# Self-assessment of Industry 4.0 Technologies in Intralogistics for SME's

Martina Schiffer, Hans-Hermann Wiendahl, Benedikt Saretz

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Martina Schiffer, Hans-Hermann Wiendahl, Benedikt Saretz. Self-assessment of Industry 4.0 Technologies in Intralogistics for SME's. IFIP International Conference on Advances in Production Management Systems (APMS), Sep 2019, Austin, TX, United States. pp.339-346, 10.1007/978-3-030-29996-5_39. hal-02460500

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Distributed under a Creative Commons Attribution 4.0 International License
Self-Assessment of Industry 4.0 Technologies in
Intralogistics for SME's

Martina Schiffer¹[0000-0001-7376-2362] Dr.-Ing. Hans-Hermann Wiendahl¹[0000-0002-5307-3444]
Benedikt Saretz¹[0000-0003-2055-7888]

¹ Fraunhofer Institute for Manufacturing Engineering and Automation IPA, Nobelstraße 12,
70569 Stuttgart, Germany

Martina.Schiffer@ipa.fraunhofer.de

**Abstract.** The 4th industrial revolution generates a high potential for smart production systems. Many manufacturing companies considering therefore the application of cyber-physical systems in the sector of intralogistics. The aim is to achieve better logistics performance or lower costs. However, small and medium sized enterprises (SME) are hesitant about introducing Industry 4.0 technologies. They fear high implementation costs, low benefits and the lack of know-how increases the reluctance of the companies.

This paper presents a procedure which enables SME's to assess the benefits of Industry 4.0 technologies by themselves. The model follows the recognized principle: First improve your processes, then automate them:

* Methodical basis is a process model intralogistics, which also considers self-controlling cyber-physical systems. In addition, the benefit aspects are assigned to the individual process steps.

* In the specific application, the company first determines the digitization potential of the individual activities and then the associated benefits of Industry 4.0 technologies.

The procedure reduces on the one hand the uncertainty regarding of wrong decisions and creates on the other hand the possibility for companies to select Industry 4.0 technologies goal-oriented. The described procedure was validated with SMEs.

**Keywords:** Intralogistics, Industry 4.0, Cyber physical systems, Smart factory,

# 1 Introduction

Production companies are in a constant state of change. Comparable service offers with regard to functionality, quality and price of the products bring logistics services, such as short delivery times, to the fore as a competitive factor. The introduction of Industry 4.0 Technologies, in particular cyber-physical systems (CPS), is seen as a possible solution to the requirements of the market. Most of the companies examine the planning and evaluation of Industry 4.0 Technologies in value-added processes [1,2]. The ad-
joining areas, such as Intralogistics, have received little attention. But the implementa-
tion of Industry 4.0 Technologies in this area hides a high potential. On the one hand,
Intralogistics secures the flow of materials and information within the company and, on
the other hand, enables a successful supply chain [3]. Despite this high potential, many
companies don't invest in Industry 4.0 Technologies. In particular, small and medium-
sized enterprises (SME's) have deficits in planning and implementation. [4] The rea-
sons are the high introduction costs, the missing know-how of the companies as well as
the non-evaluable benefits of Industry 4.0 Technologies.

The contribution of this paper is a two-step process which enables SME's to assess the benefits of Industry 4.0 Technologies by themselves. The procedure was validated with SME's in workshops. The procedure was profitably developed within the framework of the research project Industry 4.0.

## 2 Related Works

Intralogistics is responsible for the material and information flow between the value creation steps within a company. The use of cyber physical systems can realize great improvement potentials along the internal operational processes. Cyber physical systems can communicate with each other via the Internet and record their environment with their sensors. The generated data are evaluated, linked and used for the control of corresponding actuators. The result is a decentralized network that can optimize itself and counteract problems along the entire value creation process. CPS technologies offer great advantages especially for SMEs, which often produce small series or individual products. Through intelligent linkage of the material flow a flexible and fast reaction factory is realized [5,6,7].

For the introduction of CPS Technologies an economical evaluation is necessary. A benefit or potential analysis is especially important for SMEs with tighter budgets as large enterprises. A quantification of the potential of a certain CPS technology is however very difficult due to the cross-sectional function of logistics. In the literature different evaluation methods are called dependent on the problem definition and the area of application. Consequently, a uniform procedure for the potential analysis of CPS technologies for use in intralogistics has not yet been defined [6,8].

## 3 Methodic Procedure

The process model intralogistics build the methodical basis of the procedure. A (pro-
cess)-model is a reflection of the reality which, through abstraction and simplification,
provide conclusions about states, changes and functional relationships [9,10]. The re-
quirement criteria for the process model intralogistics are simplicity, completeness and
intuitive presentation. Thus, the SME-suitability is on the one hand granted as the
adaptability on larger enterprises is possible.
The model subdivides six process modules:

* Incoming goods

* Internal transport

* Storage

* Order picking

* Packaging

* Outgoing goods

The object of consideration is the characteristics of the material and information flow, the used resources and the relevant data for planning and scheduling. Fig. 1 shows the generic process model. The model follows the process sequences preparation, implementation and completion of general process and action models [11]. The process sequences apply to information and material flow level and give the model a clear structure.

