Manufacturing - June 2021 by Manufacturing Global

June 2021 | manufacturingglobal.com

Technology: Cyber Threats and How Manufacturers Can Mitigate the Risks

Factories of the Future Industrial Manufacturing 1.0 to 4.0

Global Innovation Leaders in Manufacturing

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AI & Automation: Why Should Manufacturers Adopt AI and Big Data?

Smart Manufacturing: The growing shift to smarter supply chains

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The Manufacturing Team EDITOR-IN-CHIEF

GEORGIA WILSON DEPUTY EDITOR

RHYS THOMAS LAURA GARCIA EDITORIAL DIRECTOR

SCOTT BIRCH CREATIVE TEAM

OSCAR HATHAWAY SOPHIA FORTE SOPHIE-ANN PINNELL HECTOR PENROSE SAM HUBBARD MIMI GUNN JUSTIN SMITH

PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ

VIDEO PRODUCTION MANAGER

MEDIA SALES DIRECTOR

DIGITAL VIDEO PRODUCERS

SALES AND MARKETING DIRECTOR

KIERAN WAITE

OWEN MARTIN PHILLINE VICENTE JENNIFER SMITH

SAM KEMP EVELYN HUANG MATTHEW EVANS TYLER LIVINGSTONE

PRODUCTION EDITOR

MARKETING MANAGER

PRODUCTION MANAGERS

JENNIFER SMITH

KAYLEIGH SHOOTER PROJECT DIRECTORS

JAMES RICHARDSON KARL GREEN

JAMES WHITE

JASON WESTGATE MANAGING DIRECTOR

LEWIS VAUGHAN

CHIEF OPERATIONS OFFICER

STACY NORMAN PRESIDENT & CEO

GLEN WHITE

EDITORS LETTER

The Road to Recovery: Reigniting the Innovative Flame After a year of recovery, manufacturers and supply chains are looking ahead to future proof their organisations, avoiding the repetition of the disruptive events of 2020.

“As we are evaluating what our ‘next normal’ will look like, we can’t help but see the massive opportunities this disruption has created for digital manufacturing” -Fictiv

MANUFACTURING GLOBAL MAGAZINE IS PUBLISHED BY

As mass inoculation continues to alleviate populations of their COVID-19-induced symptoms, countries begin to emerge from lockdowns and restrictions are lifted, many organisations are making the leap back to work. The shift, as a result, is causing many to reflect on the effects of the pandemic, with the majority (94%) reporting that the pandemic has had a long term effect on their business. Now, this may sound bleak, with manufacturers reporting static supply chains, time-intensive tasks, limited talent, quality issues, and security risks as some of the key barriers to innovation, but there is a light at the end of the tunnel. Determined to not repeat the disruptions of 2020 when it comes to future threats, manufacturers have reignited their innovative flames. For 68% of manufacturers, improving supply chain resilience and agility is the top business priority for 2021, alongside 40% prioritising investments into sustainable manufacturing processes and 54% in product innovation. Other Focus areas include manufacturing talent, industry 4.0 - advanced technologies (34%) and security.

GEORGIA WILSON

georgia.wilson@bizclikmedia.com

manufacturingglobal.com

CONTENTS

Our Regular Upfront Section: 06 Big Picture 08 The Brief 10 Global News 12 People Moves 14 Timeline: Made in China 2025 16 Legend: Kiichiro Toyoda 18 Five Mins With: Gavin Mee

22 J-Tec

Driving Growth in Asia

Digital Factory

Factories of the Future Industrial Manufacturing 1.0 to 4.0

Smart Manufacturing The growing shift to smarter supply chains

Technology

Cyber threats and how manufacturers can mitigate the risks

Top 10

Global Innovation Leaders in Manufacturing

AI & Automation

Why Should Manufacturers Adopt AI and Big Data?

SAP White Papers

Industry 4.0 exclusive reports

BIG PICTURE

Mercedes-Benz

June 2021

Benz Patent Motor Car: the first automobile Germany, Europe

With an engine output of 0.75hp (0.55kW), and a compact, high-speed single-cylinder four-stroke engine, Carl Benz - in 1886 - applied to patent his creation of the first automobile. Dubbed ‘the birth certificate of the automobile’ the three-wheeled, Benz Patent motor car ran for the first time on New Year’s Eve in 1879.

manufacturingglobal.com Manufacturingglobal.com

THE BRIEF “ULTIMATELY, ADOPTING INDUSTRY 4.0 DOESN’T NEED TO BE AN ALL-OR-NOTHING EXPENSE, BUT RATHER A PROCESS INVOLVING SMALL, MEASURED STEPS TO IMPROVE MANUFACTURING EFFICIENCY” Ruchir Budhwar

SVP and Regional Head – Europe, Manufacturing Infosys  READ MORE

"AFTER SPENDING 2020 PLAYING DEFENSE AGAINST CYBERATTACKS, IT IS TIME TO TAKE A STEP BACK AND CREATE A SECURE FOUNDATION FOR THE FUTURE” Bobby Bono

Partner and Industrial Manufacturing Practice Leader PwC  READ MORE

“THE COVID-19 PANDEMIC HAS EXPOSED THE GAPS IN OUR GLOBAL SUPPLY CHAINS AND THE OVERALL NEED FOR GREATER TRANSPARENCY, EFFICIENCY AND REAL-TIME FLOW OF INFORMATION” Jim Bureau CEO JAGGAER 

BY THE NUMBERS Artificial Intelligence (AI)

Which technology will see the biggest adoption from manufacturers in 2021?

