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The Fourth Industrial Revolution and the changing face of industry

October, 2016

The Fourth Industrial Revolution and the changing face of industry

According to many experts, including those at the World Economic Forum, we are already seeing the effects of a Fourth Industrial Revolution. Like the many before it, the new level of automation has both its benefits and risks. Navigating the challenges to get to the return on investment will require a level of insight into the inner workings of these new technologies.

Challenges and Risks

First, from a historic perspective, we know that while each industrial revolution was greeted with suspicion and suffered through growing pains, the world is better for having undergone them. Worldwide, distribution of wealth, health, life expectancy, and access to information is better now than at any time in history, while acknowledging that there are still wide gaps between developed and developing nations in all the previously mentioned terms, problems stemming from systemic injustice and issues.

The specific risks stemming from the Fourth Industrial Revolution include but are not limited to the disruption of labor markets, the rapid pace of change, and the changing role of information and its security in our daily lives. The first two risks are familiar with each of the previous revolutions. Mechanization through water and steam power completely changed the role of artisanship and the rate of production, leading to the loss or diminishing of several traditional trades and crafts, a trend that continued through the second (mass production) and third (simple digitization) industrial revolutions. While causing an initial fall in employment, the world adjusted to the developing needs of the market and provided a work-force with the skills needed to participate in the contemporaneous markets for each of these periods.

Rapidity of change may feel extremely fresh as a risk, considering the near exponential rate of changes experienced through the new digitization. However, it is important to remember that each of the previous industrial revolutions were also faced by critics who bemoaned the extremely rapid pace of change. The introduction of the printing press was remarked by some as a technology that disseminated information too quickly, and didn’t allow for proper study and reflection. The pace of change for each industrial revolution was soon adapted to, however, and each success was built upon to lead to another.

The most unique risk to this industrial revolution seems to be the role of information and maintaining its security. A broadening of access to information has been a double edged sword in the current age. Information dissemination and sharing has led to better organizational capabilities, better decision making possibilities, and more accurate understanding of the world around us. It has, however, also contributed to the instability of certain regions of the world, with a new brand of piracy and hacking affecting both the private sector (the North Korean hacking of Sony) and world politics (the suspected Russian hacking of Hilary Clinton). This will require that both the government and the private sector remain vigilant and aware of security issues, maintaining and updating their security measures against a constant stream of attack.

This final point is also extremely relevant to the gap between the developed and developing world. While the developed world is not completely safe from cyber-attack, and while the developing world has unprecedented access to information more than in any time in history, the availability of a knowledge base within the developing world capable of understanding and counteracting the risks of digitization is lacking in comparison with the developed world, meaning that the developed world will handle the pace of change and the information gap more quickly than the developing world, which if left unmanaged could lead to widening inequality and possible pan-national corruption.

Employment

Despite automation and the Internet of Things, the next five years will still require human labor in most parts of the world – the threat of redundancy will be more strongly felt in the developed world rather than in the developing world. That said, automation and tracking will move forward in the developing world, making data entry and monitoring skills all the more important for less skilled workers in the upcoming years. This is something we already experience in the logistics industry, as our racking and storage operations are managed through sophisticated warehouse management systems, with the system setting the product locations for each of our products. We also have transport management systems that monitor the whereabouts of vehicles and set the optimal travel route through traffic data provided while on route.

Currently, racking, unloading, offloading, and the driving of vehicles is still performed by human labor, even if their routes and tracks are set by machines. Beyond the next five years, in a future where automation has rendered these occupations human-free, manual checks of inventory and maintenance of vehicles will become ever more important to ensure that the automation is working error free. This will require accurate accounting and stock keeping skills for the first, and basic engineering and mechanical skills for the second, in addition to information systems design expertise to establish and update the systems.

With regards to wealth distribution and governance of job creation – without entering into the realms of politics, any governing system that doesn’t account for the welfare of the majority risks uprising. Possible solutions are many, but may include “second chance” economies, where existing workforces are re-educated in the skills and fields that are continually developing, while providing earlier guidance to incoming generations of workers, setting realistic expectations for their chances in the job market while directing them to fields that actually require manpower.

Consumer Issues

First, it’s important to note that for clients in the logistics industry, their experience of our products and services are through user portals. A lot of effort and dedication is put into ensuring that the user interface and experience is as simple and transparent as possible for them to monitor their cargo within our warehouses and/or en route to their required destination. Those with the burden of keeping up with the technology advances and updates in the logistics industry, therefore, are the service providers rather than the consumers.

However, even on a service level, design plays a key role on the success of a particular technology, and is a crucial element of the multidisciplinary approach that has been feeding the fourth industrial revolution. A technology that is difficult to use or learn by the end user will not survive in the free market, no matter how sophisticated or the problems and issues it addresses. Free market principles also ensure that end-users are constantly being informed of what is available on the market, while compliance with international and local standards ensures that companies keep up with any updated legal requirements made possible through the advancement of technology.

