Industry 4.0 Report

This BDO report, produced in partnership with the Institution, examines what Industry 4.0 is and why it is relevant, what other countries are doing in this space and what the important next developments are.

INDUSTRIE 4.0 is identified by the German government as one of ten ‘Future Projects’ as part of its High-Tech Strategy 2020 Action Plan. The INDUSTRIE 4.0 project (aka the fourth industrial revolution) began as a marketing opportunity for Germany to establish itself as an industry lead market and technology provider. It has now subsumed into the business lexicon as a catchall covering the automation of manufacturing, machine-to-machine and machine-to-product communication, the industrial internet and technology needed
for mass customisation of production. 

It essentially means smart, flexible factories, where machines capture more data and convey more useful data to business operators so that they can make quicker, better decisions about how something is manufactured.


Only 8% of UK manufacturers have a significant understanding of Industry 4.0 processes despite 59% recognising that the fourth industrial revolution will have a big impact on the sector.

As the increasing use of automation, data exchange, technology and wider supply chain communications driven by Industry 4.0 provides both huge opportunities and threats to UK manufacturing, there remains a ‘gaping hole’ in the education and understanding of Industry 4.0. 

Increased productivity, better data analysis, increased competitiveness and lower manufacturing costs are the top ways in which Industry 4.0 will affect UK manufacturing. 

However, a third of manufacturers are at risk of falling behind global competition having not invested in Industry 4.0 related technology or processes in the last two years. Worryingly, a quarter say they have no plans to invest in this area in the next two years and 44% of those not investing said this was due to a lack of understanding. 

Of those that are increasing investment levels, 16% of companies expected to spend over £500,000 before 2018, while 7% plan to invest more than £5m. 

64% of those surveyed said that production would be a key area when investing in automation systems and Industry 4.0 related technology, with 45% and 25% respectively saying research and development and logistics were key areas of focus. Only 5% said poor investment levels were due to the lack of external finance or grants. 

From a security perspective, 73% of those surveyed said Industry 4.0 will increase the risk of cyber security breaches in their business and 48% of these felt they had an adequate IT infrastructure which could prevent breaches. 

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