20.4%

Automation

22.6%

6.6% Additive Manufacturing

10.2%

Collaborative robotics

10.2%

The internet of things (IoT) Other

1.5%

50%

of factory work is expected to be done remotely by 2024 READ MORE

61% of manufacturers have had a cybersecurity incident in their smart factories READ MORE

US$673.6bn

Pharmaceutical manufacturing is predicted to reach US$673.6bn by 2027

READ MORE READ MORE

June 2021

28.5%

Why you should implement Industry 4.0 technologies at scale With many organisations stuck in pilot purgatory, how do global lighthouse companies come out from the shadows of outdated working models and insufficient innovation? McKinsey explains that the answer is twofold: agility and workforce development. By adopting these ways of working, organisations can harness the value that Industry 4.0 (4IR) technologies provide - productivity gains, new revenue streams, and flexible production systems - for long term business growth.

 GENERAL MOTORS AND LG ENERGY SOLUTIONS General Motors & LG Energy Solution, via their joint venture - Ultium Cells LLC - announce investment plans of over US$2.3bn to build a second battery cell manufacturing plant.  BATTERY RESOURCERS Lithium-ion battery recycling and manufacturing startup Battery Resourcers - raised US$20mn in its Series B equity round, which will support the development of a commercialscale processing facility. (REGION) WESTERN EUROPE With 17 projects and a value of US$9.1bn, Western Europe holds the biggest global share of investment into battery manufacturing projects (43%).

So why should companies fully embrace agile ways of working? Lighthouse organisations that have fully embraced agile ways of working have allowed for rapid scaling of 4IR technologies across production networks and value chains to maximise flexibility, adaptability and a dynamic approach.

 EVERGREEN Evergreen’s Ever Given container ship has been impounded by Egyptian authorities in Ismailia, seeking legal action for the cost of the salvage operation and lost transit fees. Figures reported at US$900mn.

Okay, so why is workforce development a key component? By training, reskilling, and upskilling employees lighthouse organisations have prepared and optimised their workforce in the 4IR environment. Keeping people at the centre of a 4IR transformations allows organisations to realise their full potential to build an innovative and creative future.

 CHINA ASSOCIATION OF AUTOMOBILE MANUFACTURERS (CAAM) China Association of Automobile Manufacturers (CAAM) predicts automotive sales in China to drop by 8% as a result of slowing economic growth and tighter vehicle emissions standards.

W A Y U P

JUN21

W A Y D O W N

manufacturingglobal.com

GLOBAL NEWS

UNITED STATES

Mars Accelerates its Digital Transformation with Microsoft Mars and Microsoft announce the expansion of their long term relationship with a new agreement to accelerate Mars’ digital transformation. The multinational manufacturer plans to leverage Microsoft’s Azure platform to optimise its operational speed and intelligent manufacturing supply chains.

June 2021

UNITED KINGDOM

UK Government Accelerates Green Industrial Revolution Six months on from the UK announcing its ‘10 Point Plan for a Green Industrial Revolution’, the country’s government plans to inject £166.5mn to develop technologies and solutions in carbon capture, greenhouse gas removal, hydrogen, and decarbonisation for manufacturing, steel, energy, and waste.

GLOBAL

Top 10 manufacturers committed to workplace diversity Manufacturing Global breaks down DiversityInc’s 2021 Top 50 companies that hire, retain, and promote women, minorities, people with disabilities, LGBTQ+, and veterans. Specifically, we look at the Top 10 manufacturers on the list, paving the way for the industry.

5 4

GERMANY

BMW: First Car Manufacturer to use Pirelli Sustainable Tyres Increasing its sustainable efforts in the automotive industry, BMW becomes the first automotive manufacturer to use certified sustainable natural rubber and rayon tyres for its X5 Plug-in Hybrid vehicles exclusively sourced from Pirelli.

KOREA

Factory of the Future: Samsung Boosts Logic Chip Investment Samsung Electronics outlines its latest plans to increase its System LSI and Foundry businesses investment by US$33.5bn over the next nine years. By increasing its investment, the company plans to accelerate its research into cuttingedge semiconductor process technology and the construction of a new production facility.

manufacturingglobal.com

PEOPLE MOVES MARTIN MCCOURT “ Having dedicated over 40 years to manufacturing design and marketing for leading British brands, I am excited to join Tharsus’ leadership team to support the company on its growth journey” FROM: LEARNING CURVE GROUP TO: THARSUS WAS: CHAIRMAN OF THE BOARD NOW: NON EXECUTIVE DIRECTOR

Former CEO of Dyson for 15 years, Martin McCourt has joined the board of Tharsus as a Non Executive Director. Starting his career journey in 1976, McCourt has worked for the likes of Mars, Toshiba and Duracell. 12

June 2021

With this, McCourt brings with him his wealth of industry knowledge and expertise to one of the UK’s most advanced robotics companies as demand for innovation in automation and robotics rises. “The business is clearly going from strength to strength as its autonomous and robotics solutions drive innovation across the UK business landscape and beyond. I look forward to immersing myself in Tharsus’ great work that will no doubt ensure it stays at the cutting edge of the automation industry,” said McCourt.

