Industry 4.0 From a Management Perspective

Industry 4.0 From a Management Perspective

Ilknur Taştan Boz, Özden Ibrahimağaoğlu
DOI: 10.4018/978-1-7998-8486-6.ch001
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Industries have undergone three fundamental transformation processes that were revolutionary. Following these processes, industries have been confronted with the phenomenon of Industry 4.0, known as the 4th Industrial Revolution, that is acknowledged as a new transformation process. The basic dynamics of this phenomenon include smart robots, simulation, the internet of things, cloud, additive manufacturing, and big data. It is of utmost importance for businesses that are involved in this process, that are new and trying to adapt to the process, to be prepared and adapt to the effects of Industry 4.0 dynamics. These dynamics lead to significant developments in business models, business processes, organizational structures, employees, and human resource processes. When Industry 4.0 and its dynamics are evaluated in general, businesses that follow the process and make necessary managerial adjustments will be ahead of the competition.
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The period that is known as Industry 4.0 and the use of artificial intelligence in production technologies, has profoundly influenced the whole world on a global basis. Several countries, including the USA, Japan, France and China, attribute their national strategies, innovations and technological developments to this realm (Sergi et al., 2019). Countries have had to evaluate their production systems in line with these new developments and adapt them to alterations and improvements (Doğan and Baloğlu, 2020). Industry 4.0 refers to the fourth industrial revolution, sparking a debate in various studies. It is discussed whether the concept is a revolution or a development (Alçın, 2016). By revolution, it is meant profound and abrupt change. It can be said that developments in Industry 4.0 took place not suddenly, but with the dynamics that occurred over time.

In addition to the emergence of revolutions, there is a broad literature related to the differences of these revolutions from each other and their impacts in the academic literature. The revolution, that is called the first industrial revolution as the first of these revolutions, primarily appeared in England at the end of the 18th century. Along with this revolution, a set of technological developments have brought about a change in production systems. Thus, small workshop-style enterprises were replaced by production plants, and piecework basis production was replaced by mass production. In particular, the production of steam-powered machines and the emergence of technologies that enable mass production have been significant factors of this process (Soylu, 2018).

The second industrial revolution, also known as the technology revolution, spans the period between the 19th century and the mid-20th century. The most important factor in the development of the second industrial revolution is the facilitation of access to distant markets and raw materials as a result of the improvements of transportation by railways. However, a rapid increase in production rates was observed as steam and coal replaced electricity and oil as energy sources in production (Pamuk and Soysal, 2018). Another feature that can be put forward in this period is the mass production phenomenon that emerged with the use of electricity in machines. The most characteristic example of mass production is Fordism put forward by Henry Ford and pushing the automobile industry towards mass production. With Fordism, the way of using labor has changed and the standardization of goods produced through tape production, division of labor, and production increase have been achieved (Doğru and Meçik, 2018). The most important factor that distinguishes the second industrial revolution from the first is the new technologies that is used to increase production capacities. Thanks to these technological developments, the operation modes of the workers have changed, and the jobs are divided according to their expertise (Özdoğan, 2018).

The emergence of the third industrial revolution took place with the development of electronics and information technologies. This development in the specified technologies has also enabled the automation systems to progress in production. Advancing technology and knowledge has also provided diversity in production. With the third industrial revolution, it was observed that the share of the manufacturing industry in industrialized countries decreased, the production was shifted to developing countries and the service sector became prominent. In addition, as the share of the agricultural sector decreased as a result of the first industrial revolution, a decrease in the production sector is noticeable at this stage. The area where the development in the service sector was felt most strikingly was finance (Özsoylu, 2017).

Key Terms in this Chapter

Industry 4.0: Fourth industrial revolution and represents a new stage in the organization and control of the industrial value chain.

Business Processes: It is an activity or set of activities that can accomplish a specific organizational goal.

IoT: It means the network of physical objects things that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.

Organizational Structure: The system that outlines how certain activities are directed in order to achieve the goals of an organization.

Competencies: It is a combination of characteristics that an individual can exhibit in terms of work.

Business model: Business’s core strategy for profitably doing activities.

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