Production Planning & Control

The Management of Operations

ISSN: 0953-7287 (Print) 1366-5871 (Online) Journal homepage: www.tandfonline.com/journals/tppc20

A critical investigation of Industry 4.0 in

manufacturing: theoretical operationalisation
framework

Hajar Fatorachian & Hadi Kazemi

To cite this article: Hajar Fatorachian & Hadi Kazemi (2018) A critical investigation of Industry
4.0 in manufacturing: theoretical operationalisation framework, Production Planning & Control,
29:8, 633-644, DOI: 10.1080/09537287.2018.1424960

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PRODUCTION PLANNING & CONTROL, 2018
VOL. 29, NO. 8, 633–644
https://doi.org/10.1080/09537287.2018.1424960

A critical investigation of Industry 4.0 in manufacturing: theoretical

operationalisation framework
Hajar Fatorachiana and Hadi Kazemib
a
Leeds Business School, Leeds Beckett University, Leeds, UK; bThe School of Built Environment and Engineering, Leeds Beckett University, Leeds, UK

ABSTRACT ARTICLE HISTORY

Increasing global competition on product quality and production costs, and the need for flexibility in Received 12 January 2017
production petition for transformed production processes which enable high level of connectivity and Accepted 2 November 2017
integration between business processes and systems. Much of the conventional computer- integrated efforts KEYWORDS
and advanced manufacturing technologies are limited in scope and restricted to only some organisational Industry 4.0; Internet of
areas. Such limited scope, which stems from limited connectivity and integration between manufacturing Things; cyber-physical
and enterprise systems, confines the achievement of full potential of these systems within manufacturing. systems; manufacturing
Industry 4.0, characterised by computing developments, can create a platform for addressing integration
challenge through enabling comprehensive connectivity. Hence, this paper, through following deductive
research paradigm and using systems theory as the theoretical base, aims to investigate recent academic
research and industrial reports in the area of Industry 4.0 and smart manufacturing to provide detailed
insights on execution of Industry 4.0, and to propose a theoretical framework for operationalisation of
Industry 4.0 in manufacturing.

1. Introduction manufacturing process, and enterprise/manufacturing systems

(Veeramani et al. 1995). At the enterprise level, this is, mainly,
In today’s manufacturing environment, factors such as agility,
due to integration of information systems being limited to a rel-
efficiency and responsiveness to changing customer demands,
atively homogenous area, e.g. manufacturing systems with sim-
as well as focus on product quality and regulatory compliance
ilar interfaces in a manufacturing site (Panetto and Molina 2008).
determine the survival of manufacturing companies (Brousell,
This means that information systems with different interfaces or
Moad, and Tate 2014). To address the aforementioned chal-
communication mechanisms will not be able to connect and
lenges and to meet changing customer demands in highly com- communicate with each other.
petitive environments, manufacturing strategies and processes The current trend of integration and lack of interoperability
need to, not only, be flexible (Anand and Ward 2004) and be between the information systems (Gruhier, Demoly, and Gomes
able to significantly reduce their operational costs, but also, they 2017) makes it difficult for technological innovations and manu-
need to be smart enough to act intelligently and autonomously facturing/enterprise systems to interconnect and communicate
(Bechtold et al. 2014; Genovese et al. 2014; Leitão, Colombo, (Chen, Doumeingts, and Vernadat 2008; Panetto and Molina
and Karnouskos 2016). This requires high level of digitisation 2008). This integration challenge stems, largely, from the lack
and automation, and extensive connectivity in manufacturing of sound communication mechanisms (Vernadat 2002), which
environments and throughout organisations, which in turn, calls prevents interoperability, and consequently, hinders connectivity
for seamless integration of production systems/machinery, and and integration. Hence, there is a need for a wider operational
enterprise systems (Rashid and Tjahjono 2016). perspective within manufacturing that enables effective integra-
Although IT is already at the heart of manufacturing, and tion and communication between technological innovations and
technological innovations such as sensors, actuators and com- production and enterprise systems, and allows for intelligent and
puterised automation have been used by manufacturing com- autonomous operations (Cheng, Farooq, and Johansen 2015). This
panies for decades (Naqvi, Farooq, and Johansen 2015), enabling necessitates the incorporation of Industry 4.0 perspective and its
advanced manufacturing, there has been limited benefits offered enabling technologies such as Cyber Physical Systems (CPSs) and
by them. In other words, the full potential of these technologies Internet of Things (IoT) (Reinhart et al. 2013) into the production
has not been realised (Da Xu 2011) as in the current advanced process and manufacturing structure (Schlechtendahl et al. 2015).
manufacturing environments, IT systems offer limited connec- Industry 4.0, fourth industrial revelation brought about by intro-
tivity and integration between advanced technologies used in duction of IoT and CPSs (Kagermann et al. 2013), has emerged as

CONTACT Hajar Fatorachian [email protected]

