How Can We Measure the Impact of 5G and Edge Computing in Industry 4.0?

5G and edge enable a diverse set of Industry 4.0 tools and use cases, including predictive maintenance, asset tracking, inventory management, collaborative robots, and efficient supply-chaining. The last of these, however, does not feature significantly in the current Industry 4.0 discourse. To appreciate how important supply-chaining is as a source of competitive advantage and profit in an increasingly digital commercial world, the readers of this ABI Insight should consider this fact: Wal-Mart is the biggest retailer in the world (with Amazon being second) and it does not produce a single product. All it “produces” is a hyper-efficient supply chain, an essential component and indispensable driver for smart manufacturing, and by extension, Industry 4.0.

The introduction of 5G and edge compute will enable manufacturers and warehouse establishments to reap the benefits of multi-gigabit speeds, ultra-low latency, and unlimited capacity. 5G and edge computing are positioned as key components of Industry 4.0 and aim to make manufacturing processes digitally enabled and data driven. One result of this is better asset monitoring for better Overall Equipment Effectiveness (OEE) and, therefore, better deployment of capital. It means knowing the location of tools when and where they are needed, minimizing unnecessary inventory, maximizing production efficiency, reducing human errors, and keeping workers safe.

5G is still in trial for Industry 4.0, but enhancing features will be introduced by the 3rd Generation Partnership Project (3GPP), particularly for Release 16 and 17. 5G private cellular connectivity is expected to be deeply integrated in several Industry 4.0-enabled developments, including smart manufacturing, plant operations, smart factory, and the Industrial Internet of Things (IIoT). A connectivity strategy complemented by local/edge compute is a key piece of Industry 4.0 in general, and a hyper-efficient supply chain in particular. The global supply chains of the future will consist of hundreds of lines of production and complex manufacturing operations an infrastructure.

It thus follows that establishing plant processes that deliver goods across the world—involving multiple suppliers, distributers, port operators, customer brokers, and carriers in a finely tuned chain operating in concert—is difficult to engineer and even more difficult to replicate. This, along with the three following overarching drivers, calls for Industry 4.0 ecosystem players to revisit their business processes like sales, marketing, and customer service, but equally important will be structural changes that enable those new processes. The three drivers are as follows:

• Global Optimization: Increasingly, manufacturers are seeking to balance out multiple factors in order to get the most reliable, low-cost production processes in place. The goal is to achieve a low total cost of delivering a plethora of units from across the globe to factories or retail sites, and certainly lower than that of competitors. 5G wireless cellular connections are expected to be the connectivity anchor of extensive resource and asset optimization on a global basis.
• Coordination of Disruption-Prone Supply with Hard-to-Predict Demand: Buying just the right amount of a particular part has always been a tough call to make in supply chaining. Manufacturers are expected to become adept at this to compete profitably in commercial settings characterized by accelerated technological progress and new innovations expected from the fourth industrial revolution. A hyperconverged edge compute and a relatively much larger bandwidth coming from 5G enable smart manufacturers to achieve real-time and high-precision location of “products” in planet-spanning supply chains.
• Integration of telecoms, OT and IT: In many respects, integration of 5G and edge in manufacturing is not so much about technology as it is about enabling manufacturers to obtain utility from technology integration in terms of cost rationalization and more efficient equipment. ABI Research anticipates that efficiencies in asset utilization, productivity gains and better workforce allocation will dominate the Industry 4.0 discourse as telecoms, Information Technology (IT) and Operational Technology (OT) become inextricably intertwined into a coherent whole.

The challenge with digital transformations is the paradox of embracing new transformative technologies while simultaneously allowing brownfield implementations to dictate how to do so. As a result, brownfield processes can potentially adversely limit the future architecture of new deployments to lowest common denominator(s). For example, past attempts by General Electric (GE), Ford, and Procter & Gamble to create digital processes and solutions were largely futile, leading not in digital transformation but incremental improvements. Manufacturers must embrace the utility of 5G and edge by fully committing to digital transformation; otherwise, legacy considerations will always impede progress. They must identify institutional processes and truly modernize brownfield apps as much as it is technologically possible as a first step in that direction. As indicated by GE’s and Ford’s attempted digital transformations, manufacturers must also institute a definitive vision of what it is they are trying to achieve, transform piece by piece where size is significant, and eventually integrate parochial digital transformation projects with the rest of the company.

Furthermore, smart manufacturers must understand the importance of measuring risk when looking to adopt 5G and edge technology assets. Decisions on new technology purchase have always been based on an assessment of risk and reward. If the reward is truly compelling, adopters will take the risk. 5G and edge offer unprecedented commercial opportunities, but they inherently constitute new technologies and there is therefore a risk attached. Manufacturers should change some of their workflows from the “old” to the “new” and the primary responsibility for making that happen lies with them. This is particularly important in a multi-vendor deployment that can potentially include as many as four vendors. A measured approach that does not take excessive risks of implementing new untested processes on a full site all at once is imperative, and it is equally important to educate the workforce on the risks involved and collaborating closely with customers on a risk management framework and a back-up plan.

Lastly, a question of significance is how do we measure the impact of 5G and edge deployments in Industry 4.0? Or rather, do conventional financial measurements (e.g., return on investment, net profit, and cash flow) that feature heavily in current Industry 4.0 discourse lend themselves well to the factory floor? The answer is a resounding no. Smart manufacturers seek out an alternative set of measurements that consider how 5G and edge aid manufacturing establish operational rules to run a plant. In other words, manufacturers should try to institute a direct connection between the utility of 5G and edge and what takes place on the factory floor. Measurements such as throughput, inventory, and operational expense are better suited for daily plant operations. What those measurements entail and how they fit into the broader Industry 4.0 opportunity is a topic that is covered in more detail in ABI Research’s 5G and Edge in Manufacturing (AN-4904) Application Analysis Report.