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Impact of CPS on Traditional Business Model:

In this blog, we are not much into the technologies used in Industry 4.0. and its benefits in production. Instead, we are focusing on the Business model that can be transformed by Industry 4.0 and how a Traditional Industry can adapt Cyber-Physical Systems (CPS).

First, what is Industry 4.0?


The Industrial Internet of Things (IIoT), which includes cyber-physical systems, Artificial Intelligence & Machine Learning to monitor machinery, Digital Twin, AR/VR, Cloud Computing, Big Data is what enables Industry 4.0. We may thus conclude that industry 4.0 makes your company smart, including smart storage, shipping, and warehouses. But in order to provide the companies some insight and control, it interfaces with the backresource plann ing. 

Difficulties of adapting Industry 4.0 for an Industry with a Traditional Business model:


Let us begin with the issues that are affecting the traditional model. Due to the reserved environment and close network, the company cannot expand its boundary. By having a closed network, it has to bare the overall production cost through mass individual production. Must play individually in the value chain. To overcome this with the new emerging technologies, an organization has to strengthen its core by Standardising its work culture, coming up with new business models, investing in innovations and research, upskilling its work force, and defining legal frameworks.

How a Traditional model can adapt Industry 4.0:


According to the authors, a business model is described by how an organisation creates, delivers, and capture values. Therefore, by introducing the technologie s gradually in each respective departments can help organisation to emerge digitally.


It must optimize its internal and external organisation as a minimal risk. By enabling new technologies such as Cloud Computing, AIOT, AR/VR etc ., this results in value creation by efficient manufacturing and service by reducing the cost.  

Then it must be customer centric. With the help of the digital platforms and resources an organisation must listen to the customers feedback and requests. This can be done by analysing the data with AI. A new interface must be built in order to maintain a better bonding and relationship with the customer. A well established connection between the customers, organisation and stakeholders through a digital platform needs to be formed in order to create a new network and business ecosystem.


Alternatively, by radical innovation and by implementation of CPS the traditional model can completely transformed into a new business model backed with industry 4.0 . It costs more, but can be impleme nted parallelly to the traditional model. In this way a company can experiment with the new model with the old one still provides revenue.

Benefits of adapting Industry 4.0:  


The benefits of Industry 4.0 technologies, processes, and systems include  


• Improved productivity and efficiency,  

• Better flexibility and agility,  

• Increased profitability,

• Optimized Supply chain management,  

• Empowered People  

• Decentralised decision-making,

• Collaborative working and more.


 Industry 4.0 also improves the customer experience, including through more personalized and intelligent products.  



[1]  "Business 4.0: A New Business Model for Industry 4.0," 17 02 2021. [Online]. Available:


[2]  "How Industry 4.0 will Impact your Business," [Online]. Available:


[3]  "How Industry 4.0 technologies are changing manufacturing," [Online]. Available:


[4]  "How can Industry 4.0 benefit my business?," [Online]. Available:


[5]  J. G. J. I. I. Dorleta Ibarra, "Business model innovation through Industry 4.0: A review," 11th International Conference Interdisciplinarity in Engineering, INTER-ENG 2017, p. 7, 2017 OCT.  

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