© 2018 Informa UK Limited, trading as Taylor & Francis Group
634 H. FATORACHIAN AND H. KAZEMI

a promising approach to provide extensive connectivity in man- (1) How does Industry 4.0 address the integration challenge
ufacturing environment (Li, Lai, and Poor 2012). in current advanced manufacturing environments, and
how can it enable comprehensive connectivity?
(2) What are the main enablers of this integration?
1.1. Industry 4.0 and its relation to CPSs and IoT
(3) How can industry 4.0 be operationalised in
Industry 4.0 involves connection and integration of digital/ manufacturing?
virtual and real/physical world through CPSs and IoT, where
This paper is organised as following; first, smart manufactur-
intelligent objects constantly communicate and interact with
ing and Industry 4.0 are explored in depth, and drivers and ena-
each other (Öberg and Graham 2016). Industry 4.0 has resulted
blers of Industry 4.0, and benefits and challenges of adoption
in a fundamental revolution in manufacturing, characterised
are analysed. This will address the first two research questions.
by ubiquitous computing, smart networks (cloud comput-
Next, having investigated the interconnectivity/interoperability
ing) and autonomous microcomputers (embedded systems)
of enablers and their communication mechanisms, a framework
(Kagermann et al. 2013). This industrial revolution and its ena-
for operationalisation of Industry 4.0 perspective in manufactur-
bling technologies are expected to bring about significant effi-
ing is proposed. This, will address the last research question by
ciency, productivity and performance improvements through
demonstrating how the interconnectivity of machinery, and man-
enabling enhanced integration and connectivity (LaValle et al.
ufacturing and enterprise systems can lead to comprehensive
2011; Leitão, Colombo, and Karnouskos 2016).
integration in manufacturing environment.
CPSs, the cornerstone of Industry 4.0 and the next evolution-
ary step from embedded systems, are ‘intelligent central con-
trol units’ that operate as ‘information processing systems’ (Blau 2. Research methodology
2014, 7). These systems can result in creation of smart factories,
This research attempts to analyse industry 4.0 and smart manu-
where machines, devices and systems are capable of exchang-
facturing to explore technological innovations enabling exten-
ing information, setting course of actions and controlling each
sive integration in manufacturing environments. It, also, aims to
other autonomously (Jung et al. 2016). They include distributed
propose a framework for operationalisation of Industry 4.0 in
communication and computation mechanisms that enable mon-
manufacturing. The study follows a deductive research approach
itoring and controlling of physical entities through application
which begins with identifying a theoretical base for guiding and
of sensors and actuators. CPSs can, also, enable a tight integra-
directing the research (Creswell 2009). Having explored the
tion of physical and engineering systems, and result in enhanced
research topic, and the main enablers and their interconnectiv-
coordination between computational and physical elements
ity, the research questions are investigated and conceptualised
(Stojmenovic and Zhang 2015). Moreover, these technological
in the form of a theoretical framework underpinned by systems
innovations allow for the human-technology integration and ena-
theory.
ble effective communication between technology and people
Organisations are considered as socio-technical systems con-
(Kant 2016).
sisting of people, technology and machines (Emery and Trist
The pervasive presence and the ubiquitous sensing and com-
1960). The awareness of relationships and interactions between
munication of smart objects embedded with sensors, actuators,
these components is very important as it allows for understanding
etc. in cyber physical environments, and their inter-connectivity
organisations as a whole and integrative entity (Mele, Pels, and
with the Internet has resulted is creation of IoT (Atzori, Iera, and
Polese 2010). This is advocated by systems theory which considers
Morabito 2010), wherein the Internet acts as the centre of connec-
organisations as holistic systems, where there is high degree of
tivity for smart devices, machinery and systems (Babiceanu and
communication and integration between the factors involved in
Seker 2016; Macaulay, Buckalew, and Chung 2015; Thramboulidis
the value creation process (Grant, Shani, and Krishnan 1994). This
2015). IoT can enable high level of automation and integration
theory can help gain awareness of interconnections and inter-
between intelligent machinery and manufacturing systems,
operability of various elements of the research (Neuman 1997)
through enabling their connection to each other and to the
including key technological innovations enabling Industry 4.0,
Internet (Li et al. 2016; Thramboulidis 2015; Thramboulidis and
and can allow for discovering systems’ dynamics and constraints
Christoulakis 2016). This technological innovation can offer new
to optimise the relationships and interconnectivity between var-
business models and collaborative networks that, through ena-
ious parts of the systems (Skyttner 2005).
bling enhanced integration, can fundamentally improve the
Hence, systems theory can provide the conceptual basis for
way products are developed, designed and manufactured (Li
analysing interconnectivity/interoperability and for addressing
et al. 2016). This can, consequently, provide novel opportunities
integration challenge through identifying potential constraints,
in terms of efficiency improvements, cost savings and revenue
and can underpin the relationships and connections in the pro-
growth (Bechtold et al. 2014; Zhong et al. 2015).
posed framework.
In order to harness the value of IoT and CPSs in manufacturing
and production process, there is a need for new business models
and new operational structures that allow for high level of inte- 2.1. Research process
gration and connectivity between machinery and manufacturing
Reviewing relevant literature and industrial reports around
and enterprise systems (Brousell, Moad, and Tate 2014; Li et al.
Industry 4.0 and smart manufacturing is the preliminary
2016). Hence, this paper aims to investigate Industry 4.0 and its
research step that assisted with identifying the gap in the knowl-
enabling technologies as a new operational approach in manu-
edge (limited integration in current advanced manufacturing
facturing to explore following research questions;
 PRODUCTION PLANNING & CONTROL   635

