Improving ROI For Industry 4.0 With Cellular Connectivity

A recent study from ABI Research outlines the ‘intelligence’ in a smart factory and how it is underpinned by cellular connectivity, which plays a business-critical role. Applications of cellular technology are exemplified with concrete Industry 4.0 use cases, providing business justification and initial steps for how manufacturers can move their digital transformation forward.

Calculating Return on Investment (ROI) and Cost of Inaction (COI) by weighing operational costs and savings demonstrates the business impact of Industry 4.0 applications and solutions running on dedicated cellular networks.

According to the report, “Over 4.7 billion wireless modules will be deployed across smart manufacturing factory floors to enable over USD 1 trillion in production value by 2030.” Manufacturing executives need to understand why and how to develop the right connectivity strategies to unlock this value.

In factories, today’s fixed connections are not optimal to modernize the factory floor. Hard-wired connections rely on fixed locations and equipment that require expensive cable installation to upgrade or meet factory extensions. While we expect that Wi-Fi and cellular will coexist for a while, Wi-Fi technology often falls short in reliability, security, and device density. Wi-Fi’s shortcomings do not meet the increasing connectivity needs of advanced industrial applications such as asset tracking or autonomous guided vehicles.

A viable alternative to fixed connections is cellular technology. The advantages of cellular networks are mitigation of bottlenecks, improved flexibility, and streamlined production. Cellular networks enable mobility, reliability, security, and a high device density, which refers to the number of connected devices per square meter. 4G, with a clear path to 5G, can yield significant operational cost savings for an upgraded smart factory.

Deploying Industry 4.0 solutions supported by a dedicated cellular network can generate an operational cost savings ROI of 10x to 20x over five years. In aggregate, these solutions can generate 8.5% in Operational Cost Savings, which equates to USD 200 to USD 600 per sqm per year for a factory or industrial site. ROI and COI depend on the use cases and type of manufacturing site. In the case of a Tier 1 electronics factory, the COI is USD 650 million over five years. For a Tier 1 automotive manufacturer, it is USD 500 million.

For the report, ABI Research analyzed and compared financial and operational results from the original factory (aka status quo factory) to a factory that has been upgraded to support dedicated cellular Industry 4.0 equipment. These use cases include asset tracking, condition-based monitoring (CBM), provisioning connected products, mobile robots, and augmented reality (AR). Each Industry 4.0 use case is outlined describing how it works, how to get started, and the operational cost savings.

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