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CRITICAL DISCUSSION OF INDUSTRY 4.0 AS A CONTEMPORARY ISSUE IN


STRATEGIC OPERATION MANAGEMENT

Name: ARAOYINBO FLORENCE IFEOLUWA

Institution: University of South Wales

Department: MSc Management 2023

Course code: PS4S26

Professor: Ahmed Abdullah


Student ID: 30077344
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Introduction

Industry 4.0 is one of the most pressing concerns in strategic operations management

today, this can also be termed as the fourth industrial revolution, which is altering company

operations and, redefining the way products are produced (Kagermann et al., 2013). Industry

4.0 is an integration of emerging technologies, among these include artificial intelligence

(AI), cloud computing, advanced robotics, the Internet of Things, and big data analytics

(Atzori et al., 2010). Industry 4.0 has been a game-changer for businesses, as it promises to

revolutionize how businesses work, increase efficiency, productivity, and profitability (Atzori

et al., 2010). Additionally, according to Kagermann et al. (2013), the term "Industry 4.0"

refers to the fourth industrial revolution. In this line, the first three industrial revolutions were

brought by IT, mechanization and electricity (Kagermann et al., 2013). Industry 4.0 is

theorized to be a result of businesses adopting what they refer to as "Cyber-Physical

Systems” which integrate warehousing, manufacturing, and distribution systems.

Additionally, as a contemporary issue in strategic operations management, Industry 4.0 is an

important consideration for companies (Kagermann et al., 2013), as it provides a platform for

the introduction of new products and services, as well as new ways of doing business.

Organizations must consider how they can leverage the opportunities offered by Industry 4.0

to ensure they remain competitive.

According to Atzori et al (2010), Internet of Things (IoT) is a major tool for Industry

4.0 hence it cannot be separated from it. The Internet of Things (IoT) can thus be

characterized as a global network of networked, uniquely addressable items based on

common communication protocols (Atzori et al., 2010). Strategic operations management

will be affected by the IoT in both positive and negative ways given its relatively recent

origins and high level of ambiguity. This study will discuss the implications of Industries 4.0
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for strategic operation management, including its impact on businesses, the challenges it

presents, and strategies for effectively utilizing the technology. The study will utilise

contemporary research literature as well as empirical evidence derived from different

organisations working to implement industry 4.0 in their operations. Further, an effort to

determine if the risks of Industry 4.0 exceed the benefits or vice versa, concluding arguments

will be made. Finally, options for additional research will be briefly discussed.

The Description of Key Terms.

As stated by Mishra et al. (2016), the Internet of Things (IoT) can be divided into four

key domains: personal and social, healthcare, industry, and ultimately market environments.

The Industry domain is therefore vital for this study because it directly ties to the idea of

industry 4.0. Meanwhile, Personal and social domain connects existing public-accessible

systems such as phones and tablets. It would be erroneous to separate the Internet of Things

with this sector since Personal and Social domain is one that general public can understand

better. Smart Environments domain can be defined as those domains that extend on this

comparatively clear use (Mishra et al., 2016). However, the most common and possibly most

sophisticated IoT use comes from the industry area, which Borgia (2014) postulated. The

Internet of Things may be used in all sectors of industry and can be incorporated into any

business or financial transaction between organizations (Borgia,2014). There are two

subfields that are pertinent to Industry 4.0 which include monitoring parameters and data

inputs/outputs. Subsequently, using a range of IoT sensors then IoT may be utilized to

improve safety and efficiency in industry. Although the notion of Cyber-Physical Systems

(CPS) is introduced, Borgia (2014) does not specifically mention it. Secondly, Borgia (2014)

shows how logistics and product lifecycle management are ideal for IoT use. He conjectures

that when shelves are bare, retail sales fall by 8.3%. As (Borgia, 2014), that a key component

of the Internet of Things ecosystem is the display of data and information through a
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continuous feedback loop. The specific system implementation is an extensive telemetry

system that gathers and keeps track of environmental data. These data serve two purposes:

first, they are utilized to create weather forecasts, and second, a machine learning method is

used to find telemetry equipment flaws and drift from calibrated settings. Through this

secondary usage, its main goal is to come up with a telemetry network that is self-managing

and self-healing. This is familiar to the definition proposed by Gubbi et al. (2013) on the

Internet of Things as a network of sensing and actuating devices that allows information to be

shared across platforms.

