With the idea in which if every real-world entity is synchronized to cyberspace, instead of doing in real life, we can run the business or society in cyberspace. This can be considered as the main content of the 4th Industrial Revolution (4IR) that we are experiencing.

 There must be many people who have played operation related games like football when you have to manage a whole football team including selling and buying players, training, applying tactics, financial management, etc. More complex is the games of running a city or a country with all aspects of the economy, planning, military, etc. However, running a system on the game, no matter it is the football team, company or country is not difficult. You can smoothly operate a complex system in a game environment because you have been provided with information to all objects within your management.

With the idea in which if every real-world entity is synchronized to cyberspace, instead of doing in real life, we can run the business or society in cyberspace. In the real-world-virtualizing environment, subjects can adjust themselves to suit the environment and surroundings. Managers should have a holistic view to coordinate overall resources, not to generate redundancy or inadequacy. This can be considered as the main content of the 4th Industrial Revolution (4IR) that we are experiencing.

What is Industry 4.0?

Industry 4.0 Environment

The term “Industry 4.0” originates from a project in the high-tech strategy of the German government. Industry 4.0 is the standard model for enterprises in the 4th IR, which stipulates how to organize, operate and communicate with other objects to enhance the adaptability of enterprises in the context of technology advancing and developing like a storm as recently.

The increasing use of advances in IT and communications into production has gradually blurred the boundaries between the physical world and the virtual world. The virtual-physical-link system is the network that connects entities with their copies in the network world, enabling entities to exchange and interact.

Industry 4.0 is the trend of application automation and data exchange in manufacturing technology. It includes virtual-physical-linking systems, interconnected smart devices, and network computing. Industry 4.0 creates the so-called “smart factory”. In modular smart factories, virtual-physical-linking systems monitor physical processes, creating a virtual copy of the physical world and making decisions. regulations. Via Internet of Things (IoT), virtual-physical-linking systems communicate and collaborate with each other and with people in real time. And via the Internet of Services, internal – external and interrelated services, are provided and used.

Renovations businesses should take following the Industry 4.0 model

Capabilities that businesses need to improve in Industry 4.0 (Source: Industry 4.0: Building the digital enterprise [PWC 2016])

Vertical integration of production environment

Vertical integration of the production environment uses the virtual-physical-linking system to enhance connectivity and control. The goal is to increase productivity, quality, the speed of response, the speed of completion of business operations.

In the production system, smart machines continuously share information about the quantity of finished materials, work status and production order changes. Production information and production process status are shared, which helps to optimize the time and efficient use of resources.

Virtual-physical-linking systems not only include intelligent machines interconnecting information, but also the operating environment of intelligent machines, intelligent materials, intelligent factories, intelligent vehicles and cannot be lack of human participation, creating the coordination process from product development, to manufacturing, marketing, sales, and shopping.

In addition to manufacturing, vertical integration also makes impacts on customer access and supports for the sales process. DMS software (Dealer Management System) that many businesses in Vietnam are applying, also belongs to the scope of vertical integration. DMS software uses mobile technology and digital maps to manage the operations of a large network of distributors over a wide geological range.

Horizontal integration

If vertical integration is only to improve each segment of the business, horizontal integration will coordinate the operations of the business as a whole, link individual processes, unify operations and information, improve flexibility to respond quickly to changes and aroused problems.

It’s easy to see that horizontal integration of an enterprise bears much resemblance to implementing an ERP-like information system because only the ERP system is capable of integrating all of the business operations. Enterprises that have been deploying ERP will have a great advantage in the race in the 4th IR. These enterprises have an application framework capable of inter-departmental coordination. It is necessary is to modernize the stages, expand the ERP connection to the production control system, expand connectivity to the field components by applying state-of-the-art interfaces and control technologies.

Products and services digitization

Major changes in market demand are also occurring as increasing access to consumer information based on mobile access universalization, forcing companies to adapt to the way they design, market and provide products and services. One major trend is the development of technology platforms, which combines both supplying and demanding to break existing industry structures. Typically, we can see the platforms in “shared” or “on demand” economies. Technology platforms, easy to use with smartphones, can gather people, assets and data – thus creating new ways to consume goods and services in the process.

Experts said that in the near future, products, people and machines will communicate with each other as on social networks. In order to remain competitiveness, factories will have to provide designs that are customizable and able to change products rapidly; use IoT and other technologies to digitize the entire process, shortening the time of launching products to the market; unify production network using an Internet-based product lifecycle management (PLM) solution so employees can work through the network; use semi-automatic robots to work alongside humans to increase productivity and ensure quality; analyze the data collected on the customer to provide new digital services.

For example, leggings maker Bombsheller, based in Seattle, Washington, founded by Pablos Holman, a programmer, is the world’s first completely programmed leggings manufacturer. Designs are posted online to sell online within an hour and the goods are distributed within a day. Bombshell uses a small production technology to make only one item, thus no expectation of dominating big names in the fashion industry like Zara or H&M. But it can meet the unique ordering requirements of high-quality fabrics bought in Italy, tailor-made in Seattle and delivered within a day at prices within reach of many. This is the evidence that industry 4.0 is no longer a distant future. The textile industry and manufacturers in other areas can learn from Bombsheller or other emerging companies to raise competitiveness. “Mass-produced companies selling the same thing will not be able to compete with Bombsheller because we’re never out of stock and on-demand orders do not cost us anything more,” says Holman.

In the future, thanks to robots, orders by color, shape, and size will be made more and more. It is completely different from current production method. Soon, almost all manufacturing companies around the world will be affected by the industry 4.0. Their strategy and behavior will have to change.

The role of Information Technology (IT)

Industry 4.0 is the era of connectivity, sharing, so the role of IT is increasingly determining. IT is no longer a supporting factor but a major competitive factor. Businesses need to make IT as the center of reformation if they do not want to be out of the loop.

The world will witness a spectacular overthrow of IT businesses, as they turn manufacturing businesses into “hacks” for themselves. With the ability to collect and analyze data, IT businesses will understand the needs of customers and make their own products accordingly. Then they will hire the manufacturing businesses to help them to produce the products. Thus, the era of a “coup” in production is approaching.


With the advancement of science and technology, the role of customers and businesses are gradually changing. The distribution in the chain of production and consumption is happening on a global scale. The role of the world is becoming more and more effective as there are more and more people connected people, connected devices, connected organizations.

In that context, businesses cannot stand outside if they do not want to be down the chain in value. According to standards of Industry 4.0, enterprises need to reform and improve their capacity in three main directions.

First is to enhance vertical integration, by enhancing the application of scientific and technological advances to the operations such as automation, integration between physical activity and control systems, to increase productivity, quality, speed of response to the request, speed of completion of business operations.

Secondly, we should implementing horizontal integration, inter-process, chaining of pieces to form a service and finished products to serve customers.

Thirdly, digitize products and services to meet the high requirements of customers for reviewing, evaluating and product experience, meeting personalized demands for each customer.

Vu Tien Hao – FPT IS
Source: ERP & Enterprises – No. 25

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