environment), and led to formulating research questions. The happens through industry 4.0 enabling technologies allowing
literature review continued to explore the main drivers and ena- for enhanced integration and self-optimisation on the production
blers of Industry 4.0 and their capabilities and benefits, and to side, and shortened product engineering processes and fast and
investigate and address research questions. Subsequently, key flexible product development in the engineering side (Schuh et
factors contributing to smart manufacturing were identified, al. 2014).
and main constructs and variables were listed, which led to Finally, Industry 4.0 can lead to establishment of intelligent
identifying six main technological enablers and six categories products and factories. Smart factories, can easily deal with the
of benefits. The identified enablers are technological innova- need for rapid product development and flexible production
tions that are pervasively present in smart manufacturing envi- (Vyatkin et al. 2007), and through smart manufacturing processes,
ronments (as discussed in many industrial reports and verified they can create smart products that are uniquely recognisable
by academic papers) and their interconnectivity is considered and know their own history and present status (Zhong et al. 2015).
essential for seamless information sharing and integration. The These products can, easily, communicate with each other and
analysis of interconnectivity/interoperability of the key ena- with their environment (Meyer, Wortmann, and Szirbik 2011), and
blers and their communication mechanisms, based on systems can, actively, support the manufacturing as they contain the man-
theory, allowed researchers to develop theorised relationships ufacturing process knowledge and consumer application infor-
between main variables of Industry 4.0. This formed the basis mation (Kagermann et al. 2013).
from which theoretical framework was constructed. Finally, sys-
tems theory was applied to develop theoretical framework and
4. Enablers of Industry 4.0
to explain the relationships between key variables.
A detailed analysis of the key technological innovations ena-
bling Industry 4.0 and their capabilities in manufacturing is
3. Industry 4.0 and smart manufacturing
provided below. Theses enablers, significantly, influence and
The concept of focused factories (Skinner 1974) and flexible fac- depend on each other. Hence, their synchronised communica-
tories (Skinner 1996; Upton 1995) have evolved to the concept tion is necessary for successful implementation of Industry 4.0
of smart factories where factories are, not only, highly flexible perspective in manufacturing.
and capable of responding rapidly to environmental changes
(Anand and Ward 2004), but also, can autonomously trigger
4.1. Industrial Internet
appropriate actions (Jung et al. 2016). This has been made pos-
sible by enhanced integration and automation brought about Internet, as the main enabler of smart manufacturing and
by the revolution of Industry 4.0 and its enabling technologies. Industry 4.0 has enabled the management of distributed systems
Industry 4.0 includes smart factories which are highly flexi- and technologies like Radio Frequency Identification Devices
ble and responsive to accelerating innovation cycles (Blau 2014; (RFID) (Brettel et al. 2014; Zhang et al. 2011). The new concept
Öberg and Graham 2016). In smart manufacturing, solid produc- of ‘Industrial Internet’ emphasises the importance of intelligent
tion processes and concrete structures are substituted by con- machines, advanced data analytics, and people in effective
figuration regulations, resulting in creation of Reconfigurable management of business processes (Brousell, Moad, and Tate
Manufacturing Systems (RMS) (Helo and Hao 2017). These systems, 2014). The integration of the Industrial Internet and produc-
through enhancing flexibility, enable quick and cost-efficient tion machinery can lead to generating smart processes and
response to changing customer and production requirements products that are capable of communicating and interacting
(Abele et al. 2007; Öberg and Graham 2016), and lead to improved with the machinery and enterprise systems. Introduction of the
performance (Dubey et al. 2017). new Internet protocol IPv62 in 2012 has ensured availability of
Industry 4.0, through creation of smart networks and systems, addresses to enable global networking of smart objects. This has
can enable greater connectivity and robustness, and can lead resulted in creation of Internet of Things, where resources, infor-
to achievement of high-quality standards in manufacturing and mation, objects and people can be networked via the Internet
engineering (Kagermann et al. 2013). For instance, Industry 4.0 (Kagermann et al. 2013). Hence, Industrial Internet is considered
can create a dynamic operational environment where business to be the main enabler of Industry 4.0 that in the realm of manu-
processes are capable of self-organising and self-optimising, facturing has resulted in fourth industrial revolution.
based on criteria such as cost, resource availability and demand
requirements (Leitão, Colombo, and Karnouskos 2016). In other
4.2. Internet of Things (IoT)
words, Industry 4.0 can result in generation of novel business
models and new ways of creating value in manufacturing (Li et Internet of Things, suggested by Kevin Ashton in 1999,
al. 2016) through enabling dynamic business and engineering defines a global environment where the Internet is the cen-
processes, and by creating end-to-end, transparent and flexible tre of connectivity for all the intelligent devices. IoT has been
manufacturing systems. These capabilities can, consequently, described as ‘a world of pervasive connectivity in which hosts
facilitate decision-making, and can enable responsiveness to dis- of Internet-enabled physical devices constantly feedback val-
ruptions and failures, which are considered as major challenges uable information’ to enable improved production process
in organisations (Hu and Kostamis 2015; Maddern et al. 2014). and delivery (Brousell, Moad, and Tate 2014, 3). It is expected
Improved decision-making resulting from Industry 4.0 leads that IoT will transform the manufacturing industry over the
to productivity improvements across organisations, and subse- next few years by enabling enhanced connectivity and inte-
quently, to greater competitiveness (Bechtold et al. 2014). This gration between processes (Babiceanu and Seker 2016). There
636 H. FATORACHIAN AND H. KAZEMI

