Introduction: The Birth of Industry 4.0 and Smart Manufacturing

  • By Jeff Winter
  • Smart Manufacturing (Industry 4.0)

Industry 4.0 is a paradigm shift in organizing and managing industrial businesses.

A robotic arm completes a task.
Industry 4.0 and smart manufacturing. What do these terms mean? Can they be used interchangeably or not?

It is nearly impossible to be in the manufacturing or the industrial automation industry and not have heard these buzzwords used in one form or another. They seem to be everywhere, actively discussed by thought leaders, industry experts, strategists, and company executives. They are written in mission statements and are even part of annual goals for a lot of companies, which gives the impression that everyone knows exactly what they are. But if you start asking people what the terms mean, they will either be honest and say, “I have an idea, but I don’t really know,” or they will give you an answer that is totally different from the next person’s.

And if that is the case, it would make using or achieving anything related to these concepts difficult, wouldn’t it?

The purpose of this special edition of InTech magazine is to help clarify these concepts by defining them, identifying the technology components, and explaining their relationship to one another and to your organization. Most importantly, we will answer the question: Why are these concepts such a big deal right now?

The birth of Industry 4.0

A timeline of manufacturing. Image 1: End of the 18th Century. Industry 1.0: Mechanization; Image 2: Start of the 20th Century. Industry 2.0: Electrification; Image 3: Start of the 1970. Industry 3.0: Automatization; Image 4: Present. Industry 4.0: Cyber-Physical Systems. To understand the fourth industrial revolution, it helps to know the names and timeline of the first three.
Industry 4.0 (known as “Industrie 4.0” in Europe) was brought to life as a term and a concept in 2011 at Hannover MESSE, where Bosch described the widespread integration of information and communication technology in industrial production. The entire manufacturing industry, along with the German government, took interest in this idea.

After Industry 4.0 was introduced, the idea turned into the “High-Tech Strategy 2020” action plan in 2012 by the German government. This idea took hold, and soon dozens of other governments developed their own initiatives, all similar in purpose, but different in execution and scope. 

China developed “Made in China 2025” to fully modernize the country’s manufacturing industry. The United Kingdom introduced its “Future of Manufacturing” in 2013; the European Union developed its “Factories of the future” in 2014; Singapore came out with its “RIE2020” plan; and yes, the U.S., in 2014, launched the “Manufacturing USA” initiative that created a network of 16 member institutes. Each of the institutes focuses on a specific advanced manufacturing technology. They each pull together private-sector companies, academic institutions, and other stakeholders to pursue collaborative research and development, test applications, train workers, and reduce the risks associated with deploying new technologies.

A working group on Industry 4.0 was formed, led by Bosch executive Siegfried Dais and Henning Kagermann, the former chairman and CEO of SAP and president of the German National Academy of Science and Engineering. In 2013, this working group presented a set of Industry 4.0 implementation recommendations to the German federal government. From that moment forward, the fourth industrial revolution had begun, and the working group members were recognized as the founding fathers and driving force behind Industry 4.0.

An 85-page paper developed by the Industry 4.0 working group starts off by explaining how we are entering the fourth industrial revolution—hence the reference to “4” in “Industry 4.0.” To understand the fourth industrial revolution, it helps to remember the first three, and how we got to this point (figure). At the end of the 18th century, the first industrial revolution involved mechanization—using water and steam to increase production beyond that of manual labor. It can be represented by the introduction of the first mechanical loom in 1784. The second industrial revolution saw the development of assembly lines powered by electricity. Electrification typified Industry 2.0, which continued through the start of the 20th century.

Industry 3.0 introduced electronics and computers to replace manual processes. The dawning of this era of “automatization,” according to the Industry 4.0 working group paper, could be represented by the introduction of the first programmable logic controller, the Modicon 084.

Our present era, Industry 4.0, is known as the era of cyber-physical systems—the convergence of physical, digital, and virtual systems and the rise of the Internet of Things (IoT). Industrial IoT (IIoT) emphasizes manufacturing IoT as distinct from retail/consumer, medical, or other IoT devices or architectures. Industry 3.0 is about automation—the reduction of human intervention in processes. Industry 4.0 is about cognition or the process of acquiring knowledge and understanding. These two are separated by the ability to properly capture and harness the power of data.

Trying to define Industry 4.0

Industry 4.0 is not merely a matter of connecting machines and products through the Internet. It encompasses a wide range of advanced technologies, such as digital twins, artificial intelligence, high-speed wireless networks, deterministic wired networks, cloud and edge computing, and virtualization technologies like augmented reality. It is also a paradigm shift in how we organize, manage, and approach business to make the most of cyber-physical systems.

The working group characterized Industry 4.0 as a concept that is focused on creating smart products, smart procedures and processes, and smart factories. But that statement is so grandiose and vague that it is almost no help. With all that visionary talk, we can easily get excited and energized, but we still do not have a definition. The Industry 4.0 working group did not really provide one.

Over the past nine years, people have latched onto the concept of Industry 4.0. Each country attempted to define it in its context as it saw fit, which of course meant different ideas everywhere. Several years after the working group convened, two of the largest standards bodies, the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), got together and formed a joint working group called JWG21. Its main intent was defining the concept of Industry 4.0. In the middle of 2021, the JWG21 finally established a definition. For myriad reasons, the term “smart manufacturing” was selected instead of “Industry 4.0.” The group felt it better represented a global viewpoint.

Here is the current formal definition of smart manufacturing:

Manufacturing that improves its performance aspects with integrated and intelligent use of processes and resources in cyber, physical, and human spheres to create and deliver products and services, which also collaborates with other domains within enterprises’ value chains. 

  • Note 1: Performance aspects include agility, efficiency, safety, security, sustainability, or any other performance indicators identified by the enterprise. 
  • Note 2: In addition to manufacturing, other enterprise domains can include engineering, logistics, marketing, procurement, sales, or any other domains identified by the enterprise.

As a society, we are starting to feel the impacts of Industry 4.0 already. Not only are companies investing, but governments around the world are pouring a lot of money into this idea as the way of the future. Smart manufacturing promises improved performance through the digital transformation of manual and mechanical systems, and the further integration of automated systems with business systems and advanced technologies. We all are in the midst of this paradigm shift and are being compelled to move our companies forward. The birth of Industry 4.0 is giving way to growth and change, asking us to help move our companies toward whatever the next revolution might bring.

Visit the ISA website for more InTech articles, ISA Interchange blog posts, and other resources on Industry 4.0 and Smart Manufacturing.

Reader Feedback

We want to hear from you! Please send us your comments and questions about this topic to

Like This Article?

Subscribe Now!

About The Authors

Jeff Winter is an industry executive for manufacturing at Microsoft. Winter is also part of the leadership committee of the Smart Manufacturing & IIoT Division of ISA, a contributor to IEC as a member of TC 65, on the board of directors with the Manufacturing Enterprise Solutions Association (MESA), and benchmarking chair with Control System Integrators Association.