According to Borgia (2014), Cyber Physical Systems are characterized as systems that

have the aforementioned IoT properties and are meant to take the next logical step toward

integration with the physical systems they control. Cyber Physical Systems comprises of four

technologies which are significantly linked to Industry 4.0. These include The Internet of

Things, Robotics, Autonomous Vehicles and Generalized Labour Automation (Mishra et

al.,2016). There is emphasis by Karpisheck (2009) on the crucial aspects of IoT which is,

how technologies such as Near-Field communication (NFC) Radio Frequency ID (RFID) and

smartphones chips can establish effective Industry 4.0 foundational elements. For this reason,

the prerequisites for Industry 4.0 are the data and human interaction. For instance, where

through the ERP systems the RFID tags in the clothes retail setting would provide sales

employees with NFC capabilities. Near Field Communication (NFC) enables smart phones to

detect goods and subsequently generate the delivery pull request. In their study on industry

4.0, Kagermann et al. (2013) suggests this precondition and proposes that the beginning of a

technologically enabled process is the human interaction such us with smart phones,

warehousing systems and facilities of production (Kagermann et al., 2013).


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Operations Management development in line with the prevailing trend of industry 4.0

The Department for Business, Innovation and Skills from the UK government (2010),

underlined in their research on the expansion of Industry 4.0 and advanced manufacturing in

general. Industry 4.0 was one of the major areas that are identified to bring a positive impact

on Gross Value Added (GVA) for the country, this would finally lead to the growth of UK

economy. The government went ahead and advocated policies to embolden more venture in

Industry 4.0. Industry 4.0 could impact the government more positively in developing and

strengthening the macro economy, and ensure manufacturing remains as an important

component in their economical and industrial plans. In addition, organisations can benefit

from the sector’s high level of attention from succeeding government as a key growth sector.

With associated funding and investment opportunities, this will be so if they consider

implementing an Industry 4.0 strategy or project as outlined in the BIS (2010) Growth

Review Framework. Terreich and Totenberg (2016) emphasize the political risks or hurdles

associated with Industry 4.0 adoption. There is a distinct problem and innate reluctance to

adopt any upcoming technology. In his research on Building Information Management (BIM)

implementation globally, Smith (2014) makes the assumption that the current state of the

world economy makes it difficult for industry in general to advance to the Industry 4.0, this

may be due to high investment in a setting where standard inconsistency is prevalent,

increasing the risk of inappropriate or misdirected investment. Majrouhi Sardroud (2012)

offers a rebuttal to this claim by putting out the theory that for organizations to adopt such

industry 4.0 technologies it vital for them to be provided with the necessary incentives.

Governments have started to compel the application of Industry 4.0 which include BIM or

RFID in their intended projects as emphasized by Smith (2014) as a push or a sticky strategy,

this might in turn viewed as a threat to a politically motivated Industry 4.0 adoption.
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Furthermore, born productivity improvements from advanced manufacturing, Sirkin

et al. (2015) made a suggestion on the use of modern manufacturing or industry 4.0, which

can increase industrial flexibility where the economic benefits of adopting industry 4.0 are

thought to be desired. Regardless of the batch size of a manufacturing output, Sirkin et al.

(2015) assert that such Industry 4.0 procedures can and should, if properly applied, boost

standardization and improve quality. When these strategies are coupled with the greater

aspect of cost transparency that is possible when adopting an Industry 4.0, there is a

substantial possibility to boost competitive advantage (Smith, 2014). Big data utilization in

construction projects has potential benefits a suggested by Bilal et al. (2016). They explicitly

assert that projects adopting Industry 4.0 approaches for component design, prefabrication,

and assembly can successfully eliminate design conflicts by utilizing the volume of data

created by such projects (Bilal et al.,2016). Across the supply chain, the reduction in building

time equated to significant economic gains are demonstrated in a situation where time is

money.