is forecasted to be 26 billion connected devices by 2020, between humans, machines and products (Babiceanu and Seker
generating global revenues of somewhere between $300 2016; Einsiedler 2013). Through acquisition and processing data,
billion and an astounding $8.9 trillion (Brousell, Moad, and CPSs can autonomously manage certain tasks and communi-
Tate 2014). Hence, business opportunities provided by IoT are cate with humans via interfaces (Figure 1) (Brettel et al. 2014;
expected to be enormous (Thramboulidis and Christoulakis Kagermann et al. 2013).
2016). Some of the benefits and opportunities offered by IoT Along with Ethernet, Wi-Fi, Bluetooth and cloud systems,
include greater insights and visibility and collaboration across which have enabled companies to embed cyber physical intelli-
the plant floor as well as greater real-time machine-to-ma- gence into machines and devices at low cost, innovations such as
chine (M2M) connectivity. sensors, actuators and metres have led to intelligent and remote
In IoT-enabled environment machines will have self-monitor- control, monitoring and sensing (Shamsuzzoha et al. 2016). This,
ing capabilities and will be able to communicate their real-time in turn, has resulted in effective and strategic management of
performance on production lines (Brousell, Moad, and Tate 2014). product movement throughout the production process and sup-
This can, not only, enable intelligent and dynamic manufacturing ply chain (Zhong et al. 2015). These technologies, not only, can
processes, but also can create smart and self-organised logistics be used for ‘tactical and strategic purposes’, but also, they can be
that can foresee and react to unforeseen changes throughout the applied for identifying constraints and redesigning operational
supply chain. In other words, IoT can create an intelligent network processes (Amini et al. 2007). For example, RFID tags, through
along the value chain, in which connected machines, products enabling measurement of operational parameters, can alert
and systems can autonomously connect and control each other. workers to product and process failures (Brousell, Moad, and
Moreover, predictive capabilities in IoT-enabled vision, can enable Tate 2014; Modrák and Moskvich 2012), and improve business
machines to foresee failures and to, autonomously, take quick and processes.
corrective actions (Leitão, Colombo, and Karnouskos 2016; Lopez CPSs can transform the idea of information sharing and
Research 2014; Shamsuzzoha et al. 2016). connectivity in manufacturing companies and result in crea-
tion of ‘mesh architecture’ (Vogel-Heuser et al. 2009) in which
information clients and servers represent nodes of the mesh
4.3. Cyber Physical Systems (CPSs)
(Schlechtendahl et al. 2015). The mesh structure requires com-
Integration and networking of embedded systems with each munication interfaces for receiving, transforming and exchanging
other and with the Internet has resulted in the merging of the data. This challenge is believed to be addressed by focusing on
virtual world (cyberspace) and the physical world, generating concepts of ‘communication gateway’ and ‘information server’
Cyber-Physical Systems (CPSs). CPSs enable communication (Schlechtendahl et al. 2015) which are discussed below.

Human-Machine interface
Connection to other systems

Figure 1. Interaction between humans and machine via Cyber Physical systems, based on Brettel et al. 2014.
 PRODUCTION PLANNING & CONTROL 637

