Consistently connected equipment and production units each become an object with distinct properties in the manufacturing network. They always communicate their performance status and, jointly, respond autonomously to dynamic production needs.

FREMONT, CA: Horizontal integration and vertical integration are two processes well-known in numerous contexts. From an operational standpoint, a horizontally integrated business focuses its activities around its core competencies and sets up partnerships to build an end-to-end value chain. A vertically integrated enterprise, on the other hand, keeps most of its possible value chain in-house—from product development to manufacturing, sales, marketing, and distribution.

Industry 4.0 has further expanded the significance of horizontal and vertical integration, making them the backbone on which the smart factory is established.

Execution of Horizontal or Vertical Integration in Industry 4.0

When it comes to horizontal integration, industry 4.0 visualizes connected systems of cyber-physical and enterprise practices that bring in unprecedented levels of automation, compliance, and operational performance into production methods. As a result, horizontal integration takes place at several levels, including:

On the Production Floor

Consistently connected equipment and production units each become an object with distinct properties in the manufacturing network. They always communicate their performance status and, jointly, respond autonomously to dynamic production needs. In addition, the ultimate objective is for smart production floors will to cost-effectively produce lot sizes of one and reduce expensive downtime with the help of predictive maintenance. 

Across Multiple Production Facilities

If a firm has distributed production facilities, industry 4.0 encourages horizontal integration across plant-level Manufacturing Execution Systems (MES). In this situation, production facility information (unexpected delays, inventory levels, and others) are shared effortlessly across the whole enterprise. Furthermore, the possible production tasks are shifted mechanically among factories to respond swiftly and competently to production variables.

Across the Entire Supply Chain

Industry 4.0 offers data transparency and high levels of computerized collaboration across the upstream logistics and supply chain that provisions the production methods themselves and the downstream chain, which brings the end products to market. Third-party suppliers and service providers should firmly but tightly incorporate horizontal integration into the business’s production and logistics control systems.

Vertical integration in industry 4.0 aspires to bring together all logical layers in the company—from the field layer (the production floor) to quality assurance, R&D, product management, IT, sales and marketing, and others. Data flows generously and transparently up and down the layers so that strategic decisions can be data-driven. The vertically integrated industry 4.0 enterprises achieve a critical competitive edge by being able to react suitably and with agility to altering market signals and new possibilities.

The Difficulties of Horizontal or Vertical Integration in Industry 4.0

Data Security and Privacy

Horizontal integration in industry 4.0 needs sharing of data outside the firm with suppliers, partners, subcontractors, and, in many cases, consumers as well. This level of precision is encouraging in terms of production flexibility and agility. Still, it also raises concerns of warranting that the data of all stakeholders is kept safe and accessible exclusively on a need to know basis.

Scaling IT Systems and Infrastructure  

Industry 4.0 radically increases the capacity and velocity of data being collected and studied to support improved levels of horizontal and vertical integration. In most cases, infrastructure and IT systems will have to experience a fundamental change to assist the business’s journey toward digital transformation.

Industry 4.0 deployments are often a compelling channel for shifting enterprise workloads and databases to the cloud, where they are more effortlessly available to an extensive range of stakeholders. This shift to cloud-based IT needs careful planning by a multidisciplinary team and is also a rare chance to start breaking down the silos. Additionally, cloud-based implementations address the already noted data security and privacy challenges, with organizations benefiting from the access-control and robust security capabilities employed by cloud service providers.

See also: Top Cloud Consulting/Services Companies