A  McKinsey report is given as the source of the figures. The following are the areas and the benefit envisaged.

Operations optimization:  $1766 billions, 
Predictive maintenance: $627 billion
Inventory optimization: $342
Safety: $226 billions
Human productivity: $160 bilion 
Others: 587 billion

So, there are significant productivity benefits expected from the implementation of new technologies and there is a role for productivity engineering that is industrial engineering.


The McKinsey Institute expects Industry 4.0 applications enabled by the Internet of Things to create a new surge of factory productivity. This would provide a productivity increase of 10 – 25 percent and would amount to as much as $1.8 trillion per year in 2025.


Digitalization in industrial products: Harnessing the power of digital

Efficiency benefits are explained in pages 17 and 18.


Industry 4.0 will revolutionise industrial production. Digitisation brings enormous benefits.

"Industrial companies expect to generate 3.6% p.a. in cost reductions over the next five years, driven by internal improvements and by working more closely across value chains. They’re also expecting to generate 2.9% p.a. in increased revenues by digitising products and services and developing new digital service offerings, all the way through to hosting platforms for industrial ecosystems."

Getting there won’t be easy. And it won’t come cheap. Investments in Industry 4.0 capabilities are expected to reach around 5% of annual revenues p.a.  Investment will be $907 billion per annum till 2020.  Cost reduction benefit will be $421 billion and revenue increase benefit will be $493 billion.

So all the leading consulting firms have published reports based on their studies highlighting the potential of Industry 4.0 transformation of engineering in the world. It has revenue increasing potential by facilitating the creation of new products and services which customers will buy and use and also, it has productivity potential by facilitating the productivity improvement and cost reduction in production, operation and maintenance of current products. Industrial engineers have a role to play in both the segments. They have to make sure that new processes being developed to produce new products are efficient and productivity to begin with. Also they have to improve the productivity of production/engineering processes of current products. Industrial Engineering 4.0 needs to be developed by industrial engineering researchers, consultants and practitioners in academic, consulting and corporate sector by understanding the new technologies, doing research and converting the productivity opportunities into productivity engineering and management solutions.

In the blog book to be developed by me in the coming days (this blog post being  the first one in the series), I shall write my ideas regarding the various phases based on the research that I was carrying on this issue specially since August 2017.

So far, I made number of blog posts on Industry 4.0 and IoT. I  give the links of those articles below.

Articles/Blog Posts on Industry 4.0 by Narayana Rao

Productivity “Industry 4.0, Leapfrog Opportunity for India” - Productivity Week Theme - India 2018

Data Analytics Period in Productivity Improvement - Productivity Engineering and Management

Digital Transformation at Daimler Benz

Industrial Engineering 4.0 - IE in the Era of Industry 4.0 - The German Initiative


Lean Industry 4.0

Industrial Engineering 4.0 was already mentioned in the following references.

Industrial Engineering 4.0 – Neue Ansätze in vernetzten Produktionen  A seminar in 2016  (Full brochure)

Industrial Engineering in the Industry 4.0 Era
Selected papers from the Global Joint Conference on Industrial Engineering and Its Application Areas, GJCIE 2017, July 20–21, Vienna, Austria
Editors: Calisir, Fethi, Camgoz Akdag, Hatice (Eds.)

Industry 4.0 - Online Library

(C) Narayana Rao K.V.S.S. 2018

Updated on 8 January 2018
First published on 31 December 2017

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