The sector of capital equipment would move away from reactive maintenance when

the IoT technology is applied (Oesterreich and Teuteberg, 2016). In this line, using IoT

technology in industries like mining and construction might result in cost savings and

increased productivity by keeping a close eye on the component and equipment health

(Manyika et al., 2015). However, the risks that are economical and associated with

implementing Industry 4.0 are comparable to those associated with any major capital

investment or organizational change. Akanmu and Anumba (2015) identify two economic

variables that they believe would make applying CPS in the actual world challenging in their

study on hurdles to the adoption of CPS in the facilities management business. The initial

economic consideration is who should foot the bill for IoT or CPS hardware. The primary

reason for the lack of adoption and execution is highlighted in this subject. Akanmu and
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Anumba (2015) continue by stating that the sector's risk tolerance for making substantial

investments in such equipment, is not high because there is lack of a recognized facilities

management model to define the benefits of installing CPS technology.

In addition, Smith (2014) further emphasizes that the extensive organizational

transformation necessary to fully capitalize on the advantages of Industry 4.0, is a barrier to

investment in the vast majority of businesses. For this case, organizational change and

adaptation within the industry were nothing new (Smith, 2014). This has enabled business

companies to be typically compelled to modify and reposition their offerings, for them to find

the changing wants to customers and the wider industry. It is noted that, while there are

significant expenditures involved with software and technology, it is because of the larger

expenses attributed to the employee’s up skilling and training. The behind knowledge

required to fully exploit Industry 4.0's underlying technologies is technical hence expensive

to acquire. Benefits to the end user or consumer, as well as those that directly influence in the

sector adopting Industry 4.0, can be roughly classified as social benefits for Industry 4.0

adoption. To start with, consumers and other end user’s benefits is supposed to be considered

significantly. In their recent discussion of the vison and the Internet of Things' problems

Sundmaeker et al. (2010) concluded their research with a theory of IoT enabling consumers.

In addition, it is very crucial to understand that such alpha convenience can bring about

efficiency that is greater and advancement of society at large, this s a clear reflection of the

definition of Industry 4.0 from the previous definitions that pre-exists. The potential for

Industry 4.0 to benefit society is undeniable in an environment that is consumer-driven, and

the fact that IoT in consumer contexts appears to be growing popularity reinforces this

assertion. Onwards, it is clear that those who work in industries and healthy are likely to

benefit as a result of social benefits of workers. Especially, those working in mining,

construction and manufacturing sector. Mostly, injuries or fatality to workers can be


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prevented by aiding of the value of real time monitoring of Personal Protecting Equipment

(PPE), a concept concluded by (Barro-Torres et al., 2012) in their aim to study PPE

monitoring systems. In their study, they have limited to establishing the practicality of the

concept and cutting-edge of IoT- based systems. Nevertheless, the suggested approach would

start to solve the problems with PPE use and efficacy, and as a result, it can be assumed to

offer the employee or user a social advantage. A variety of monitoring techniques are applied

in order to expand the applications of the RFID and IoT technologies, these devices monitors

workers and recording of improvements on productivity, also exposure to hazardous

condition can be monitored and be minimized. Such applications can therefore be preferred

by industries to lower accident and mortality rates, as well as a broader gain in terms of

productivity. This clearly demonstrate how beneficial such measures are to society and

environment. However, there are limitations to this quantitative data because there are no

actual examples of such technology being used.

Impacts associated with Industry 4.0 towards Strategic Operation Management

Moving on to the societal risks and concerns related with Industry 4.0, they can be

divide into those that have an impact on the consumer and those that impact the employees

within an industry. However, up skilling personnel in this sector is a far more pressing

concern. In this regard, it is vital to note that, there is sufficient great demand on large

increase in training due to the degree of change within the various industry sectors, as

suggested by Ariyici and Coates (2012). According to their research, this transition affects

people's work routines and day-to-day activities, making them feel psychologically as though

their job security is jeopardized. Smith (2014) adds that the challenge for firms trying to

deploy Industry is shifting staff mind-sets to embrace and adapt to new technology Methods.

Some employee’s intrinsic intolerance to change, along with underlying concerns about job

security, is a key barrier to the successful adoption and execution of an Industry 4.0 plan.
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There is more openness to digital technologies and change by the younger generation of

workers transitioning into professional roles, in turn the exposure to such technologies allows

them to mitigate potential challenges and risks of Industry 4.0 practices implementations.