KERSTIN ENOCHSSON FROM: VOLVO CARS TO: VOLVO CARS WAS: VICE PRESIDENT OPERATIONS PLANNING NOW: GLOBAL HEAD OF PROCUREMENT

PAUL DILAURA

With more than 20 years of experience in strategic development, project management and operations planning, Kerstin Enochsson’s career journey began at McKinsey, moving on to Deutsche Bahn before joining Volvo Cars in 2007. Starting as Project Manager Aftermarket, Enochsson has climbed through the ranks to the position she holds today as Global Head of Procurement.

FROM: CARBON TO: MANTLE WAS: VICE PRESIDENT OF SALES AND APPLICATIONS ENGINEERING NOW: CHIEF COMMERCIAL OFFICER With a career spanning 24 years, Paul DiLaura has joined Mantle, following four years at Carbon, where he helped to bring three generations of printers and many new materials to markets. “I joined Mantle because of our unique ability to make precision parts with trusted tool steels at a fraction of the time and cost of traditional manufacturing or other 3D printing processes. I look forward to working with manufacturers and partners to realise this value and to help evolve our technology,” said DiLaura. manufacturingglobal.com

TIMELINE MADE IN CHINA 2025 China’s short term development roadmap to transform the country into a high-end manufacturer and technology powerhouse. The implementation of the Made in China 2025 (MIC 2025) initiative, is led by the Ministry of Industry and Information Technology (MIIT) with a focus on nine strategic priorities and 10 priority sectors.

2015

2025

The World’s Largest Manufacturer of Goods

Closing the Gap

Establishing itself as the world’s largest manufacturer of goods, and a major manufacturer when it comes to scale, China in May 2015 released its ‘Made in China 2025’ roadmap. The national initiative aims to improve the manufacturing industry, reducing its dependency on other countries. 14

June 2021

By 2025, the initiative aims to comprehensively upgrade China’s manufacturing sectors and strengthen its position as a major manufacturing nation. The initiative will also focus on quality manufacturing, smart manufacturing technologies, improving the efficiency of energy, labour and material consumption, making chinese companies, leaders, and master key technologies instead of importing them.

What’s the beef with the ‘Made in China 2025’ strategy?

2035

2045

2049

Becoming a Mid-Level Player

A Leader in Innovation

A Global Leader and Technological Powerhouse

By 2035, China’s initiative aims to have the country operating as a mid-level player in the manufacturing industry. To do this China will increase its innovation, increase its IP ownership, and achieve globally innovative breakthroughs in key areas.

By 2045, China aims to be a leader when it comes to innovation, and be on its way to becoming a top player and global leader in the industry.

By 2049 - the final stage of the initiative - China is focused on becoming a global leader in key, high-end manufacturing sectors, driving innovation and holding a competitive advantage.

manufacturingglobal.com

Kiichiro Toyoda LEGEND

Founder of Toyota

ounding the Toyota Motor Corporation in 1937, Kiichiro Toyoda is the first son of inventor and founder of Toyoda Automatic Loom Works - Sakichi Toyoda. Following in his fathers innovative footsteps, Toyoda began his career working in the family business. During his time at the company he made several improvements to its techniques for eliminating waste in manufacturing establishing what is known today as the ‘Just-in-Time (JIT) method’. After visiting England and the United States (US) to further his education in manufacturing, Toyoda became interested in automobiles, believing that “the era of automobiles would soon come to Japan.” Receiving funding in 1933 from the family business to develop an automotive development program, Toyoda and his team used the funding to take apart a Chevrolet to understand each component. Overcoming many manufacturing challenges in Japan due to a lack

June 2021

years at Toyota (since its founding in 1937) Born 11 June

1894 2011

Toyota Motor Corporation was the third largest manufacturer in the world

of automotive manufacturing technology in the country, the team in 1936 - produced the first prototype automobile for Toyoda known as the ‘Model A1’ passenger car. The following year the program was trademarked Toyota Motor Corporation, the name Toyota was chosen because it comprises eight strokes in Japanese script, which is considered a lucky number. Toyoda remained at the company until 1950, laying the foundations for Toyota Motor Corporation’s rise in the automotive industry, passing away in 1952. "Kiichiro Toyoda embodied the foresight and innovation that few people in history possess, demonstrated by his significant contributions to the automotive industry. We are honored to include him in the 2018 induction class to the Automotive Hall of Fame", stated Ramzi Hermiz, President and CEO, Shiloh Industries and Board Chairman, Automotive Hall of Fame.

“The Toyota success story is built on innovation, both in terms of its products and the processes by which they are made” - Toyota Motors manufacturingglobal.com

FIVE MINS WITH...

GAVIN MEE

Managing Director Northern Europe at UiPath Q. WHAT DOES YOUR COMPANY PROVIDE THE MANUFACTURING INDUSTRY?

» Just how physical industry robots can

streamline processes on the factory floor, UiPath software robots can provide support to the manufacturing industry. Rather than solely relying on employees to complete time-consuming and repetitive admin tasks such as procurement, order management, inventory management and payment processing to name a few, UiPath robots can lend a helping hand.

Q. WHAT TECHNOLOGY DO YOU THINK WILL BE THE MOST VITAL TO THE INDUSTRY IN 2021?

» Last year saw a huge amount of change

within the manufacturing industry and business as a whole. Automation has proved vital in helping organisations adapt to the new business climate by digitalising processes to reduce the need for employees to be physically present, all while improving efficiency in difficult economic circumstances. For this reason, I believe RPA will continue to prove vital in 2021. 18

June 2021

Q. IS THERE A PARTICULAR ACHIEVEMENT YOU ARE PROUD OF IN YOUR CAREER?

» I take pride in helping people realise their

career goals, in particular helping them start their own leadership careers.

