Out-Law / Your Daily Need-To-Know

Industry 4.0 and the technological revolution in manufacturing – developments in Germany

Out-Law News | 13 Apr 2015 | 8:55 am | 6 min. read

Increasingly sophisticated technology can help manufacturers improve their production processes, enable smarter working and service customers in a more personalised way, providing they navigate a web of legal and regulatory issues.

The fourth industrial revolution, dubbed 'industry 4.0', spans everything from connected employees and connected supply chain and logistics to connected machinery, and encompasses developments in wearable technology, machine-to-machine communications, the internet of things and artificial intelligence.

Its origins are in Germany and it is there that many of the latest connected manufacturing technologies are being developed by vocal industry leaders such as Bosch and a thriving SME market.

The term 'industry 4.0' can be characterised as the decentralisation of intangible, intelligence-related production steps brought about by technological advances, a report by Germany Trade & Invest (GTAI) said last year.

"Simply put, this means that industrial production machinery no longer simply 'processes' the product, but that the product communicates with the machinery to tell it exactly what to do," the GTAI, which promotes German business and technology on behalf of the German government, said.

Data is at the heart of industry 4.0 developments and stems from the fact that networks of sensors on machinery and even employees are being developed to making manufacturing more efficient and responsive.

With industry 4.0 a main theme of Hannover Messe, the world's largest industrial fair which opened today in Hannover, we look at some existing industry 4.0 projects stemming from Germany and the legal and regulatory issues they engage.

Smart gloves

An example of 'connected employee' wearable technology is 'ProGlove', a so-called 'smart glove' being developed in Munich.

According to the company, the ProGlove uses RFID and near-field scanning technology, motion tracking and sensors that "can record environmental and other vital information".

A feature of the product is that it can both track and document workers' activity against pre-set benchmarks. "Motion tracking avoids mistakes when sequences are not followed in the right order or steps are skipped," it said.

The glove can also be used for "automated hands-free scanning of goods" and to help workers identify the right tools and parts for the job they are working on.

The technology is exciting – you can see how it could enhance quality control, and make production processes more efficient and safer. However, it raises a number of legal issues that companies introducing the technology would need to consider.

Because the technology monitors workers' movement and activity, employers need to consider the privacy rights of individuals. To comply with data protection laws, businesses would need to make staff aware their activities will be monitored. They would also need to ensure that data recorded is only retained for as long as is necessary, that the information is stored securely and that access to the data is controlled, for example.

Tracking employees would also raise employment law issues. For example, businesses using tracking technology should not rely solely on data recorded by tracking devices such as the ProGlove for drawing conclusions about staff performance or on disciplinary matters.

Drones

Unmanned remote-controlled aerial vehicles, or drones, are becoming increasing popular intelligent logistics tools in manufacturing and other industries.

Based in Kassel, a small city situated in central Germany midway between Cologne and Leipzig, Airbotix has developed intelligent 'multicopter' drones that can perform tasks such as airborne surveillance of industrial sites and inspections of wind turbines and power lines. In a manufacturing context, drones can also be used to transport parts from one area of a factory to another. The most common press coverage on drones has been in relation to proposals by retailers such as Amazon to use drones to deliver goods bought by consumers to those consumers.

The company's main "flying robot" product can be integrated "directly into the workflow of our customers" and help those businesses do things more easily and more efficiently. Using its drone is a "faster, safer and less expensive solution", it claims, than sending engineers more than 100 metres up a wind turbine tower to conduct an inspection, for example.

However, as Amazon has discovered, there are restrictive air traffic regulations that have to be complied with when flying drones. There are also liability risks to consider. Would businesses using drones be liable for damages in the event of an accident? Could they even face criminal liability in the event an accident with a drone causes death or serious injury to people?

When fitted with surveillance cameras, drone-use is likely to fall subject to data protection laws too. It means drone users must find an appropriate way to notify individuals about the potential for their image to be captured and to describe the purpose of their recording.

Robotics

Manufacturing is becoming increasingly driven by technology and this is manifesting itself in increased use of, and demand for, robotics. In Germany, the government is helping to fund a number of research projects in this area.

The ReApp project aims to drive down the cost of implementing robots into the production process by developing simple "plug-and-play" features that companies can use to put the robots into operation. To do this, researchers are seeking to "define standardised interfaces" and build up a bank of hardware and software from different manufacturers on robot systems.

Separately, the InSA project is looking at how robots can operate on the factory floor alongside human workers in a safe manner. Researchers want to develop new technical standards that enable close interaction of robots and people without compromising safety or unnecessarily holding up production.

The increased involvement of robots and move towards autonomous manufacturing systems in general force manufacturers to think about the potential impact of human safety and their potential liability for, as an example, injuries to workers, defective products or products the use of which bears hidden risks.

Possible problems with identifying liability for damages caused by an autonomous system compromised of several plug-and-play components could also arise. It might not be possible to trace back to the specific source of the fault.

Over-reliance on telecommunications networks could also become an issue should those networks suffer disruption.

A research initiative that receives German government funding and which is reliant on connectivity is the the CoCoS project. It involves the development of a 'smart' production line, where each individual machine involved in a production cycle is separately networked with one another and other central systems. The aim is to enable the integration of production systems throughout a supply chain and allow decision makers to adapt components of the production cycle more easily to reconfigure what is produced.

Customisation in manufacturing

Connectivity in manufacturing is also enabling products to be tailored to an individual or local level but be produced on an industrial scale globally.

A prominent example of this is Coca-Cola’s personalised branded bottle campaign which allowed customers to order cans and bottles of Coke featuring their own or friends' names and short individualised message. The campaign helped the drinks giant arrest a sales slump.

In the German drinks market, a number of companies offer a similar personalised service. Customers are encouraged to come up with a design for a label for a drinks bottle or for the bottle itself. The manufacturers then produce the bottles or customise standard bottles and fill them with a commonly available drink selected by the consumer.

Customisation raises a number of issues, including whether the manufacturer can claim design rights for the customised products, and whether it is the consumer or the manufacturer of the individualised bottles that can be said to own the bottles.

Businesses would also have to consider if there would be restrictions on customising products and selling them if, as in the drinks case, they contain another product developed and sold by another company.

Cultural change

Beyond those raised in the examples above, connected manufacturing raises familiar issues for businesses but in entirely new contexts.

For example, on intellectual property, ownership and licensing issues need to be addressed clearly in contracts with suppliers. Cyber security is also important to protect against unauthorised access to personal data, trade secrets and other commercially sensitive or confidential information.

However, to realise the benefits from technology, manufacturers need to undergo major cultural transformation. Connectivity will change the fundamental dynamics and relationships in the supply chain because it enables a more collaborative approach. By connecting and sharing data, all parts of the supply chain can gain greater visibility over demand and manage it more effectively.

However, there are real advantages to be secured for manufacturers and suppliers. Alongside greater efficiency and better management of risks, the greater transparency of connected supply chains can help companies respond to the greater scrutiny they are subject to, particularly from ever-more demanding business and consumer customers.

Eike Fietz is an expert in corporate law and M&As in the technology sector and Stephan Appt an information and telecoms law specialist at Pinsent Masons, the law firm behind Out-Law.com