Understanding the Transformation Towards Industry 4.0

Abstract

The ongoing process of digital transformation in manufacturing – known as Industry 4.0 - hauls fundamental change. The whole value chain of enterprises is affected. As the digital transformation of businesses is still ongoing, many enterprises struggle with the challenges arising. This paper aims to show these struggles but also to contribute by analyzing how enterprises are transforming. We take a phenomenological view of the ongoing transformation. To get in-depth insights, we conducted and analyzed 18 interviews with 10 companies. For most companies, the digital transformation starts in operations with the vision of building a smart factory. Other primary and support activities also need to transform. These essential changes lead to restructuring and extensions of the strategy of manufacturing companies. Following these changes, companies will not need to choose either cost advantage or differentiation as a strategy but instead can do both.