Industry 4.0 refers to the current trend of automation and data exchange in manufacturing technologies. It involves the connection of cyber-physical systems, the Internet of Things, cloud computing and cognitive computing using sensors, software and data exchange to drive better business decision-making. This new era of flexible automation is changing the way goods are warehoused and distributed through the use of intelligent sensors, robotics and modular systems that are easily adaptable. Warehouse 4.0 aims to optimize operations through greater flexibility, reduced costs, modular automation and improved customer satisfaction.

1. Industry 4.0: Guide to warehouse 4.0
Today, Industry 4.0 i.e. fourth industrial revolution is transforming companies, economies, jobs, and even society
itself. Under the broad title Industry 4.0, many physical and digital technologies are combining through analytics,
artificial intelligence, cognitive technologies, and the Internet of Things (IoT) to create digital enterprises that are
both interconnected and capable of more informed decision-making. Digital enterprises can communicate,
analyze, and use data to drive intelligent action in the physical world. In short, this revolution is embedding smart,
connected technology not only within organizations, but also our daily lives. This marriage of digital and physical
systems—known as industry 4.0—has paved the way for increasingly connected experiences that impact
everything from product design and planning to supply chain and production. Beyond the processes of designing
and producing goods, however, the technologies inherent in industry 4.0 can also impact the way finished goods
are moved, warehoused, and distributed.
According to McKinsey, Industry 4.0 is “the next phase in the digitization of the manufacturing sector,
driven by four disruptions: the astonishing rise in data volumes, computational power and connectivity,
especially new low-power wide-area networks; the emergence of analytics and business-intelligence
capabilities; new forms of human-machine interaction such as touch interfaces and augmented-reality systems;
and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D
printing.”

2. The Internet of Things (IoT) is poised to fundamentally change the way a wide range of industries approach the
procurement, processing, and distribution of raw materials and finished products. New efficiencies based on the
introduction of intelligent sensors, mission-critical communications, automation, and robotics will optimize
industries ranging from mining and shipping to manufacturing verticals including electronics, automotive and
petrochemical products. This emerging megatrend is alternatively called the Fourth Industrial
Revolution and Industry 4.0, although these aren’t interchangeable terms.
For a system to be considered Industry 4.0, it must include:
• Interoperability — machines, devices, sensors and people that connect and communicate with
one another.
• Information transparency — the systems create a virtual copy of the physical world through
sensor data to contextualize information.
• Technical assistance — both the ability of the systems to support humans in making decisions
and solving problems and the ability to assist humans with tasks that are too difficult or unsafe
for humans.
• Decentralized decision-making — the ability of cyber-physical systems to make simple decisions
on their own and become as autonomous as possible.
Flexible automation
Industry 4.0 is an era of flexible automation which means only automation is not sufficient; It must be
modular, adaptable, data driven, scalable, repeatable or plug n play and least dependent on other factors. The
differentiator in industrial automation today is the choice between “fixed” automation and “flexible”
automation. e.g. Fixed automation systems, such complex automated storage and retrieval systems (AS/RS)
and carousel goods-to-person systems, are valuable to larger, higher volume distribution centers that require
large-scale density and higher throughput.
However, the implementation of these types of advanced automation require extensive installations and
facility modifications. For this reason, automation projects may take years to design, implement, and iterate
upon after deployment. Operational decisions based on automation purchases were irreversible, and facilities
were locked-in with equipment whether it functioned as expected.
On the contrary, “Flexible” automation, or drop-in equipment such as mobile robots, is more versatile and
costs less overall. Such systems are scalable, modular and flexible. Extensions or add-on system is feasible with
incremental costs that reduces risk in longer terms. Additionally, as requirements for DC operations evolve,
there’s a growing need for smarter, adaptable, automation equipment that is easily adjustable to meet future

3. needs. For example, e-Commerce order profiles have shifted to 1-5 items per order and inventory must now
ship within hours of being received.
Today’s flexible mobile-robot deployments carry different challenges than the fixed automation installations;
but those can be unplugged, packed-up, and operations may return as they were previously if equipment
requirements change.
Democratization of automation
While past and present automation solutions address the volume requirements for large retailers, high capital
costs and the inherent inflexibility of the highly engineering systems make them inaccessible to most
warehouse operations.
Low barriers to entry with mobile robots allow distribution centers to deploy small pilots of flexible
automation in specific zones/smaller areas and monitor its impact on an operation. Today, everyone, big and
small, has access to pilot and adopt new forms of automation.
Finally, new pricing schemes also serve to extend automation to a greater number of operations. Projects can
be financed in a variety of ways to manage costs on an operational basis thereby avoiding long-term capital
investments. This offers a huge advantage to small players who otherwise wouldn’t invest in a fixed AS/RS.
According to an MHI Annual Survey as reported in Logistics Management, a majority of the market expects
disruption and believes that robotics will be a driving factor. In 2015, only 39% viewed robotics and
automation as such a driver for change, but now 61% see robotics as a source of opportunity or disruption.
Challenges inherent in adopting an Industry 4.0 model:
• Data security issues are greatly increased by integrating new systems and more access to those
systems. Additionally, proprietary production knowledge becomes an IT security problem as well.
• A high degree of reliability and stability are needed for successful cyber-physical communication
that can be difficult to achieve and maintain.
• Maintaining the integrity of the production process with less human oversight could become a
barrier.
• Loss of high-paying human jobs is always a concern when new automations are introduced.
• And avoiding technical problems that could cause expensive production outages is always a
concern.

4. Warehouse 4.0
Organizations interested in getting the most out of their distribution center using automation and robotics can
begin by asking themselves a few fundamental questions:
• Is my order profile driving the need for automation?
• How much of my SKU mix is suitable for full, flexible automation?
• What is my inventory velocity between receiving and shipping?
• How can I optimize my warehouse environment to enable fully autonomous functions such as picking and
packing?
• How would I setup a pilot to test the benefits of Warehouse 4.0?
Demand for more efficient distribution centers and the reality of labor shortages in logistics cannot be ignored by
companies who wish to compete for prime clientele. Next-gen warehouses are channels for meeting emerging
customer demands, iterating on evolving business models, and improving service all-around. The companies who
adapt and grow are the companies who endure, and agile newcomers can deliver on customer satisfaction better
than today’s incumbents.
Those who explore and iterate with flexible automation are best prepared to generate new levels of customer
satisfaction, and automation adoption is a requirement for the future opportunity to compete.
Deloitte has outlined what to expect from Warehousing 4.0 robotic technologies and it truly can deliver the same
as following:
• Enable greater operational flexibility
• Reduce operational costs
• Drive more modular and adaptable automation
• Promote business growth
This helps distribution centers to become a fine-tuned and highly adaptable system utilized to improve customer
satisfaction and increase margins. Also, it helps leadership teams to adapt for changing markets and emerging
customer demands. It speeds up innovations as speed of implementations becomes way faster than earlier.
Warehouse 4.0, is the future as it puts consumer in the center of all activities and eliminate the chasm between
expected and executed.