“ Through our diverse and equal talent principle, we will also continue to make UiPath a great place to work”

“ I have been at UiPath for five months now and I am consistently inspired by the way we all live our lives here” Q. WHAT’S NEXT FOR YOU IN THE NEXT 12-18 MONTHS?

» In the next year or so, I will be continuing

to work in partnership with our customers to help them realise their digital transformation agenda through intelligent automation. To support this, we will be working to scale our own organisation and partnership ecosystem to help our customers achieve their goals. Through our diverse and equal talent principle, we will also continue to make UiPath a great place to work.

Q. WHAT INSPIRES YOU?

» Working for a culturally rich organisation

inspires me. I have been at UiPath for five months now and I am consistently inspired by the way we all live our lives here. Our customers also inspire me by truly innovating through technology to meet their business needs and vision, while creating new offerings and improving the work/life balance of their employees. Those on the front line throughout the pandemic have also provided a huge source of inspiration. Despite seeing it every day in the headlines and on TV, I remain totally in awe of the doctors and nurses caring for COVID patients. What they have done around the world over the past 14 months is incredible. manufacturingglobal.com

Bringing the Community to LIVE Broadcast from London to the World

September

28th - 30th 2021 A BizClik Media Group Brand

Featuring:

Keynote Speakers LIVE Roundtable Q&As Networking Lunch Inspirational Presentations

Over 5 Stages:

Main Stage Procurement Stage Supply Chain Stage Sustainability Stage Tech Expo Stage

EARLY BIRD TICKETS

Creating Digital Communities

J - TEC MATERIAL HANDLING

June 2021

J - TEC MATERIAL HANDLING

DRIVING

GROWTH

IN ASIA

Process know-how, open control systems and independence from suppliers is leveraging business growth for J-Tec Material Handling in South-East Asia

WRITTEN BY: JANET BRICE PRODUCED BY: THOMAS LIVERMORE

pen control systems, an independent approach to suppliers and the skill to design tailor-made solutions is helping J-Tec Material Handling leverage its growth throughout South-East Asia. Just three years after the Belgium-owned company - a wholly-owned business unit of its parent company Katoen Natie - put down roots in Rayong, Thailand they are driving growth across SEA as a process engineering partner to clients in the food and chemical industry. “Part of our business plan focused on the possible synergies with Katoen Natie who have been in Thailand (and Asia) for more than 20 years,” said Arnaud Nelissen Grade, Sales Director Asia at J-Tec Material Handling. “Aligning ourselves with Katoen Natie allows us to share resources like IT and HR more efficiently. But more importantly, it has resulted in a closer cooperation between the existing business units here which now makes our group quite unique in the region in terms of what we can offer to our clients. manufacturingglobal.com

J - TEC MATERIAL HANDLING

“ In terms of growth we just got started, but we've already exceeded most company targets and expectations that we set up three years ago.” ARNAUD NELISSEN GRADE SALES DIRECTOR ASIA, J-TEC MATERIAL HANDLING

June 2021

“We were also attracted to Thailand because it is a big market with a lot of investments going on in the food and the chemical industry. On top of that, J-Tec previously had some success with significant projects in Thailand - so we felt that we could easily build on those to gain momentum.” For more than five decades, J-Tec has focused on its customer-centric approach and has retained its competitive edge in handling solids and liquids due to the fact it is totally supplier independent and offers clients open control systems moving away from the more standardised approach of most of their competitors. “This means we can guarantee a customised solution for every challenge,”

J - TEC MATERIAL HANDLING

ARNAUD NELISSEN GRADE TITLE: SALES DIRECTOR COMPANY: J-TEC MATERIAL HANDLING LOCATION: ASIA

said Nelissen Grade who bridges the gap between Europe and Asia as he spearheads the rapid growth in the region. Speaking from J-Tec’s Asian headquarters in Rayong, he said: “We don’t offer a onesize-fits-all approach; instead we listen to the client and use our in-house knowledge and tools to develop a tailored solution for their project. “J-Tec acts as a partner during the complete process: from the conceptual design, on through detailed engineering, procurement and manufacturing, up until installation and commissioning, and if required training and maintenance.” He pointed out the open control systems mean clients are not ‘handcuffed’ to J-Tec

EXECUTIVE BIO

INDUSTRY: INDUSTRIAL AUTOMATION Arnaud holds a Master Degree in Industrial Engineering from GroupT Leuven Engineering School. Graduating in 2009, he spent most of his career abroad, mostly in China for Jan De Nul and in Rotterdam for Fabricom, working in various project and construction engineering roles. After earning a Postgraduate Degree in Business Administration, he joined J-Tec in late 2014 where he immediately contributed to J-Tec’s success as a Sales Engineer. In 2016, he moved to Thailand to spearhead J-Tec’s business development in SEA. Since then, he has devoted his time to putting J-Tec on the Asian map, taking the lead in Sales, HR and Strategy, establishing J-Tec Material Handling Ltd. as the regional HQ and focusing on building a sustainable foundation for J-Tec’s growth in the future.

