What is Industry 4.0? Concept, definition, history, design principles, smart factories of Industry 4.0 and challenges

The fourth industrial revolution or Industry 4.0 is currently a hot topic. This article provides readers with an overview of the fourth industrial revolution, including its concepts, history, strategies, goals, trends, elements, and obstacles. Please, take some time and read the article slowly; hopefully you will have a clear understanding of the fourth revolution. To study more about it you take the help of various books and research papers.

What is the Fourth Industrial Revolution or Industry 4.0?

The fourth industrial revolution or Industry 4.0 is the ongoing automation of conventional production and industrial systems using modern smart technologies.

According to UNCTAD, Industry 4.0 refers to the “smart” and connected production systems that are designed to sense, predict, and interact with the physical world, so as to make decisions that support production in real-time. In manufacturing, it can increase productivity, energy efficiency, and sustainability. It increases productivity by reducing downtime and maintenance costs.

The term ‘fourth industrial revolution’ basically refers to large-scale machine-to-machine communication to create smart machines capable of diagnosing, analyzing problems, providing solutions, and automating every aspect, implementing advanced communication, and self-monitoring systems without human intervention. Machine to Machine or (M2M) and the concept of combining the Internet of Things (IoT) is identified in the process of Industry 4.0. Self-driving cars are just one example of the fourth revolution; another example of it is ‘if a machine goes down, another machine will fix it remotely without the help of a human being’. Industry 4.0 will take the world into the Imagination Age. The father of the concept of the fourth industrial revolution is a German economist named Klaus Schwab.

Klaus Schwab says— The fourth industrial revolution, however, is not only about smart and connected machines and systems. Its scope is much wider. Occurring simultaneously are waves of further breakthroughs in areas ranging from gene sequencing to nanotechnology, from renewables to quantum computing. It is the fusion of these technologies and their interaction across the physical, digital and biological domains that make the fourth industrial revolution fundamentally different from previous revolutions.

Industry 4.0 is known as ‘Industrie 4.0’ in Europe, especially in Germany.

Industry 4.0 will take the world into the Imagination Age.

Definitions of Industry 4.0 by Authors

  1. Klaus Schwab says, “Industry 4.0 is differentiated by a few characteristics of new technologies, for example: physical, digital, and biological worlds. The improvement in technologies is bringing significant effects on industries, economies, and governments development plans.”
  2. According to Kagermann, Wahlster & Johannes (2013), “Industry 4.0 is utilizing the power of communications technology and innovative inventions to boost the development of the manufacturing industry.”
  3. According to Neugebauer et al (2016), “Industry 4.0 is a complex technological system that is being shaped fundamentally by connectivity, integration and production digitization, emphasizing the opportunities of integrating all elements in a value-adding system.”
  4. According to Carvalho et al (2020), “The Industry 4.0 is an imminent advanced manufacturing model characterized by a comprehensive set of technologies that streamline industrial performance, making it more integrated, virtual, digital, with excellent response time to internal and external stimuli, and especially with exemplary environmental and sustainable behavior.”
  5. According to Carvalho and Cazarini (2020), “Industry 4.0 is a junction of three general aspects to consider: smart plant, smart production, and smart logistics.”
  6. According to Salkin et al, “Industry 4.0 is comprised of the integration of production facilities, supply chains, and service systems to enable the establishment of value-added networks. Thus, emerging technologies such as big data analytics, autonomous (adaptive) robots, cyber-physical infrastructure, simulation, horizontal and vertical integration, Industrial Internet, cloud systems, additive manufacturing and augmented reality are necessary for a successful adaptation. The most important point is the widespread usage of the Industrial Internet and alternative connections that ensure the networking of dispersed devices.”
  7. According to Soldatos, “Industry 4.0 is largely about the introduction of Cyber-physical Systems in the shopfloor, in order to digitally interconnect the machines and the Operational Technology with Information Technology systems such as Enterprise Resource Planning, Computerized Maintenance Management, Manufacturing Execution Systems, and Customer Relationship Management, Supply Chain Management systems.”
  8. Pereira and Romero, “Industry 4.0 is a new manufacturing paradigm that is highly focused on the creation of smart products and processes, through the use of smart machines and the transformation of conventional manufacturing systems into smart factories.”
The English term ‘Industry 4.0’ for the ‘Fourth Industrial Revolution was first introduced by a group of scientists employed by the German government.