• Communication gateway (SCM) do not fully address the collaboration and integration
Communication gateway allows detection of available challenges in manufacturing operations. In order to ensure
communication interfaces of a production system, and ena- complete connectivity within an enterprise, intelligent software
bles connection to production systems through accessing and systems should be established to enable regular communica-
transmitting data and command interfaces. This gateway act as tion with intelligent devices, machinery and processes (Brousell,
a server to host and connect all smart objects within a manufac- Moad, and Tate 2014). For example, management software sys-
turing plant (Zhang et al. 2011), and is considered as the main tems such as Product Lifecycle Management (PLM) which cap-
enabler that allows production systems to be part of a smart fac- ture all information related to products throughout the value
tory (Schlechtendahl et al. 2015). chain, enable real-time communication and realisation of ‘single
source of truth’ across the complete product life cycle (Gecevska
• 
Cyber Physical Production System (CPPS) information
et al. 2012; Schuh et al. 2014). This capability can have a signifi-
server
cant impact on product analysis, design and development.
As discussed earlier, CPPSs should allow intelligent produc-
tion systems to be linked with each other for easy and fast data
exchange. However, in order for all machines, devices and systems 4.6. Cloud computing and big data analytics
to be able to connect and exchange information with each other,
they need to be aware of other existing CPSs and their commu- Computing power offered by high-tech computers has created a
nication mechanisms. Therefore, there is a need for an ‘overall great platform for analysing big data generated from IoT. Moreover,
control centre’ to enable extensive connectivity. In other words, cloud systems have enabled high-storage capacity and high-
since different CPPSs have different functionality and communi- speed computing, where all data and information can be accessed
cation channel, there is a need for CPPS Information Server which quickly and independently from any location (Hilbert and Lopez
provides information about their communication channels and 2011; Schuh et al. 2014). In other words, cloud networks allow for
functionality (Schlechtendahl et al. 2015). remote communication of products, devices and machines, and
enable data generated in multiple sites to be transferred to central
data stores for ‘subsequent access, aggregation, and analysis’ (6).
4.4. Information network These networks and computing power distributed across them
One of the main reasons behind creation of networks is to can be very helpful in pre-processing data and preparing data for
enhance collaboration and to exploit the core competencies of being uploaded to the main analytical systems such as big data
business processes, and, finally, to improve competitiveness by analytics (Brousell, Moad, and Tate 2014). Big data processing tools
integrating value-added information and resources (Choudhary can provide valuable opportunities in terms of forecasting, proac-
et al. 2013; Romero and Molina 2011). Similarly, in the context tive maintenance and automation (LaValle et al. 2011). These tools
of smart manufacturing, the connectivity and collaboration of can enable real-time data stream analysis, which, in turn, can result
devices and machinery is of significant importance. However, in real time problem solving (Li et al. 2016) and dramatic improve-
based on Macaulay, Buckalew, and Chung (2015), only 4% of the ments in performance (Akter et al. 2016; Wamba et al. 2017).
devices on the manufacturing floor are ‘actually’ connected to
a network. In order for all devices and machines within a plant
5. Drivers and benefits of Industry 4.0 in
to be linked together and effectively communicate with opera-
manufacturing
tional and enterprise systems, there is a need for ‘standardised
IP-centric network’ (Lopez Research 2014). These networks can As discussed earlier, business and manufacturing environment
enable visibility and real-time information exchange, not only, are becoming more dynamic and complex, and customer
within the factory, but also throughout the supply chain, and can requirements are becoming more and more diverse (Genovese
lead to horizontal integration of business processes and estab- et al. 2014). This requires companies to ensure greater flexibility
lishment of smart factories (Brettel et al. 2014). Development of and connectivity in their business processes in order to be able
networks can, also, lead to improving competitive advantage to offer customised products that are superior in quality and
and providing ‘world class excellence and flexibility’ (Choudhary competitive in price (Leitão, Colombo, and Karnouskos 2016;
et al. 2013; 1953) as these networks can address the challenge Shamsuzzoha et al. 2016).
of dynamic and turbulent market environment by capturing Industry 4.0 is expected to address the aforementioned
valuable business opportunities, and by effective allocation of organisational challenges by enabling digitisation, automation
resources and competencies (Romero and Molina 2011). and integration of production systems (Brettel et al. 2014; Naqvi,
Farooq, and Johansen 2015), and through application of comput-
er-aided programs and smart systems in manufacturing processes
4.5. Software systems (Macaulay, Buckalew, and Chung 2015). The distributed smart- and
The need for effective management and coordination of Internet-based systems can enable ‘cybernetic management’ which
resources for better production planning in manufacturing incorporates self-controlling systems to handle high level of com-
industry has resulted in creation of information systems (Koh plexity in organisations (Brosze 2011). This capability can enhance
and Saad 2006). However, based on Koh, Gunasekaran, and flexibility and, significantly, improve responsiveness. In other words,
Rajkumar (2008), currently available information systems such companies can gain huge efficiency benefits by development and
as Enterprise Resources Planning (ERP) systems, Advanced establishment of smart systems and technologies within their oper-
Planning and Scheduling (APS), and Supply Chain Management ational processes (Cheng, Pan, and Harrison 2000; Yu et al. 2015).
638 H. FATORACHIAN AND H. KAZEMI