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J - TEC MATERIAL HANDLING

“We have all the experience and all the competencies in-house at J-Tec but we just need to keep working on how to effectively apply this in Asia without really rushing it.” ARNAUD NELISSEN GRADE SALES DIRECTOR ASIA, J-TEC MATERIAL HANDLING

if they want to extend the factory or system in the future. “Instead, we believe in delivering quality and that keeping this promise means J-Tec will hopefully be involved again in the future” he said. Supplier independent Independence from suppliers is one of J-Tec’s key differentiators. “If we look back 50 years, J-Tec started as a representative of certain brands of component manufacturers. Over the years the projects became more complex and we evolved towards an engineering company,” commented Nelissen Grade. “We knew our competitors and at that time, we made a very clear decision to start designing our own systems and become completely supplier independent in order to offer that additional flexibility. “Today, in contrast with many of our competitors, we don't produce our own equipment. Most of the equipment in our systems are purchased from third parties, OEM for standard equipment and independent manufacturers for custommade equipment that we design ourselves, but is then manufactured by these third parties. “The way we make a difference is by leveraging this strategy. We always focus on finding the real optimal process design for

any given application, which will then define which original equipment manufacturer (OEM) equipment we will source and where to source it. If it doesn't exist or if it needs to be custom made, we will design it and have it fabricated, typically in the region where the project is located.”

manufacturingglobal.com

Arnaud NelisseN Grade talks J-Tec Material Handling

June 2021

J - TEC MATERIAL HANDLING

J-Tec is a company member of EHEDG The European hygienic engineering & design group. “We are involved in several relevant associations related to our industry, the most important one being EHEDG. J-Tec is an active, contributing member of EHEDG and has been assisting in the development of the industry standards with regards to hygienic design for Dry Material Handling for more than 10 years now. Such collaborations help us stay up-to-date and highly relevant in what we do.”

1970

J-Tec Material Handling was founded in 1970.

140+

Number of employees

€50+mn Company revenue

Three-dimensional experience One way in which J-Tec is turning to technology to give them a competitive edge is offering customers a virtual tour of a proposed factory development. “By using the power of Virtual Reality (VR) we are able to elevate a factory design from a flat plan to a three dimensional experience,” said Nelissen Grade. “It enables us to show the customer and let them discover their future factory before it's even built which also helps us in the design of our systems. If our engineers and our customers can walk around a realistic 3D representation of the plant, we can discover potential problems, find alternative solutions and adjust the design much faster and more efficiently which benefits both J-Tec and its customers. “A small thing like being able to visualise their factory also adds an element of wonder for the customer,” he said. Commenting on J-Tec’s digital transformation to Industry 4.0, Nelissen Grade said: “Like many companies, we have an Industry “4.0” plan that is being rolled out to improve and expand our services during and after projects. “We are developing several technologies involving the use of big data related to the manufacturingglobal.com

J - TEC MATERIAL HANDLING

systems we build. This can, in turn, lead to remote monitoring of certain metrics and KPIs, preventive maintenance and the further expansion of our internal know-how on how to design the best possible systems with optimal performance using realistic process simulations. “Furthermore, we have accelerated our remote assistance program, finding ways to support our global customers without needing to be physically present, for example using AR, which has become highly relevant due to the pandemic.” Future technology trends “For our industry specifically, we do believe and invest in big data and remote assistance and see this as a trend across several industries,” said Nelissen Grade. “Also, hygienic design, contamination prevention… are big trends and we are continuously developing solutions for our clients in this regard, particularly in infant nutrition. “Lastly, automation is gaining momentum even in countries with a lower labour cost. Automation has many advantages such as a higher efficiency and accuracy, improved working conditions… but especially in these COVID times, it limits the required manpower needed in factories and prevents contamination to a large extent.” Nelissen Grade helped spearhead the original business plan on the value of J-Tec moving into the Asia market. “The ultimate goal was to set up an entity in Thailand that acts as a regional headquarters. We will take the lead from here for our further expansion in the region. In terms of growth we just got started, but we've already exceeded most company targets and expectations that we set up three years ago. 30

June 2021

The company's headquaters are located in Antwerp, Belgium

Locations worldwide

2018

Year regional headquarters in Rayong, Thailand openned

J - TEC MATERIAL HANDLING

“This means we can guarantee a customised solution for every challenge,” said Arnaud Nelissen Grade, Sales Director Asia at J-Tec Material Handling, who bridges the gap between Europe and Asia as he spearheads the growth in the region.” ARNAUD NELISSEN GRADE

SALES DIRECTOR ASIA, J-TEC MATERIAL HANDLING

manufacturingglobal.com

J - TEC MATERIAL HANDLING

“ When it comes to highly advanced packaging systems, we have worked with Statec Binder on various occasions. They share a lot of our values such as high quality and an impeccable service.” ARNAUD NELISSEN GRADE SALES DIRECTOR ASIA, J-TEC MATERIAL HANDLING

“One of the targets we had was to grow a local team to perform key client-oriented activities like Sales and Project Management more locally. And so we grew from a fulltime equivalent of two to about 13 people permanently based in the office in Thailand in just three years. We are still actively hiring but with the mindset that we have only got started, so we are slowly building the foundation of a durable business. “We have all the experience and all the competencies in-house at J-Tec but we just need to keep working on how to effectively apply that experience and competencies in Asia without really rushing it. There's no point coming to Asia just to be in Asia, we need to do it right. That is what we are focusing on right now.”