What is the concept and history of Industry 4.0?

The English term ‘Industry 4.0’ for the ‘Fourth Industrial Revolution was first introduced by a group of scientists employed by the German government. Klaus Schwab, founder and executive chairman of the World Economic Forum coined the term ‘Industry 4.0’ at the Hannover Fair (Hannover Messe) in 2011 in Germany and introduced it on a large scale through an article published in Foreign Affairs in 2015. The theme of the annual meeting of the World Economic Forum held in Davos-Klosters, Switzerland in 2016 was “Mastering the Fourth Industrial Revolution”. Klaus Schwab is the father of Industry 4.0 or the fourth industrial revolution.

On October 10, 2016, the World Economic Forum announced the opening of its Fourth Industrial Revolution Center in San Francisco. The “Fourth Industrial Revolution” was also the subject and title of a 2016 book by Klaus Schwab. In the book, Klaus Schwab refers to the fourth industrial revolution as the technology that brings together hardware, software, and biology as well as cyber-physical systems and advances in interconnection.

Klaus Schwab
Klaus Schwab

About the characteristics of the fourth industrial revolution, it is said that the era of the fourth industrial revolution is Robotics, Artificial intelligence, Nanotechnology, Quantum computing, Biotechnology, Internet of Things  (IoT), Decentralized Consensus, Fifth Generation Wireless Technology, 3D Printing, and Automatic Transportation. Industry 4.0 will be marked as a revolutionary era of technology.

Fourth Industrial Revolution and German Strategy

‘Industry 4.0’; abbreviated ‘I4.0’ or just ‘I4’ term was created in 2011 from a project of a high technology strategy of the German government, where the development of computerization in the manufacturing industry is done.

The term ‘Industry 4.0’ was first publicized at the Hannover Messe in Germany in 2011.

It should be noted that Hannover Messe is one of the most important trade fairs in the world.

In October 2012, Germany’s high-tech innovation task force presented recommendations for the implementation of Industry 4.0 to the country’s central government. The team members and partners are recognized as the founders and driving forces behind Industry 4.0. The working group presented its final report at the Hannover Messe on April 8, 2013. The team was led by Siegfried Dias of Robert Bosch GmbH and Henning Kagermann of the German Academy of Science and Engineering.

Companies sometimes reinvent themselves by applying the principles of ‘Industry 4.0’. For example, aerospace parts manufacturer Meggitt plc has developed its own Industry 4.0 research project M4.

Industry 4.0 is being discussed in Germany about “Industry 4.0”, especially how digitization will affect the labor market.

One of the notable features presented by the German government’s Industry 4.0 strategy is the flexibility of strong customization of products in large-scale productions. The automation technologies required for self-optimization, self-configuration, self-diagnosis, the introduction of cognition, and intelligent support of workers in increasingly complex tasks continue to evolve. As of July 2013, the largest Industrie 4.0 project is the leading cluster project of the German Federal Ministry of Education and Research (BMBF) “Intelligent Technical Systems Ostwestfalen-Lippe (ItsOWL). Another major project is BMBF’s RES-COM, and so ‘Cluster of Excellence Integrative Production Technology for High-Ways Countries’

In 2015, the European Commission for the sponsorship of Industry 4.0 launched a research project called CREMA (Cloud-based Rapid Elastic Manufacturing based on XaaS and Cloud Models) Horizons 2020.

The pace of change is what defines Industry 4.0. There is an interrelationship between the pace of technological development and the resulting socio-economic and infrastructural changes in human life that dictate our technological development and mark a new era.