The heart of dangers and problems confronting customers and end users of Industry

4.0 practices, is a major perceived loss of confidentiality and privacy linked to the use of new

technologies. In a study to determine the convenience and privacy issues in IoT, Weinberg et

al. (2015) suggests about the risk of Industry 4.0 and IoT producing considerably increased

volumes of consumer-related data. When implementing an IoT strategy, Weinberg et al.

(2015) argue that much greater emphasis should be placed on data ownership and related data

flows. Additionally, in their study of an alpha convenience, Nolin and Olson (2016) suggest

that the universal nature of IoT and Industry 4.0 raises concerns about the acceptable limits of

privacy. They conclude that, should these technologies be adopted, their nature would make it

impossible for users to avoid them. According to Nolin and Olson (2016), technological

determinism, in which technology drives societal development, poses a rather dystopian risk.

Clearly, adoption of Industry 4.0 and IoT faces a potentially insurmountable challenge. and

deployment if public opinion and confidence of these concerns are poor.

Operation management and a shift towards Industry 4.0 and IoT

The most important catalyst for the developing technology is the use of IoT hardware

and sensors, this can be stated as the main benefits of implementing industry 4.0 and IoT.

Sensor integration into hardware is becoming increasingly important, according to

Oesterreich and Teuteberg (2016), such as cranes and loaders, and as a result, manufacturers

are under more technological pressure to build sensors that are resistant to harsh

environments. Given that it fosters technological innovation, research, and development in

relation to Industry 4.0 and the Internet of Things, this challenge may be regarded as good for
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technology and technical industries. Furthermore, Strange and Zuchella (2017) state that

there has been a paradigm shift in the capabilities of industrial robotics as a result of the

adoption of IoT and Industry 4.0. Traditional robotics systems, according to Strange and

Zuchella (2017), their use and powers have been limited. They move to add that advances in

industrial robots, IoT, and Industry 4.0 have expanded the versatility of current robotics,

allowing them to handle more sensitive and complex jobs and work more successfully in the

technology domain, as Strange and Zuchella refer to it. Concerning the risks associated with

technology, there is a substantial amount of risk associated with the technological

advancements caused by the adoption of Industry 4.0 and IoT. This has both an advantage

and a risk, similar to the requirements for more computing hardware described by Oesterreich

and Teuteberg. (2016). Even in areas where computing and technology have traditionally

played a minor role, there is an increasing demand for gear to be installed in environments

that are generally hostile and uncomfortable. This takes place in the construction and mining

industries, as well as those environments that take part in manufacturing activities.

Industry 4.0 practices and applications may face a deficit of standards; this is a bigger

problem that affects all business sectors implementing applications for Industry 4.0 and IoT.

Inadequate consistent standards and software compatibility, according to practitioner

opinions, limits the scope implementing Industry 4.0 techniques until clearly defined

standards are adopted (Smith, 2014). Kagermann et al. (2013) identified the problem of

Industry 4.0 reference architecture and standards as one that needed more investigation and

discussion. Industry 4.0 methods adoption contain security concerns which are crucial and

substantial risks being the same challenges faced by many modern technologies. In their

study on IoT security, Li et al. (2016) stress that the open eco-system nature of IoT, raises

increased security risks due to the very nature of IoT and Industry 4.0 solutions. According to

Li et al. (2016), in order to enable a reliable and secure IoT and networking, IT security must
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undergo a paradigm shift. The implementation of industry 4.0 would take this as a substantial

risk especially with industries that are still in their early stages of information and cyber

developments.

Adoption and implementation of Industry 4.0, like technological advantages, should

serve as a stimulus for the establishment of a more powerful legal system and monitoring

framework for Industry 4.0, IoT, as well as the larger technology and personal data sectors.

General Data Protection Regulations (GDPR), a piece of European Union legislation that

takes effect in 2018, represent a move toward a more "workable" manner of data protection.

