Smart factories

In most German production companies, smart factories are already a significant part of the business strategy, as a report by consultancy firm PricewaterhouseCoopers (PwC) has shown. In practice, however, only every fifth company controls its production processes and facilities via interconnected IT systems.

"Almost half the respondents plan to establish a so-called smart factory," Michael Rasch, PwC's digital transformation leader, told DW. According to Rasch, another interesting result of the study is that it takes less than a year to set up a smart factory, although the majority of companies project a longer time period for the transition.

Connecting everything

Smart means connected - and although this may already have arrived to German manufacturing as a technology trend, it is far from being ubiquitous. One thing is certain: where the technology has been implemented, increasing automization is leading to significant improvements.

"What surprised us is that it isn't sales that were mentioned as the biggest success of smart factories - it's the increased flexibility and quality of production," Rasch explained.

Reliable and fast

Siegfired Russwurm, CEO of the industrial sector at Siemens, has made this same observation. Networking digital production models with real production significantly increased productivity at the Siemens' electrical plant in Amberg (southern Germany) over the past few years.

Thanks to the new technology, Russwurm added, "our error rate is now a phenomenal 12 errors per million products." He explained that this stems from integrating product development, digital production and actual factory production.

Another important factor of this new type of production is that the time between development of a new product and its availability to customers has been drastically reduced. "We have customers who use this method and have a time savings rate of up to 50 percent," said Russwurm.

Optimizing production

Weidmüller is a mid-sized, international-level company with around 4,500 employees and yearly sales worth more than 620 million euros ($847 million). Weidmüller specializes in industrial connectivity, and has used the new technology to produce links for communication systems since 2012.

There are always fluctuations within an industrial production process - for example, due to irregularities in the materials being used, or deterioration of machinery over time. The smart technology was developed to regulate such peaks and lows.

"We've developed a machine that can keep an optimum production process at all times," said Jan Michels, project manager in charge of the technology at Weidmüller. In developing this self-regulating machine, the main aim was to improve sustainability, he added: "We wanted to increase the efficiency of our processes - material efficiency, and of course energy efficiency."

A worthwhile investment

In the long term, using the new technology is also more cost-effective. It might take a while to reap the benefits - "but the investment will pay of soon," Michels said.

The investment has already been successful for many other projects in Germany, including for an information technology company called T-Systems, a subsidiary of Deutsche Telekom. It's also helped logistical management of the Hamburg port, where optimizing traffic in goods resulted in a cost reduction of around 10 percent in some areas.

Privacy and lack of standardization

But some problems remain in the use of smart factories - the first being data protection issues associated with use of the Internet. And one of the other main problems of Industry 4.0 is that connecting classical production with information technology requires standardization - in other words, the plugs have to fit the sockets.

T-Systems CEO Hagen Rickmann emphasized that this is an important challenge, which he thinks can be resolved by establishing industrial standards in a "cost-effective and efficient way." He added that industrial production is connected directly or indirectly with around 15 million jobs in Germany, and is thus fundamental to the nation's prosperity.

Germany leads the way

According to the PwC survey, Germany is lagging behind when it comes to Industry 4.0. But leading managers such as Siegfried Russwurm from Siemens thinks that Germany is leading the charge in two ways.

Germany is the global leader in providing production technology. And when it comes to using the tech, Germany boasts a series of "pilot factories" - as Russwurm calls them - which have "become something of a pilgrimage site" for interested parties from other parts of the world.

That Russwurm was invited to make a presentation about Industry 4.0 in Peking at the Chinese Academy of Engineering serves as further proof of this, he thinks. "German industry and German research institutions that are working on this are seen as international pioneers there," he said. "And rightly so, I'm sure of this."