The pace of change is what defines Industry 4.0. There is an interrelationship between the pace of technological development and the resulting socio-economic and infrastructural changes in human life that dictate our technological development and mark a new era.

Design Principles and Objectives of the Fourth Industrial Revolution

There are some core principles for designing the structure of an element that can be considered an integral part of Industry 4.0 or the fourth industrial revolution. Experts have prioritized their choice, experiences, thoughts and views, and familiar theories for choosing the principles. Some experts claim there are four design principles for Industry 4.0, and some experts claim and emphasize six designing principles that are critically identified as integral parts of Industry 4.0. After studying some articles, reports, and reviews I understand there are at least eight design principles for Industry 4.0. The design principles are identified as the objective as well.

The eight design principles for Industry 4.0 are—

  1. Interconnectivity
  2. Information transparency
  3. Technical assistance
  4. Decentralized decisions
  5. Real-time capability
  6. Service orientation
  7. Virtualization
  8. Modularity


In the context of Industry 4.0, interconnection refers to the ability of technology and people to communicate seamlessly in a smart ecosystem. This is closely related to the concept of the Internet of Things (IoT). Mainly, the ‘interconnection’ or ‘interconnectivity’ in Industry 4.0 refers to the smart connection or communication between machines, devices, sensors, and people through the Internet of Things or Internet of People (IoP).

Information transparency

Industry 4.0 provides information transparency that provides operators with comprehensive information for decision-making. Because of the interconnection, the operator can gather a wealth of information from all points of the production process and identify the critical areas that will be more effective when increasing the system’s performance. This, as the name implies, refers to the use of data and statistics in the manufacturing process to enable innovation and improvement, as well as targeted problem-solving.

Technical assistance

The technical facilities of systems assist people in decision-making and problem-solving and the ability to assist in difficult or unsafe tasks. In Industry 4.0, technical assistance means that humans no longer have to calculate and solve problems manually, but rather with the help of computing software and simulators that can make things easier to visualize. Technical assistance also includes machines that perform physical tasks that are either unpleasant or exhausting for workers.

Decentralized decisions

The ability of cyber-physical systems to make their own decisions and perform their tasks as independently as possible. Only in the event of an exception, intervention or conflicting goal is a higher level of responsibility delegated. Because everything is automated or controlled remotely, cyber-physical systems can make decisions and perform tasks autonomously. The only exception to this rule is if there is a technical error or if there are competing goals.

Real-time capabilities

The availability of real-time information about manufacturing resources has enormous potential to improve efficiency in many manufacturing companies. To fully realize the potential of real-time locating systems, appropriate technologies must be selected for the application at hand, and their integration with other manufacturing systems must be planned. The collection and analysis of production data have the potential to significantly improve many aspects of a manufacturing process. Data can be collected directly from machines or from independent sensor networks.

Service orientation

Service orientation is a process that allows companies, cyber-physical systems, and humans to make their services available so that other cyber-physical systems, humans, or companies can use them. This not only makes these services more accessible but also allows for the development of new types of services.


Virtualization encompasses several technology trends in Industry 4.0, including cloud computing, mobile, and the Internet of Things (IoT). Cloud computing’s ubiquity and scalability free manufacturing from the constraints of its infrastructure and allow it to operate from any location. Because of virtualization, cyber-physical systems or CPS can monitor physical processes.


Modularity refers to a company’s ability to adapt to changing requirements and industry needs. Modular systems can adapt to changing requirements by replacing or expanding individual modules. As a result, modular systems can be easily adjusted in the event of seasonal fluctuations or changes in product characteristics.

What are the elements or components of the fourth industrial revolution?