Many companies have realised the potential benefits of (Lopez Research 2014). The enhanced information sharing and
Industry 4.0 enabling technologies, and are making huge invest- integration can streamline production processes and, signifi-
ments in advanced technologies and robotics (Chung 2015). cantly, optimise decision-making (Yan and Xue 2007). In other
Based on PWC (2016) global Industry 4.0 survey, the majority words, effective information exchange is considered as a strate-
of the companies – around 60% – expect to see a Return On gic tool to influence the performance of production processes
Investment (ROI) within two years or even less for their Industry (Guo, Li, and Zhang 2014) as it can significantly influence pro-
4.0 projects, and the rest estimate a ROI of around five years. duction quality (Chen and Deng 2015) and product develop-
Considering the significant benefits and long-term impact of ment through enabling high level of integration and improving
advanced technological innovations, the 2–5-year period for ROI decision-making (Lang et al. 2014).
seems to be reasonable and realistic.
The main benefits of industry 4.0 and its enabling technologies
5.4. Improved integration and collaboration
in manufacturing are discussed below.
In Industry 4.0 manufacturing environment, high level of con-
nectivity allows for integration of factory floor operations with
5.1. Meeting individual customer demands
enterprise-based systems and decision support tools (Jung
Industry 4.0 perspective can enable meeting individual cus- et al. 2016). The extensive integration of operations results in
tomer requirements through including individual custom- improved information sharing and collaboration, and leads to
er-specific criteria in the process of production (Kagermann et al. creation of superior competitive advantage (De Toni, Filippini,
2013). Application of IoT and CPSs, as main enablers of Industry and Forza 1992). The high level of connectivity allows man-
4.0, can create a great platform for automation and integration gers to monitor factory floor operations from any location, and
of machinery and devices (Leitão, Colombo, and Karnouskos to optimise efficiency of devices and machinery by analysing
2016), which can facilitate rapid transferring of customer potential process constraints (Guo et al. 2015; Shamsuzzoha et
requirements into production processes. Industry 4.0 can, also, al. 2016). For instance, through mobile-enabled applications,
enable high level of flexibility and facilitate last-minute changes performance data and status updates of production systems
into the production process (Helo and Hao 2017). This can bring can be displayed in tablets, enabling real-time and remote infor-
about a variety of benefits including the ability to change out- mation access and control. This capability can enable transpar-
comes with little change in cost and timeliness (Upton 1995), ency, and subsequently, proactive approach towards problem
and improved responsiveness to changing customer demands solving (Bechtold et al. 2014).
(Burnes and Towers 2016).
5.5. Improved resource productivity
5.2. Flexible and agile engineering and manufacturing
Smart devices and intelligent systems can, continuously, opti-
Smart business systems in industry 4.0-enabled environment mise manufacturing processes and production systems, espe-
can enable dynamic and flexible configuration of various busi- cially, in terms of resource and energy consumption (Kagermann
ness elements, ‘such as quality, time, risk, robustness, price and et al. 2013). IoT and big data analytics can create cost effective
eco-friendliness’ (Kagermann et al. 2013, 16). This can result in measurement systems and performance management tools,
creation of agile engineering and manufacturing processes and can provide valuable benefits in the area of resource and
which allow for meeting changing customer demands promptly energy management (Helo and Hao 2017; Li et al. 2016). These
and effectively (Abele et al. 2007; Öberg and Graham 2016). For technological innovations, through automation of environmen-
example, Industry 4.0 and its enabling technologies, through tal control tools, facilitate and optimise energy use, as the sec-
providing end-to-end transparency and visibility about required ond largest operational cost in many Industries, and bring about
design elements, allow for on-time verification and quick incor- huge cost savings. Moreover, IoT can connect various energy
poration of design decisions into engineering and production solutions, and can provide economic operational models for the
processes. These capabilities can enhance integration and production process (Lopez Research 2014).
collaboration between different business and manufacturing
processes, and can lead to improved responsiveness and deci-
5.6. Mass customisation
sion-making (Hu and Kostamis 2015).
Industry 4.0 allows for individualisation of manufacturing pro-
cesses. Individualised production/mass customisation refers to
5.3. Improved information sharing and decision-making
flexible production strategies and business processes that aim
Considering the rapid changes in business environment and to produce personalised mass products (Brecher, Kozielski, and
customer requirements, making right decisions, especially at Schapp 2011). Industry 4.0 can enable production of highly cus-
very short notice, are becoming very important. Enhanced tomised products at low volume, while still ensuring quality of
information exchange in Industry 4.0 is expected to have a huge products and profitability. For example, 3D printing as one of
impact on improving decision-making in manufacturing oper- latest technologies in manufacturing, through connecting com-
ations (Jung et al. 2016). In Industry 4.0-enabled environment, puters, machinery and business processes, has enabled gener-
technological innovations such as IoT and CPSs enable easy ation of high-quality and highly customised products (Zhong
access to real-time information and result in effective cooper- et al. 2015). This capability can bring about huge efficiency and
ation between different machinery and manufacturing systems productivity improvements in manufacturing.
 PRODUCTION PLANNING & CONTROL 639

The summary of the main benefits of industry 4.0 and its ena- Within an IoT-enabled environment, there might be, also, tech-
bling technologies in manufacturing are provided in Table 1. nical incompatibilities related to IoT standards and interfaces. This
is an important issue since IoT data generated in multiple sources
needs to be integrated into analytical and decision-making sys-
6. Challenges of adoption of Industry 4.0 perspective
tems for further analysis. Addressing this issue can be very chal-
and potential solutions
lenging, as it requires agreement at both sector and industry level
One of the biggest challenges in smart manufacturing is how to (Brousell, Moad, and Tate 2014).
capture and make sense of machine-generated data and turn Additionally, as technological changes bring about high level
it into valuable information that would facilitate decision-mak- of transformation and automation, which causes concerns such as
ing (Brousell, Moad, and Tate, 2014). In other words, although job security and redundancy, it is important to consider socio-cul-
big data create valuable business opportunities with regards tural context when adopting Industry 4.0 production perspective
to realisation of the potential of business and creation of com- (Acatech 2012; Kache and Seuring 2017).
petitive advantage, analysing this data can be a big challenge. In general, it is vital to ensure that the organisational structures
Moreover, the analysis of data in Industry 4.0 requires different and manufacturing infrastructure are ready to grasp new oppor-
kinds of structures, processes and technologies, which neces- tunities and values created by Industry 4.0. In other words, both
sitate companies to go through fundamental changes, and technological and cultural structure should support adoption and
embrace all the needed adjustments and adaptations. For exam- implementation of intelligent production systems.
ple, interpretation of IoT generated data requires companies to
establish dedicated analytics units for analysing data, and use
7. Conceptual framework
relevant analytical technologies such as big data analytics and
cloud computing technologies (Macaulay, Buckalew, and Chung As discussed earlier, in current advanced manufacturing envi-
2015). However, the adoption and initial implementation of such ronments there is limited connectivity between technological
technologies can be very costly (Lin and Chen 2012). innovations, machinery and production/enterprise systems. In
The other significant challenge for smart factories is concerned other words, production systems present in advanced manu-
with security issues (Leitão, Colombo, and Karnouskos 2016) as IoT facturing are, mainly, cross-linked systems that enable commu-
is associated with vulnerability to interference and cyber-attack nication of production machinery with similar communication
(Babiceanu and Seker 2016; Kache and Seuring 2017). In order to mechanisms.
address this challenge, safeguards and security procedures such This paper aims to use systems theory to analyse and address
as ‘hardware encryption, physical building security and network this challenge. Systems theory considers systems as dynamic enti-
security for data in transit’ should be put in place (Lopez Research ties with interdependent and interconnected components (Grant,
2014, 8). Shani, and Krishnan 1994). Based on this theory, identifying and

Table 1. Summary of key benefits of industry 4.0 and its enabling technologies in manufacturing.