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4 ADVANTAGES OF J-TEC’S OPEN CONTROL SYSTEMS

-Tec’s open control systems is just one of the key differentiators setting them apart from most of their competitors. Nelissen Grade explains the main reasons why this gives the company such an advantage. “The first is flexibility - which is something we're proud of because we are independent. We are flexible in selecting equipment and in the same way, we want to make sure that that flexibility is translated into the control system. More often than not, our main competitors have more standardized control systems that are not very flexible, based on their own equipment. J-Tec is different in that we also have limited standards that guide us, but every system is completely custom made based on specific needs of the project. This results in a more lean control system with smaller and cheaper hardware. “Number two is that our systems are “open”. We are not like some of our competitors who design “black box” type systems which means the client needs their intervention if they want to expand. We had an example of this when one of our key accounts in Indonesia actually contacted us. They wanted us to do an expansion to their factory, but in the end, they were forced to go back to the previous supplier because the control system was locked which would be very costly to change. Instead, we offer open and transparent control systems using building blocks that are then ‘assembled’ based on the process design. The blocks themselves may be protected, but the program itself is open-source and can be accessed by our clients directly. “Number three is the fact that our independence from suppliers means that we work with a large variety of different

suppliers from all over the world. As a result, our experts have gained quite a significant understanding of how to control the variety of equipment. They often have a better understanding of how to control certain equipment as part of a broader system than the actual manufacturer of that equipment. This means that they can correctly use the specific characteristics of each equipment to optimise the performance through automation. And since these programmers are actually involved during commissioning on site, this greatly improves the efficiency, expedites commissioning and avoids all the hassle of finding bugs that would happen when using third-party programmers.” “Finally, we are able to design a fully comprehensive control system involving all aspects of the production line, even for equipment that normally comes with its own control software. We can use our experience and know-how in using many different systems to program software for that equipment and integrate this in a single control system. As an example, whether the extruder itself is part of our scope or not, we can integrate it in a single SCADA system, avoiding the need for communication between various control systems from various suppliers.” “In the same way Steve jobs did with Apple - controlling the product design from end to end: hardware and software - we are doing exactly the same with our control systems.” “All these things means that we are very good at designing and offering control systems that are lean and simple - a single control system for the entire process, regardless of whether the equipment in that process is supplied by J-Tec or not.

J - TEC MATERIAL HANDLING

June 2021

J - TEC MATERIAL HANDLING

Partnership with Statec Binder Although we don’t have fixed partnership agreements with any supplier – one of our core strategies – we do have a list of preferred OEM that we tend to work with. This follows a rigorous supplier selection process to make sure that our approved suppliers can support us and our customers in the best possible way.

“In the same way Steve jobs did with Apple - controlling the product design from end to end: hardware and software - we are doing exactly the same with our control systems.” ARNAUD NELISSEN GRADE

SALES DIRECTOR ASIA, J-TEC MATERIAL HANDLING

One of J-Tec’s preferred suppliers is Statec Binder who offer high-performance packaging systems for open-mouth bags, FFS machines and related palletising and bagging systems used in a wide variety of industries for packing different products worldwide. “When it comes to highly advanced packaging systems, we have worked with Statec Binder on various occasions worldwide. They share a lot of our values such as an impeccable service and a high quality and performance level. I hope that the global partnership can continue for many years to come.

manufacturingglobal.com

DIGITAL FACTORY

FACTORIES OF THE FUTURE

Industrial Manufacturing 1.0 to 4.0

June 2021

From the first industrial revolution through to Industry 4.0 and beyond, Manufacturing Global looks at the past, present and future for industrial manufacturing WRITTEN BY: GEORGIA WILSON

ating back to the 1800s the first industrial revolution occurred when steam and water-powered machines were developed. As production increased so did small businesses becoming larger organisations. “The industrial revolutions are more than a sequence of events from machines to manufacturing,” says Maddie Walker, Industry X.0 Strategy and Consulting Lead at Accenture (UK&I). “The impact of the first revolution in the 18th century is hard to overstate – agriculture was replaced by the manufacturing of key materials, powered by water and steam as the country’s main source of economic output, spurring a population boom and economic growth. It was a breakthrough for human productivity and production – particularly in textiles and steam powered transportation – where what was spun by hand, could now be done by machines, and distributed far more easily.” The second industrial revolution was sparked with the use of electricity in the late 19th century - which became more efficient than the steam and water-powered machines - and the application of mass production and assembly lines by Henry Ford in the automotive sector increasing efficiency and decreasing costs. “During the second revolution, which took place in the late 19th / early 20th century, new energy sources emerged – gas, oil and electricity. Their presence in factories allowed for mass production and more sophisticated machines, along with new processes in the assembly line,” adds Walker. manufacturingglobal.com

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DIGITAL FACTORY

“ Ultimately, adopting Industry 4.0 doesn’t need to be an all-or-nothing expense, but rather a process involving small, measured steps to improve manufacturing efficiency” RUCHIR BUDHWAR, SVP AND REGIONAL HEAD – EUROPE, MANUFACTURING, INFOSYS

Stepping into the 1970s, the third industrial revolution began with the use of partial automation using memoryprogrammable controls and computers. “The third revolution triggered in the 1970s introduced the computing era. The rise of electronics and information technology made automated production possible - in the front, middle and back office. Semiconductors were invented, giving way to personal computers, mainframe computers, mobile phones and, eventually, the internet,” says Walker. Bringing us into the present day, the fourth industrial revolution (Industry 4.0) has been driven by the development of advanced technologies such as the internet of things (IoT) and artificial intelligence (AI) to improve automation, productivity and selfmonitoring capabilities. manufacturingglobal.com

DIGITAL FACTORY

Industry X Explained | Accenture

“Whilst every revolution was distinct, each one heavily influenced the one to follow. Their core principles of communication, connectivity and automation culminated in the phase most companies are going through today – commonly referred to as Industry 4.0,” adds Walker.