Looking deeper into our society and current trends, the fourth industrial revolution can be divided into many components. To illustrate how pervasive these elements are, some notable digital technologies are named as examples—

  • Mobile devices
  • Internet of Things (Internet of Things – Iot) platforms
  • Detection Technology (Electronic Detection)
  • Improved human-machine interface
  • Authentication and Fraud Detection
  • Smart sensor
  • Big data analytics and improved processes
  • Multilevel customer interaction and customer profiling
  • Augmented Reality or Wearable Technology (Augmented Reality or Wearable Technology)
  • Availability of computer system resources on demand
  • Cyber-Physical Systems
  • Availability of computer system resources on demand
  • Cognitive Computing

Mainly Industry 4.0 or the fourth industrial revolution creates utility by connecting new technologies on a large scale. It is possible to create virtual copies of the real world using cyber-physical systems. Prominent among the features of this system is the ability to take decentralized decisions independently. Industry 4.0 may rely heavily on electronic identification. In that case, set technology should be established to make the production process smart. Then there will be no need for digitization.

Mainly Industry 4.0 or the fourth industrial revolution creates utility by connecting new technologies on a large scale.

The major drivers of the fourth industrial revolution

There are four major factors that can smartly drive the system of Industry 4.0. The major drivers of Industry 4.0 are—

  1. Artificial Intelligence
  2. Industrial Internet of Things
  3. Big Data Analytics
  4. Cloud Computing

Artificial Intelligence

The digital transformation to Industry 4.0 begins with data collection, followed by the addition of artificial intelligence to make sense of that data. Artificial intelligence refers to intelligence demonstrated by machines as opposed to natural intelligence demonstrated by animals, including humans. AI research has been defined as the study of intelligent agents, which refers to any system that perceives its surroundings and takes actions that maximize its chances of success. Artificial intelligence is shortly known as AI

Industrial Internet of Things

The Industrial Internet of Things is about using smart technology that millions of us already use at home and work. The Industrial Internet of Things (IIoT) refers to interconnected sensors, instruments, and other devices that are networked with computers’ industrial applications, such as manufacturing and energy management. This connectivity enables data collection, exchange, and analysis, potentially facilitating improvements in productivity and efficiency as well as other economic benefits. The IIoT is an evolution of a distributed control system that allows for greater automation by using cloud computing to refine and optimize process controls.

Big Data Analytics

Industry 4.0 is the fusion of the physical and virtual worlds. This digital revolution is defined by technology that uses Big Data and Artificial Intelligence to foster automatic systems. Big data analytics are becoming important in identifying areas for efficiency in the new era. In order to achieve production excellence, manufacturers in Industry 4.0 seek to achieve business intelligence through the compilation, analysis, and sharing of data across all key functional domains. The interconnection of systems and computers, as well as the ability to analyze large amounts of data, have enabled the creation of intelligent machines capable of making informed decisions without the involvement of humans. For many years, the Internet of Things (IoT) has been connecting elements, but the value extracted from data through Big Data has elevated the term to a new level.

Cloud Computing

Cloud computing serves as the foundation of Industry 4.0 technologies. Cloud computing is the use of hardware and software to deliver a service over a network which is usually the internet; it is the on-demand availability of computer system resources, particularly data storage and computing power, without the user’s direct active management. Large clouds frequently have functions distributed across multiple locations, each of which is a data center. Cloud computing refers to the on-demand delivery of IT resources via the Internet at a pay-as-you-go model. Instead of purchasing, owning, and maintaining physical data centers and servers, users can access technology services such as computing power, storage, and databases on an as-needed basis from a cloud provider.

Industry 4.0 and “Smart Factory”

The Fourth Industrial Revolution or Industry 4.0 largely underpins the concept of the “Smart Factory”. Some points have been out here in this regard.

Cyber-physical systems’ Monitoring

Cyber-physical systems monitor all physical processes in smart factories with modular structures to create virtual copies of the real world and deliver expected results without central intervention. In smart factories, systems communicate and support each other and with people through the Internet of Things. They are able to interact with all parts of the value chain throughout the organization.

