Author:Chou, Shuo-Yan

Recent technological developments in manufacturing have spurred a global transformation that is now being called the Fourth Industrial Revolution. The fourth stage in any industry has become synonymous with state-of-the-art status, digitization, and smart automation. Although there is a lack of consensus about the best way to harness these developments, a number of countries and most industries have produced visions and roadmaps to strengthen their competitive positions in the race. (1) One clear example of this is the Industry 4.0 program initiated by the German Government. (2) A common characteristic among these initiatives is becoming "smart," which is a digital rather than a physical transformation, and relies significantly on software rather than on hardware.

The fundamental enabler of this disruption is the new level of connectivity facilitated by the Internet of Things (IoT). It is a natural extension of prior levels of connectivity achieved by the Internet and World Wide Web (WWW) to include physical objects and systems. (3) IoT comprises a collection of digital technologies, including sensors, communication modules, and various software applications, that all together can digitally integrate analog physical systems with the digital world, providing constant and readily available information about those systems. Based on this information, collaborative decisions and coordinated actions can be implemented in a timely and accurate manner and make the physical system smart. The seamless integration of physical systems with the digital world can result in a substantial compression of time and space for managing not only manufacturing but also the operation of society more generally.

As products will become connected and commoditized through IoT, the Fourth Industrial Revolution will transform the value proposition of businesses from products to the intended outcome of the products. (4) New business models, such as that of Uber, have demonstrated that mobility can be effectively shared and accessed. Establishing the ownership of physical products is no longer necessary to ensure the effective outcome of the products. These integrated systems can serve humans dynamically instead of limiting humans to sequenced yet uncertain schedules. With such flexibility and agility, the economy can better satisfy different requirements of individual customers and produce in a more environmentally sustainable way.

The first three industrial revolutions considerably improved production efficiency, which benefited all of society. However, the primary focus of those improvements was to help producers. While producers continuously try to contain the complexity and cost of production, customers and markets today are demanding greater product variation at minimal additional cost. The Fourth Industrial Revolution thus entails complex and potentially conflicting interests of key stakeholders. Moreover, concerns beyond economic efficiency--for example, sustainability and socioeconomic development--must be addressed in a careful and balanced manner to ensure that new digitally transformed approaches can address more than purely economic concerns.

This article aims to provide a thread connecting various fields that are affected by IoT with some of the implications of the Fourth Industrial Revolution. First, the transformation in the manufacturing industry due to IoT will be discussed, as it marks the beginning of the movement, and the value proposition of the increased digital proficiency of the manufacturing industry will be identified. Next, viable opportunities and potential interruptions of these new digital technologies, particularly IoT, in other sectors will be discussed. Then, some of the economic, labor, social, and security changes that will occur as a result of the Fourth Industrial Revolution will be addressed. This article will conclude with a discussion on the outlook of the Fourth Industrial Revolution in terms of the relationship between IoT and other technologies as well as the challenges facing countries as this revolution occurs.

Revolution in the Manufacturing Industry

Mass production is the current predominant form of manufacturing, which is effective in terms of cost and time and has contributed significantly to the progressive improvement of living standards over the last century. In recent years, the interests of customers have moved beyond functionality and aesthetics. The development of the Internet and WWW in the 1990s provided an effective solution for companies to break out of isolation and connect with partners and customers in the supply chain. This connectivity, along with various manufacturing and information technologies, enabled the cost-effective production of products with greater but still-limited variety to better satisfy the diversifying market demand. The overall model, namely mass customization--comprising not only of a production system synchronized with information flow but also of various innovations in design, assembly, and distribution--was developed to underpin this new production strategy. (5) However, the adoption of this strategy remained limited, because most of the physical manufacturing systems were not capable of keeping up with the rhythm needed by the information-technology (IT) systems.

While product lifecycles shrink, the demand for product variability continues to expand. The complexity subsequently introduced into all aspects of production management--including schedule control, inventory management, and production support--makes production management exceedingly challenging. Data collected intermittently during production processes or at later stages are insufficient and can lead to serious production delays and cost overruns. Simply adding the traditional notion of automation to current production systems will not be sufficient. To avoid discrepancy-induced production problems, it becomes essential to synchronize the as-planned and the as-is situations of the production system through constant calibration. Not only do the issues of vertical integration and horizontal resource-sharing in the supply chain and within the enterprise need to be addressed, individual physical production systems in factories must be considerably empowered. (6) Physical operations need to go beyond taking actions based on simple rules and steps, to perceive and respond to different requirements of various products or production situations. The notion of cyber-physical systems (CPS), based on IoT, was created to embody physical production systems that function integrally with IT systems. (7) CPSs facilitate proactive sensing, communication, and control, thereby allowing timely data acquisition and informative action. This data-and-software-driven capability instills the production system with flexibility and agility, and makes the system smart enough to cope with complex production needs.

Traditional coordination of production systems was primarily hierarchical, comprising separated layers and top-down or within-layer communication to dispatch instructions and report events. However, in high variability batch production, all parts of the production process--including systems, machines, products, inventory, transporters, and robots--must coordinate proactively by communicating among themselves and across layers to collectively respond to the constantly changing conditions and ensure smooth and effective production. (8) In particular, when they are unexpectedly interrupted or when situations deviate from the plans, they need to respond by working collaboratively to remedy these changes and discrepancies. To support this kind of autonomous coordination, all the participating entities must become aware of what they are capable of doing and what they need to do under different circumstances.

To increase the flexibility and agility of production systems to cope with changes in the production environment, a service-oriented architecture based on IoT can be adopted. (9) Software is no longer adopted only to assist the hardware operations but rather to drive the entire production process, with hardware playing a supporting role for different parts of...

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