Industry 4.0 Enabling Technologies

Industrial Internet, Internet of Things, Cyber Physical Systems, Information Network, Software Systems, Cloud Computing, Big Data Analytics
Key benefits Examples of results References
Meeting individual customer demands • Including individual customer-specific criteria in the process of production Kagermann et al. (2013); Helo and Hao
• Rapid transferring of customer requirements into production processes (2017); Upton (1995)
• Enabling high level of flexibility
• Enabling last-minute changes into the production process

Flexible and agile engineering and • Dynamic and flexible configuration of various elements of business processes Öberg and Graham (2016); Abele et al.
manufacturing • Creation of agile engineering and manufacturing processes (2007); Hu and Kostamis (2015)
• On time verification of design decisions and quick incorporation of decisions
into engineering and production processes
• Improved responsiveness and decision-making

Improved information sharing and • Easy access to real-time information and effective cooperation between differ- Lopez Research (2014); Chen and Deng
decision making ent machinery and manufacturing systems (2015); Lang et al. (2014)
• Improved performance and production quality
• Improved product development

Improved integration and collaboration • Improved information sharing and collaboration Shamsuzzoha et al. (2016); Bechtold
• Monitoring operations from any location et al. (2014); Lopez Research (2014)
• Enabling proactive approach towards problem solving

Improved resource productivity • Continuous optimisation of manufacturing processes and production systems Kagermann et al. (2013); Lopez
• Creating cost effective measurement systems and performance management Research (2014); Li et al. (2016); Helo
tools and Hao (2017)
• Automation of environmental control tools

Mass customisation • Individualisation manufacturing processes Brecher, Kozielski, and Schapp (2011);
• Production of highly customised products at low volume Zhong et al. (2015)
• Generation of high-quality and highly customised products
640 H. FATORACHIAN AND H. KAZEMI

establishing communication channels and managing relationships The explanations for different sections of the framework and
and information flow between systems’ components can signifi- the interoperability and integration of information systems are
cantly influence the competitiveness of the systems, as they can provided below.
enable extensive connectivity and integration throughout the sys- Technological innovations such as embedded systems, RFID
tems, and lead to creation of a whole entity (Mele, Pels, and Polese tags and sensors attached to the manufacturing plants and infra-
2010). Hence, the main aim of systems theory is to discover sys- structures such as machinery and devices can enable M2M com-
tems’ dynamics and constraints to optimise the relationships and munications and result in creation of advanced manufacturing
interconnectivity between various elements of the systems, and systems (1). However, as different production systems can have
subsequently, to improve systems productivity (Skyttner 2005). different interfaces, and in the same way, different interfaces can
This theory argues that application of technology can enable com- have different communication mechanisms and channels, there is
ponents to intelligently detect key elements for communication, a need for a communication gateway called CPPS enabler. CPPS
self-organisation and reconfiguration. In other words, based on enabler, through connectivity to Industrial Internet, can easily
this theory, technologies can allow systems to easily search for detect, access and transmit available communication interfaces
dynamic and intelligent IT-based systems, and to autonomously of various production systems (2). This can create an IoT-enabled
connect and communicate with them (Barile and Polese 2010). manufacturing environment where CPPSs are connected to the
To enable extensive connectivity within current advanced Internet and CPPS enabler (3). An example of CPPS enabler is a
manufacturing companies, manufacturing companies need to ‘Cloudplug’, that can be used in manufacturing environment to
use a broader scope of advanced and computer integrated tech- transmit production systems data into the cloud (4) (Atmosudiro,
nologies (Chung and Swink 2009; Jonsson 2000). This requires Faller, and Verl 2014). The cloud networks enable connectivity and
application of Industry 4.0 technological innovations such as IoT, remote communication of devices, machinery and systems, and
CPSs and big data analytics that can enable smart detection and allow for data generated in multiple points to be transferred to
connectivity in production floor through creation of CPSs. These central control units (CPPS Information Server) for analysis and
technologies can create great value for manufacturing companies aggregation (5). After the CPPS Enabler creates a connection
through enabling smart operations and comprehensive integra- with the CPPS Information Server, its communication channel
tion between technological innovations and manufacturing and and functionality is registered in the CPPS Information Server (6).
enterprise systems (Li et al. 2016; Wamba et al. 2015; Zhong et al. So, the CPPS Information Server provides information about the
2015). However, operationalisation of Industry 4.0 perspective communication channel as well as the functionality of connected
and implementation of its enabling technologies require new and available CPPS Enablers. By being aware of communication
business models and new operational structures that allow for channels and functionalities, any CPPS can search in the CPPS
high level of integration and connectivity (Brousell, Moad, and Information Server for other compatible CPPSs (CPSs with the sim-
Tate 2014; Li et al. 2016). ilar communication channels and functionality), and they can get
Hence, having investigated the Industry 4.0 and its enabling connected to each other through the same networks (7). Through
technologies in the manufacturing, and having discussed the ini- CPPS Information Server, data links/communication channels can
tiatives and drivers of implementation of Industry 4.0 concept, the be linked with production systems and other enterprise applica-
authors attempt to propose a theoretical framework for opera- tions (8&9), such as production management systems to allow
tionalisation of Industry 4.0 perspective in manufacturing. for connectivity and communication with production machinery
The proposed framework will address the last question of the and systems (10), and to enable automatic and smart produc-
research – how industry 4.0 can be operationalised in manufactur- tion processes. The high level of connectivity and integration, and
ing? – by demonstrating the main enablers and their communi- autonomous interoperability in manufacturing plant can result
cation mechanisms, and the resulting comprehensive integration in creation of smart factories where all manufacturing processes,
(Figure 2). systems and machinery are connected to each other and to the