Private Sector

The private sector will begin to see a stronger advancement and progression on the internet of things. As previously mentioned, we are already using warehouse management systems to assign pallet locations at a rate faster than anything possible manually, while monitoring the movement of our vehicles minute by minute as they move en route to their various destinations. Furthering this will be a “sensing internet” that will allow the systems to make adjustments to various changing stimuli in the environment during a transportation or racking operation directly faster than human-making decision capabilities. We might also see advancing technologies bring about a hybridization of services, as technologies have already allowed for the linking of transportation, planning, management, and control with IT and knowledge and management, and progression in these terms will see the classic division of 2PL, 3PL, and 4PL blur even further.

Rather than coping with the changing environment, the private sector has been a key driver in the technological transformation, leading the charge and uniting various disciplines previously seen as separate and uniting all steps in the supply chain within single locations, allowing clients to pick and choose from among a host of services under a single roof.

Big Data, Cyber Security

Using data to refine services is hardly a unique situation in the modern world – our company has used client feedback and our experience in the field in developing our logistics infrastructure and services so as to cater directly to their needs. Admittedly, this feedback was willingly and overtly given, whereas the concept of big data relies on interpreting trends based on data subconsciously or unknowingly given by clients using services or performing functions unrelated to the type of data collected.

While this may be emotionally distressing, the data itself is neither good nor bad, and in fact can be used for greater good – in logistics, observing traffic flow through the use of collective GPS locations of drivers on the road can optimize transport plans drastically, while the internet of things can monitor stock levels and make inferences based on correlations to update or import new stock based on the movement, flow, and availability of other stock.

The danger and risk posed by the data, then, is only through possible corruption or security threats from hackers and information pirates. As previously mentioned, companies and government entities must first combat this by being hyper vigilant and security conscious in their operations. A certain standard of security may then become a legal requirement for all legally operated businesses. Discouraging hackers through strong regulation and penalties while encourage those dubbed “white hat” hackers, or programmers who discover and report weaknesses in security systems in the effort to ensure security, as well as promoting protections for whistle-blowers – especially those who reveal data corruption or misdeeds – may be the best possible methods to control for the misuse of big data.

Society

The impact of the fourth industrial revolution is already apparent on society. In the developing world, unprecedented access to information has allowed for a level of innovation and possibility in poorer communities, even if these do not match those experienced in the developed world. In the developed world, issues of privacy vs. security vs. access are common topics of discussion, where privacy is now seen as a commodity to trade in return for higher levels of security (as promised by the government) or more access to services and products (as promised by the private sector).

On a corporate level, this has allowed for human resource management systems that provide real-time tracking of employee performance and needs. Although in its early stages, these systems promise to monitor and suggest training and/or corrective action, while allowing those higher in the hierarchy to observe employee interactions and progress from a distance, guiding their decision making.

While there are those that fear that the technologies of the fourth industrial revolution have been isolating and alienating, the technology has actually been an extremely useful tool in community building and in connecting people based on common interests that were previously unknown or impossible. Furthermore, much of social media has the effect of organizing and mobilizing people to meet and affect the real world.

Privacy

As previously mentioned privacy is slowly becoming a commodity that can be traded for other goods or services, but can only maintain its value if confidentiality of services, agreements, and information can be assured. The logistics industry touches upon this through records management services that stores both physical records in brick and mortar warehouses and, more and more, digital scans and records of clients on large private cloud servers. Preserving the safety and security of these services requires constant update of server security through the upholding of international standards, such as the ISO 27001 for Information Security Management Systems.

In terms of threats for the future, war may be waged on both the conventional fronts and on cyberspace. However, business continuity may be at more risk from cyber threats than larger acts of war if only because cyber threats are more pervasive and insistent.

GCC: Economy, Businesses

GCC governments in particular have recognized and embraced the need for more egovernment, or access of services through online gateways and apps. This can be seen in the development of more online services and portals that center around the use of information and communication technology, particularly the internet, to provide better government services by integrating all government parties, connecting private institutions and users with their various services, and placing information within reach of individuals. This creates a transparent, speedy, and efficient relationship between user and government that aims to refine the quality of services.

The GCC has also made tremendous efforts to prepare its local citizenry to effectively participate in the marketplace by raising the nationalization qualification in the government and semi-governmental sector as suits the goals set in the nationalization plans of government parties; implementing citizen employment plans in new and replacement job openings, with a concentration on jobs in dynamic fields; and instating and implementing short-term plans to nationalize jobs that do not require university degrees or high levels of experience.

Meanwhile, the GCC in general and Qatar in particular has placed a high emphasis on the role of small and medium enterprises as well as start-ups for the diversification of their economies and their survival in a fourth industrial revolution world. To this end, many economic zones and logistics facilities have been developed to cater to the specific needs of SMEs when establishing themselves and allowing them to flourish, which includes both physical and digital logistics infrastructure.

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