Predictive maintenance

Machines used in Industry 4.0 or Fourth Industrial Revolution can provide predictive maintenance using IoT sensors and technology. This special process capable of predicting can directly identify problems, thereby identifying problems long before machines break down or break down, and can be solved cost-effectively if the Fourth Industrial Revolution is 100% realized.

For example, a company in New York realizes that one of their machines in Oslo is operating at abnormal speeds or temperatures; in this circumstance, they can decide whether the part needs to be repaired or not; and they can fix it remotely.

3D Printing and the Fourth Industrial Revolution

It is said that Industry 4.0 or the fourth generation industry will rely heavily on 3D printing. The use of 3D printing is already being felt, even Bangladesh has an effective 3D printing factory established long ago.

The advantage of 3D printing is that many types of structures can be printed with this method and product design is also easy.

3D printing is relatively environmentally friendly. This method can reduce lead time and total production costs for low-volume production. Furthermore, 3D printing can increase flexibility, reduce warehousing costs, and help companies adopt mass customization strategies.

Additionally, it can be particularly helpful for spare part printing and fitting. This will reduce supplier dependency and lead time.

Ethics and regulation are considered important issues in the field of 3D printing. It can also affect the uncontrollable production of human body parts or the compliance of human hygiene in addition to agriculture.

The use of smart sensors in the fourth industrial revolution

A sensor is a device that generates an output signal in order to detect a physical phenomenon. A sensor, in the broadest sense, is a device, module, machine, or subsystem that detects events or changes in its environment and transmits the information to other electronics, most commonly a computer processor. Sensors are always used in conjunction with other electronics.

Smart sensors are devices that generate data and monitor complex process conditions with self-monitoring, and self-configuration. Smart sensors are able to communicate wirelessly, making their installation process much easier as well as understanding their arrays. Experts say that Industry 4.0 cannot make any progress without sensor systems.

An example of the use of smart sensors in electronic devices is the ‘smartwatch’. The sensors in the smartwatch receive the user’s movement data, process them, and finally provide information on how many steps the user has walked in a day and even how many calories the user has burned.

What are the disadvantages of smart sensors?

There are several disadvantages of using smart sensors such as—

  • Synchronization error
  • Data loss
  • Dealing with large-scale harvested data limits the implementation of a complete system
  • Battery power is also another limitation 

Smart Agriculture and Food Industry in Industry 4.0

Smart sensors are still very much in the experimental stage in food and industry. These innovative, connected sensors communicate by collecting and analyzing ground-based data (foliage, vegetation index, chlorophyll, hygrometry, temperature, water availability, radiation). Its objective is to optimize land management in terms of results, time and money by providing timely monitoring and advice through smartphones based on scientific data.

Using smart sensors on the farm can understand crop conditions and provide timely inputs and medical advice. It is even possible to determine the amount of irrigation.

Smart sensors are still very much in the experimental stage in food and industry.

Obstacles or challenges to the implementation of Industry 4.0

Industry 4.0 is undoubtedly a great presentation in human life and the earth but there are some important barriers or challenges to implementing the newest technologies that comprise the concept of Industry 4.0. The challenges are mentioned below—

  1. High cost or excessive investment
  2. Lack of skills or talent to manage complex Industry 4.0 structures
  3. Adapting a new business model
  4. Concerns about cyber security
  5. Cultural issues at workplaces
  6. Lack of appropriate digital infrastructure
  7. Lack of understanding of digitalization and how it can help the business
  8. Intangible economic benefits/additional investment
  9. Social security concerns
  10. Others

High cost or excessive investment and intangible economic benefits

Adoption of Industry 4.0 can be expensive at first, depending on what you want to change. A large investment, however, is not always required to transform the business. But the solution to this is “You can think big, but you should start small.” Begin with a simple scalable solution, such as a smart lighting section, and see how it goes. A significant step forward does not require a large investment. Another big challenge is that the outcomes of business in Industry 4.0 are primarily intangible to investors as they do not exactly know how much a specific effort and investment pay them in return.