<figure><img src="image_2.png" /><figcaption>Fig. 1. Generic Process Model</figcaption></figure>

Process activities describe the respective process module in a sequential order. This applies both, information and material flow, levels. The preparation phase includes the steps ‘Create order’, ‘Accept order’ and ‘Release order’ on the information flow level. After each activity a result must take place, which represents the possibility of a system-technical illustration. The trigger arrow forms the interface between information and material flow. The phase implementation starts only with the order release and the physical availability of the material on the input buffer area. In the implementation phase, the ‘Start order’ and ‘Monitor order’ activities are at the information flow level. Both activities reflect the progress of the order on the one hand and provide on the other the data basis for calculating the lead time. At the material flow level, implementation begins with the transfer of the performance object (PO) from the buffer area. Generically, the two activities ‘take on PO’ and ‘transfer PO’ take place within the model. Specific process-module activities are possible, e. g. ‘Check PO’ in incoming goods-process.

In order to consider the above-mentioned requirement criteria, assumptions and application limits of the process model must be drawn. The intralogistics activities of SME's
To ensure that corporate strategy and goals can be taken into account when evaluating the digitization potential, it's possible and recommended to prioritize the dimensions. [12] Furthermore, there are conflicting objectives between the dimensions which must be taken into account when determining the digitization potential [13]. The step of determining the digitization potential enables the company to make a strategically correct selection of the processes to be digitized.

The degree of detail of the target dimensions is not sufficient for estimating the potential of Industry 4.0 Technologies. Therefore, in the next step KPI's were defined on the basis of the target dimensions, see Fig. 3.

<figure><img src="image_3.png" /><figcaption>Fig. 3: Procedure for Potential Assessment</figcaption></figure>

The calculation of these KPI's does not deviate from the commonly used one in the literature, so that no further definition is given here. The potential estimation is carried out with the values low, medium and high.

As with the determination of the digitization potential, the conflicts of objectives of the KPIs must also be taken into account when estimating the potential of Industry 4.0 Technologies. The process model forms the basis of the potential estimation. Possible Industry 4.0 Technologies were assigned to the activities of the process model. The assignment of the technologies as well as the estimation of potential took place with the help of experts from research and industry.

## 4 Results / Validation

The validation of the methodical approach took place at two medium-sized factory equipment suppliers during a workshop. Within the scope of the workshop the requirements for the applicability of the procedure in SME's were to be examined. Criteria for
this included comprehensibility, extensibility, survey effort and consistency. The pro-
cedure for the self-assessment of Industry 4.0 Technologies was essentially confirmed.
In particular, the approach of optimizing the processes first and then digitizing them
met with approval. For example, the process model revealed gaps in process responsi-
bility and thus provided initial fields of action for process improvement. The procedure
for determining the digitization potential and the benefit potential of Industry 4.0 Tech-
nologies was confirmed under the aspects of SME suitability. Three extension requests
were mentioned by the participating companies:

1. Possible combination of the process modules

It was noted that in SME's, several process modules are often processed together, e.g. combined picking and transport orders. Fig. 4 shows the possible combinations of the individual process modules. For a better understanding the production / assembly has been included in this overview. The internal transport is shown in this diagram between the process modules.

<figure><img src="image_4.png" /><figcaption>Fig. 4: Possible combination of the process modules</figcaption></figure>

2. Extension of the KPI's by soft factors

In the course of the potential assessment, participants would note that Industry 4.0
Technologies are not only being introduced to improve process capability. Especially
for SME's the external impact is very important. On the one hand towards the customer
but also towards potential employees. SME's often have the problem to find suitable
personnel. To be seen as an innovative and sustainable company, companies should
also invest in new technologies because of these aspects. To this end, the potential as-
sessment could be supplemented by KPI's such as degree of innovation and employee
motivation.
### 3. Extension of the model by life cycle costing

Not only the estimation of potential is relevant for the introduction of Industry 4.0 Technologies. As already mentioned, SME's fear the introduction of such technologies. These results are on the one hand from the not recognizable benefit and on the other hand from the high costs. In order to have a comprehensive picture for the decision, the procedure should be extended by the life cycle costing. The extension of the life cycle costing in relation to Industry 4.0 Technologies is also currently part of the research project Industry 4.0 profitable.

## 5 Conclusion

Industry 4.0 Technologies will gain in strategic importance in the future. SME's in particular should not lose their connectivity with regard to digitalization. Nevertheless, the approach is: First improve your processes and then digitize them. The step-by-step approach in this article supports SME's in improving intralogistics processes and in making decisions about these Industry 4.0 Technologies. After the process improvement the procedure gives a decision assistance which process step the company should digitize first and afterwards with the help of which Industry 4.0 Technology. The results of the validation show that the procedure appears conclusive and plausible. The extensions to the procedure requested by the companies are currently being examined and subsequently taken into account in the model.

### Acknowledgements

The IGF project 19183 N of the Forschungsvereinigung Bundesvereinigung Logistik (BVL) e.V., Schlachte 31, 28195 Bremen was funded by the AiF within the framework of the program for the promotion of joint industrial research (IGF) of Federal Ministry of Economics and Energy by resolution of the German Bundestag.

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