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Digitalization has created a new paradigm in manufacturing—where factories are becoming more modern and sophisticated. The use of technologies such as IoT, robots, automation, sensors, advanced analytics, and artificial intelligence has revolutionized industrial-scale production, and its impact can be seen globally. Although the manufacturing industry aspires to setup near-total automated factories to achieve cost savings, it has raised concerns about eliminating human jobs.

While there are significant deployment challenges, will digital technologies take control over the manufacturing assembly lines of futuristic factories? Or will it bring a paradigm shift where ‘human touch’ and ‘craftsmanship’ be dominant? Let us try to shed some light on the puzzle and look at the role of humans in shaping the next industrial revolution.

The rise of intelligent automation

Before we generalize whether digitalization will robotize manufacturing and determine whether it is good or bad for the industry, let us go through what led to this scenario. A brief description of the four historic industrial revolutions would help us understand where the manufacturing industry is headed and what would differentiate the next one, taking shape over the next two decades, ‘Industry 5.0.’

Industry 1.0: The first industrial revolution began in the 1700s with the introduction of engines powered by water, steam, and coal, which moved the economy away from agriculture to industrial production, which eventually paved the way for the first factories.

Industry 2.0: By the 1870s, industrialization had moved on to the second revolution with the use of new-found energy resources such as oil, electricity, and gas. Industry 2.0 gained momentum with the electrification of the assembly lines for mass production. This period was revolutionized with the invention of the telegraph and the telephone, which enabled long-distance communications possible.

Industry 3.0: Almost a century later, in the 1970s, industrialists began to use electronics and computers in manufacturing. The third industrial revolution made use of microprocessors, information technology, and robots for a high level of automation in production. Soon there was a surge in globalization and manufacturing outsourcing due to the availability of skilled labor and lower production costs.

Industry 4.0: The fourth industrial revolution, dubbed as the ‘information revolution,’ introduced the concept of digitalization and integrated it into manufacturing. The advent of connected devices and technologies such as cyber-physical systems (CPS), Industrial Internet of Things (IIoT), data analytics, cloud computing, cybersecurity, big data, and artificial intelligence (AI) made the factories much more efficient and smarter.

According to technical reports, automation of manufacturing processes has cut down the costs of production, quality, and logistics by up to 30%. It has also transformed the management and governance of manufactured goods and products through digitalized supply chain management, predictive maintenance, intelligent inventory management, and effective resource management.

The priory assumption is that these technologies would make functions obsolete. And that, more automation would lead to standardization and, therefore, less human intervention. However, the Industry 4.0 implementation is not without challenges. Although enterprises have been aspiring to setup near-total automated factories and take advantage of cost savings.  

The journey towards digitalization, dependence on technologies, and its perils

The counterfactual observation is that by not standardizing the production lines, their efficiency cannot be improved. All the theories of Six Sigma and Lean production that have the potential to reduce errors and wastes cannot be achieved with too many variations of the product.

The advent of technologies has resulted in senior management teams struggling to understand and failing to adapt to the transformational trends. There must be a lot of technology enablement and periodic handholding to ensure that they unlearn most of their experiences and relearn the new way of working.

Another critical issue is the time required for large organizations to achieve a reasonable level of digitalization. Many organizations take more than three years to see some ROI, and more than five years to reach a state of maturity. Industry 5.0 would come into play after they have reached that stage.

The factor that is the most significant deterrent in this journey is the investments required. It is difficult to demonstrate ROI quickly, and hence, to get financing is not easy. The delay in getting results would not motivate CFOs to invest further.

The rate at which technologies change is another issue. After investing millions of dollars and waiting for years to see the benefit, a change in technology may mean getting back to the drawing board. An example is a movement from 3G to 4G in the Telecom industry. While 4G has taken a lot of investment and time, the talks of 5G have already begun, and this would mean changing the systems, redefining the business processes, and retraining the staff. The changes would also mean more challenges from the security and compliance perspective.

Though moving to the cloud has made computation easier with ‘pay as you use’ and ‘scale up or down on-demand’ models, the data management costs would be enormous, if not handled efficiently. People with these skills are expensive to hire as well. All these would result in increased IT spend.

Compliance is another issue with more evolving regulations, including GDPR for Data protection and other Industry standards like FDA for food and HIPAA for healthcare. Attaining ISO certifications like ISO 9000 and 27000 is also challenging as these are documentation-driven and depend on the organization’s nature, structure, size, systems, and processes, and so on which are time-consuming. There is also an issue of investment for maintaining the certifications and realigning them after every change in the business model.

In the current competitive market, agility and innovation of the business model is the key to success. All the overheads imposed by aligning to Industry 4.0 is a considerable challenge. Taking this further to Industry 5.0 would increase the problems.

In the future, however, customers would want more personalization and options to pick and choose before purchasing a product.

The problem with Industry 4.0 could be interpreted from the American industrialist and founder of Ford Motor Company, Henry Ford’s quote: ‘Any customer can have a car painted any color he wants so long as it is black.

Need for a ‘human touch’ revolution

The concept of human and machines working in tandem could be possible when we break the manufacturing assembly line into two parts:

  1. Using robots for repetitive and labor-intensive work
  2. Using humans for customization and thinking radically out of the box

Japan defines Industry 5.0 as ‘Society 5.0 ’ a ‘human touch’ revolution: “A human-centered society that balances economic advancement with the resolution of social problems by a system that highly integrates cyberspace and physical space.” The phenomenon visualizes a forward-looking society and without information stagnation.

Therefore, unlike how science-fiction movies portray the future, digitalization would not make humans in the industrial production obsolete. Instead, it would integrate intelligent automation, devices, and systems at the workplace to elevate co-operation and collaboration between humans and machines. It would help highly-skilled workers to guide smart machines and robots and work better and faster alongside collaborative bots or cobots.

Industry 5.0 would solve the necessity for personalization and mass customization of products for customers. It would stimulate and apply human intelligence and thought processes in computers—a process known as cognitive computing. The cobots of the smart factories would also be smart enough to understand the human operator's needs, decide whether they need assistance, and help them accordingly.

Further, it would benefit the workforce in two ways: 1) upskilling and 2) providing value-added tasks in production. It would also combine intelligent systems to the existing workflows to better leverage human creativity and brainpower and improve operational efficiencies. Therefore, the focus on factories would be less on mass production, automation, and digitalization, which were the core elements of Industry 4.0.

Perils of Industry 5.0

There is an argument that machines could customize the products by analyzing historical data and patterns and bringing in technologies based on machine learning and AI. This argument is partly valid, but technology cannot be a replacement for human intelligence, and they would play a different role.


Contrary to the assumption that people would lose jobs to AI, studies show different statistics. The future technologies are estimated to contribute to the expansion of the global manufacturing workforce by up to 4% by 2030 from the present 1.2 billion people.The supply chain management across industries would also become more agile and innovative due to increased investments in R&D, intelligent sales and marketing, distribution, and reduce the price for the value delivered.

Thus far, in Industry 4.0, companies globally are automating the production setups and connecting smart devices to let them communicate with each other digitally. This has enabled the machines to carry out repetitive and burdensome tasks. The upcoming Industry 5.0 would be about bridging the gap between robots and highly-skilled workforces to produce and deliver the best-individualized products, services, and customer experiences possible. Here, human intervention would be intellectual rather than physical.

Companies and individuals that not only survive but thrive are the ones that embrace the change and adapt accordingly. This perception has been rightly emphasized by the American futurist and businessman, Alvin Toffler, who said: ‘The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.’


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