Lack of skills or talent to manage complex Industry 4.0 structures

The most common barrier to digital transformation is a lack of skills. Technology adopters report difficulty finding, training, and re-skilling staff, particularly in the areas of the user interface, data science, software development, and machine-level controls. Problems can also arise when people are unwilling— or find it too difficult to use new digital tools and applications. If this is an issue in your company, it may be beneficial to conduct a training needs analysis to determine what training your employees may require.

Adapting a new business model

One of the most common challenges in implementing Industry 4.0 is inadequate knowledge and skill to adapt to new business models. New business models are emerging as a result of the advancement of digital technologies. It is necessary to rethink how companies should conduct business.

Concerns about cyber security

In an Industry 4.0 environment, IT security can pose significant risks. Online integration of processes, systems, and people can lead to security breaches and data leaks. Keep in mind that IT security is not limited to cyber-attacks. Other prominent threats include network misconfigurations, erroneous commands, and software or device failures, which can potentially disrupt business operations and production. Your IT infrastructure must also be capable of handling the increased connectivity required for your digital transformation.

Cultural issues at workplaces

Another important challenge is to handle the cultural changes at workplaces in the Industry 4.0 environment. Managing culture change is a critical component of Industry 4.0 success, but it can also be a hindrance if not done correctly. If the human resources are not prepared for change, they may be unwilling, resistant, or unable to adapt. Proper and effective leadership can handle the culture at work.

Lack of appropriate digital infrastructure

In order to implement the vision of Industry 4.0, communication between existing systems must be digital. The digital system allows data to be exchanged in real-time. Industry 4.0 relies on having modern, mission-critical networks with the low latency required to perform split-second actions. In these environments, a network outage of a few minutes, or even seconds in some cases, could have serious consequences for business and society as a whole. It may even result in death. Although digital infrastructures are being increased day by day, it is still a challenge for implementing Industry 4.0.

Lack of understanding of digitalization and how it can help the business

Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business. Digitalization in business helps to improve the efficiency of its operations, making automation possible. There are fewer human errors and operational costs are reduced, due to the decreased need for human resources. Undoubtedly, digitalization in business is a blessing but the lack of understanding of the digital infrastructure and digitalization in business, and integration across processes slow down the implementation of the automated processes. Sometimes the lack of understanding of the system and the process can push in death as well.

Social security concerns

Industry 4.0 is not only a matter of a system of Machine to Machine connection but also a matter of safety. The more technologies related to Industry 4.0 are invented and developed the more the safety concern is increased. Industry 4.0 is a new model that breaks traditional work patterns between people or man-machine interaction, and now the pattern stands out mostly because of its machine–machine relationship. Social security deals with covering the risks of illness, maternity, unemployment, age, disability, occupational accidents, family burden, and death of the family’s provider, within the framework of insurance, prevision or prevention, as well as the various processes. Security is provided by the companies to their employees or by the government to the citizens. But for the fourth industrial revolution, many of the employees will be jobless as the system of technical issues is going to be transformed into a fully automated system. So, if the Implementation of Industry 4.0 can be belated or slow till getting assurance of social security.


  • Lack of management, standards, and certification forms
  • Ambiguous legal systems and data protection
  • IT security issues, which will greatly increase due to the inherent need to reopen previously closed stores
  • Reliability and stability are required to maintain complex machine-to-machine (M2M) communication deployments and low and stable latency
  • The need to maintain integrity in production processes
  • Lack of overall skills required for rapid transformation in the fourth industrial revolution
  • Lack of commitment from top management
  • Inadequate qualification of staff


Industry 4.0 is a new phase of the Industrial Revolution that emphasizes interconnectivity, automation, machine learning, and real-time data; it includes IIoT and smart manufacturing and combines physical production and operations with smart digital technology, machine learning, and big data to create a more holistic and better-connected ecosystem for manufacturing and supply chain management companies. Industry 4.0 supports digitization in every sector.

Industry 4.0 is a new phase of the Industrial Revolution


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