Figure 2. Proposed theoretical framework for operationalisation of Industry 4.0 in production process.
 PRODUCTION PLANNING & CONTROL 641

Internet and cloud systems, and can communicate and control to allow for extensive connectivity and interoperability in manu-
each other effectively, and act autonomously. facturing environment and to enable smart manufacturing. The
This study proposes the application of CPPS enabler and CPPS paper provides in-depth analysis of key technological innova-
Information Server as the main step for transforming to smart tions and their capabilities and functionalities. The awareness
manufacturing. In other words, to convert advanced production of technological enablers of Industry 4.0 can assists with the
systems to CPPSs, there is a need for a mechanism that allow realisation of their integration and communication techniques,
for integration of devices, machinery and production systems, and can facilitate the understanding of operationalisation of
and enable access and distribution of their data and command Industry 4.0 perspective in manufacturing process.
interfaces to the other organisational systems. Until recently, The proposed framework can create an operational structure
there was no mechanism to automatically discover and connect for implementation of Industry 4.0 perspective in manufacturing,
to other production management systems. However, in Industry and can bring valuable insights for operations managers con-
4.0 perspective, IoT can address this challenge by enabling cre- sidering engagement in smart manufacturing. The framework
ation of Cyber Physical Production environment where all smart includes the main technological innovations that enable smart
deceives, machinery, and systems can get connected to CPPS manufacturing, and demonstrates how CPSs and IoT can address
enabler through the Internet, and subsequently to central con- the challenge of limited integration in current manufacturing sys-
trol units (CPPS Information Server) through cloud technologies tems. It demonstrates how proposed integration mechanisms
and big data analytics. (CPP enabler and CPP Information Server) can allow for Cyber
Hence, as demonstrated in the framework, the study proposes physical level integration and support enterprise level integra-
CPPS enabler as a solution for Cyber physical level integration, tion, enabling extensive and comprehensive integration between
and CPPS Information Server as a solution for enterprise level inte- machinery, and manufacturing and enterprise systems.
gration that enables extensive and comprehensive integration Hence, the proposed theoretical framework can provide better
between machinery and manufacturing and enterprise systems. understanding of smart manufacturing by simple demonstration
of the interconnectivity and integration of key Industry 4.0 ena-
bling technologies in manufacturing environment. Using the pro-
8. Conclusion
posed framework, mangers can scrutinise the readiness of their
Today’s business world is characterised by intense competitive systems, processes and structures for engagement in Industry 4.0
pressures and growing market demands. Increased demand for and smart manufacturing, and can develop tailored implementa-
customised and innovative products together with pressure for tion plans based on proposed integrative approach and integra-
improving efficiency and responsiveness call for transformed tion solutions in the framework. This, in turn, can facilitate their
manufacturing systems/structures which are highly flexible and decision-making on adoption and implementation of Industry
responsive and capable of dealing with increased complexity. 4.0 perspective, and can give directions for transforming to smart
This necessitates high level of integration, connectivity and col- manufacturing systems by enabling analysis of their current sys-
laboration between business processes, which, in turn, requires tems and embracing potential required CPSs and technological
adoption of intelligent technological innovations such as IoT innovations.
and CPSs. These technological innovations, which enable trans-
parency, real time information sharing and connectivity, have
10. Limitations and further research directions
brought about fourth industrial revolution, called ‘Industry 4.0’.
Industry 4.0 can offer extensive benefits in manufacturing This research is conducted mainly based on deductive approach
ranging from flexibility, resource efficiency, and extensive inte- which applies systems theory as a theoretical basis for analysing
gration and interoperability. It is expected to provide novel potential relationships between main elements and variables
opportunities in terms of operational productivity and efficiency of the research topic. In this study, systems theory is expected
improvements, which, in turn, will result in competitiveness and to explain the major research question (integration challenge)
revenue growth for organisations. as this theory is, mainly, focused on interaction between main
This paper explored Industry 4.0 to provide a detailed analysis components of the system, and considers organisations as
of smart manufacturing. Having investigated recent academic whole and integrative entities. However, future research could
research and industrial reports in the area of Industry 4.0 and focus on application of other theories to analyse the genera-
smart manufacturing, it analysed the technological innovations tion of knowledge out of IoT generated data. Moreover, further
enabling smart manufacturing, and their operational functions research can be conducted to study the application and imple-
and interconnectivity mechanisms. Consequently, a framework mentation of the proposed framework in practice, and to ana-
for operationalisation of Industry 4.0 in manufacturing was pro- lyse Cyber Physical integration at supply chain level, including
posed. The proposed framework considers the adoption and different parties throughout the supply chain. Finally, future
application of CPPS enabler and CPPS server as main steps for research can analyse Return On Investment (ROI) of advanced
developing smart manufacturing systems. technological innovations in organisations that are far behand
industry 4.0 operational perspective.
9. Implications of the research
Disclosure statement
This study extends existing knowledge by shedding lights on
smart manufacturing, and proposing integration mechanisms No potential conflict of interest was reported by the authors.
642 H. FATORACHIAN AND H. KAZEMI

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