June 2021

So What is the Current Landscape for Industrial Manufacturing? Happening right now, the fourth industrial revolution (Industry 4.0, the digital revolution), “is characterised by a confluence of trends and technologies that are blurring the lines between the physical and digital sphere,” says Ruchir Budhwar, SVP and Regional Head – Europe, Manufacturing, Infosys. Unique in many ways, “Industry 4.0 - unlike prior industrial revolutions - is not about replacing the existing assets/technologies with new ones, but about mastering the challenges and opportunities posed by disruptive technologies like AI, machine learning, and big data processing methods,” continues Budhwar. “For the first time, an industrial revolution is predicted ahead of time, and not observed post facto. This provides various opportunities for innovative companies to actively shape the future. The two key drivers behind this change are the

DIGITAL FACTORY

evolution of consumer behavior and the rapidness of technology advancements.” “This movement really sees the intersection of connectivity, data and intelligence, with smart technologies like AI, digital twins, robotics, and IoT supporting growth and increasing profitability with digital-first business models and more agile production systems. Overall, this has had a profound effect on the manufacturing process, allowing every single aspect of the chain – from sourcing, to the production line, to logistics – to collaborate and share intelligence. As a result, productivity is increased even further, businesses are more flexible and resilient, and the products they make are better tailored to customer needs,” adds Walker.

“ Industry 4.0 unlike prior industrial revolutions - is not about replacing the existing assets/ technologies with new ones, but about mastering the challenges and opportunities posed by disruptive technologies” RUCHIR BUDHWAR,

SVP AND REGIONAL HEAD – EUROPE, MANUFACTURING, INFOSYS

COVID-19 and its effect on Industry 4.0 adoption COVID-19 shone a light on the need for greater investment in digital technologies and has brought the importance of data-driven operations to the fore – just look at how data has fueled the discovery, approval, procurement and roll-out of the vaccine. While the benefits of being a datadriven organisation have been known for a long time, the pandemic catalysed many digital transformations out of necessity, meaning that businesses across all industries are looking to apply the technologies and principles of Industry 4.0 to their operations to not only maintain business continuity but to also look to enhance their performance in the post pandemic world. Whether it was manufacturers rearchitecting their supply chains to alleviate shortfalls, or grocery stores scaling up their delivery networks, the last 12 months have truly demonstrated how Industry 4.0 can help businesses pivot at record speed. Maddie Walker, Industry X.0 Strategy and Consulting Lead at Accenture (UK&I)

manufacturingglobal.com

DIGITAL FACTORY

“ At its core, what Industry 4.0 has brought to manufacturing is connectivity, COVID-19 put connectivity to the extreme test” MADDIE WALKER,

INDUSTRY X.0 STRATEGY AND CONSULTING LEAD AT ACCENTURE (UK&I)

Realising the Value of Industry 4.0 Being one of the most prominent boardroom agenda for manufacturing executives today, adopting Industry 4.0 can help manufacturers achieve many benefits, including streamlining operations, making them more resilient and sustainable, boosting cost efficiencies or creating more intelligent products.

June 2021

“But before making decisions on the technology capabilities to achieve these benefits, businesses should always first identify what their objectives are and what business challenges and opportunities they are looking to address. There is always a technology that can fix a problem, but it's about using the right ones to deliver maximum benefits,” explains Walker.

DIGITAL FACTORY

“At its core, what Industry 4.0 has brought to manufacturing is connectivity. COVID19 put connectivity to the extreme test and manufacturers have learnt the value of digital technologies to keep the lights on in times of crisis. Machine intelligence and transparent use of data help companies to unlock insights into their operations – insights that may never have been available before. These digital threads will inspire new decisions and operational processes. Industry 4.0 strategies should now be looking to embed these lessons and move forward in times of recovery,” adds Walker. However, for successful adoption of such strategies, Walker further adds that it “requires the whole business - from engineering, supply chain, finance and technology – to be engaged and work

towards achieving its value. Everyone in the business needs to be engaged with new technology and processes to deliver sustained benefits. What we often see is many businesses adopting a ‘minimum viable product’ approach to bring about change and to demonstrate the benefits of a new product or process. This enables a business to start quickly, prove its value and then scale – bringing its people and technology with them.” Adding to Walker’s comments, Budhwar comments that “ultimately, adopting Industry 4.0 doesn’t need to be an all-ornothing expense, but rather a process involving small, measured steps to improve manufacturing efficiency – particularly in ways that are right for your organisation and its specific needs.

manufacturingglobal.com

DIGITAL FACTORY

“ Acting on Industry 5.0 requires manufacturers to have already taken key steps to starting their digital transformation journeys” RAFI BILLURCU,

PARTNER AND HEAD OF UK MANUFACTURING AT INFOSYS CONSULTING

June 2021

DIGITAL FACTORY

That’s why at Infosys, we consider 4.0 an evolution, rather than a revolution, and have developed an Industry 4.0 Maturity Index in partnership with acatech, the National Academy of Science and Engineering in Germany, to provide companies with a practical framework for progress.”