In their article examining the regulatory landscape for Industry 4.0, Russo et al. (2015)

emphasize how the creation of an effective and necessary technological, social benefits, and

environment of IoT and Industry 4.0 will be enabled and enforced by an IoT legal

framework. According to Trequattrini et al. (2012), the strategy that was emphasized in this

analysis section on political gains is the best course of action. In a similar manner to

legislation governing copyright and intellectual property, governmental regulations and laws

should be created and enacted. To begin with, there are ethical and legal issues with regard to

the surveillance of people and the gathering of their personal data, which includes location

data. Second, the underlying data protection laws that govern how this data are used, stored,

and their inherent privacy implications (Kagermann et al. (2013), even though there is an

emphasis on the importance of further, high priority risk research. Moving forward another

potential risk portrayed by an Industry 4.0 is Intellectual property and private information are

legally and contractually owned by implementations (Smith, 2014). In this line, Smith (2014)

discovered a chasm between modern Industry's unusually open information-flow eco-system

and Technologies 4.0, as well as what has previously been thought to be relatively well-

defined intellectual property rights borders in the public domain. This is especially true when

the data generated by an Industry 4.0 installation is the result of numerous parties' efforts.
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Zuchella and Strange (2017) expand on this argument in the complex setting of the

availability of custom products or goods with consumer-generated intellectual property.

Furthermore, there is need for more discussion before a trustworthy governance

system can be implemented according to the conclusion made by Zuchella and Strange

(2017) from their current research. Moreover, according to an article about greenhouse gas

emissions in the construction industry, there are significant benefits offered by the

deployment of Industry 4.0 methodologies and implementations (Tang et al., 2013). Big Data

and Industry 4.0 approaches are used in the production business to help close the gap between

project plan and finished project emissions (Tang et al. 2013). In additions, Tang et al. (2013)

emphasize that the precise planning and effective scheduling of activities enabled by Industry

4.0 techniques allows for higher levels of work efficiency and, as a result, a reduction in

emitted greenhouse gases brought by construction techniques and work that are inefficient. In

their study, Beier et al. (2017) demonstrate that utilizing an Industry 4.0 approach to work has

a considerable positive influence on the environment, both conceptually and practically, in

their comparative analysis of the sustainability elements of the digitalized industry. The

study, which focuses on resource efficiency, finds that the raw materials and energy used in

production utilizing an Industry 4.0 strategy are clearly lower than they were before Industry

4. 0. Furthermore, Beier et al. (2017) describe how Industry 4.0 adoption and the use of

renewable energy coexist in Germany. In addition, Industry 4.0 environment generates huge

amounts of data which should therefore theoretically allow a renewable energy application

from the Smart Factory and an on-demand renewable energy facility on-site. However, there

is a scarcity of empirical evidence that this has been used in a real-world environment.

Moreover, running an Industry 4.0 applications practically requires a huge amount of

resource energy consumption that is responsible for the environmental risk connected with its

implementation. Industry 4.0 has led to increased demand for energy that is to power
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machines such as computing gears, this is comparable to how Oesterreich and Teuteberg

(2016) define escalating technological requirements. Furthermore, Beier et al. (2017)

examine the sustainability features of digitalized business, including energy utilization and

related resource consumption. In this line, raw materials, energy and environment are one of

the key parameters for Industry 4.0 hardware which strongly relies on them as concluded by

Beier et al. (2017). To stress on this, it is important to evaluate benefits from IoT

installations and adoption of Industry 4.0 methods implications of resources and in turn

assessing its ‘net’ benefit. From the above available research literature, it can be noted that

there are low risks associated with industry 4.0

Conclusion

In conclusion, Industry 4.0 is a contemporary issue in strategic operations

management that has far-reaching implications for the future of the industrial sector. It has

the potential to revolutionize the way businesses operate, allowing them to become more

efficient and reduce costs, while also allowing for more personalized customer experiences

that can increase customer loyalty (Beier et al.,2017). As the technology continues to evolve,

more organizations are likely to adopt these technologies and use them to their advantage. It

is important for organizations to be aware of the implications of this new technology and how

it can be leveraged to maximize their competitive advantages.

Future implications

As the body of research literature continues to grow, future studies should preferably

concentrate on showing examples of investigation areas that are specific and are more likely

to be of value to the research community and are likely to organically emerge. The focus on

dangers and difficulties of successfully integrating industry 4.0 and IoT would be really
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benefit the research community, as well as reducing the inherent bias in the literature

implementations in the actual world and comparing the advantages and risk of such.
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