Industrial Manufacturing Beyond Industry 4.0... Believing that the fifth industrial revolution (Industry 5.0) is already underway, Walker explains that “while the fourth industrial revolution has brought advanced technology and with it, opportunities into companies, it hasn’t done enough to truly seize said opportunity. The COVID-19 crisis made that very clear as have the growing movements and regulations addressing unsustainable behaviors, climate change and a growing number of societal problems. “Businesses will begin to pursue balanced value – which goes beyond efficiency and growth to also maximising social and environmental responsibility, and being better prepared in a world prone to crises. “Companies will harness the existing digital technologies from the fourth industrial revolution to weave a continuous ‘digital thread’ through product engineering, manufacturing and the entire supply chain. This thread will give them unprecedented datadriven real-time insights, which enables them to always balance being relevant to customers and employees, operationally resilient, and responsible to the environment and society.” In order for organisations to realise the Industry 5.0 potential, Rafi Billurcu, Partner and Head of UK Manufacturing at Infosys Consulting concludes that “acting on Industry 5.0 requires manufacturers to have already taken key steps to starting their digital transformation journeys. This includes establishing a digital vision for the enterprise, and aligning this to drive the corporate strategy. Setting up a digital foundation is also key – digital processes must be at the core, along with a fully integrated and aligned operating model. Manufacturers must also adapt agile, and later SAFe agile principles of execution, in order to drive innovation at speed.” manufacturingglobal.com

SMART MANUFACTURING

June 2021

SMART MANUFACTURING

THE GROWING SHIFT TO SMARTER SUPPLY CHAINS Manufacturing Global discovers what is driving the need for smarter supply chains and the value it can provide the manufacturing industry WRITTEN BY: GEORGIA WILSON

Mark Hughes, Vice President (VP) of Epicor (UK&I)

eing just one part of many that forms the complexity that is a supply chain, manufacturing can be as simple as buying a small amount of raw materials to convert into a product, or it can be a series of components and processes that are interconnected. Mark Hughes, Vice President (VP) of Epicor (UK&I) explains that “at the heart of it, a smart supply chain is simply one that is as efficient as possible. This means constantly reviewing and understanding where any bottlenecks may exist in your supply chain and working to strengthen the weakest links in order to minimise any potential supply chain shocks. You either eliminate the challenge, or move it elsewhere, further up or down the supply chain as required, to make sure you deliver the end result efficiently.” However, when it comes to being the ‘smartest’ supply chain, “this takes efficiency one step further and is self-organising and self-optimising,” adds Hughes. “For example, it will only introduce components when they’re required —controlling the likes of inventory and storage, and prevent the emergence of any bottlenecks by fine tuning the pacing of each stage. In order to achieve this, it’s important to have maximum visibility throughout the whole supply chain — which is where technology can play a beneficial role.” manufacturingglobal.com

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SMART MANUFACTURING

“ For a manufacturer to develop a smart supply chain, it all begins with digitisation” MARK HUGHES,

VICE PRESIDENT (VP) OF EPICOR (UK&I)

So What is Driving the Shift Towards Smarter Supply Chain? With supply chains being made of several different links - sourcing goods, manufacturing, distribution, shipping and receiving - a vast amount of information and data is being produced. Coupled with a heightened awareness of supply chain risk, the industry is seeing an increase in the adoption of IoT technologies to make supply chains smarter. “If just one of these links are weakened, it can then have a devastating impact across the whole supply chain. Nobody wants to be the weak link in the chain, so organisations across the whole supply chain are continuously working to mitigate any risk.

What is a smart supply chain? A smart supply chain is one that draws on data from IoT sensors in the factory, AI and other intelligent technology and data sources to track, monitor and manage goods from manufacturer to retailer. This ability to monitor all processes from design, manufacturing, production and storage of products helps ensure traceability and compliance with the latest standards in quality and hygiene and provides better overall flow, visibility and collaboration across all stages in the value chain. The smart supply chain is selfimproving and self-optimising. It can learn from its environment and past actions. It can predict bottlenecks and work around them to avoid disruptions. It can help optimise inventory and make sure that the right quantities are in the right place at the right time. For manufacturers, this can lead to better delivery times and performance, lower costs, efficiency gains, reduced risk and more. manufacturingglobal.com

SMART MANUFACTURING

“ The COVID-19 pandemic has exposed the gaps in our global supply chains and the overall need for greater transparency, efficiency and real-time flow of information” JIM BUREAU,

CEO OF JAGGAER

As a result, this ongoing improvement cycle breeds higher quality supply chains,” says Hughes. “A great example is the dual sourcing process that takes place in the automotive industry. A car manufacturer may receive 95% of their stock of a single component from one source, but retain 5% of their supply from a different supplier. In the event that something goes wrong with the primary supplier, the manufacturer can then ramp up their order from the secondary. This mitigates risk, reduces the potential for disruption and makes an organisation’s supply chain more robust,” he explains. Adding to Hughes' comments, both Jim Bureau, CEO of JAGGAER, and Hong Mo Yang, SVP and GM of the Manufacturing Sector at Blue Yonder highlight the part that COVID-19 has played in the shift to smarter supply chains. “The COVID-19 pandemic has exposed the gaps in our global supply chains and the overall need for greater 50

June 2021

transparency, efficiency and real-time flow of information. Supply shortages caused major disruptions and placed immense pressure on manufacturers to navigate these challenges as efficiently as possible, especially for critical products like personal protective equipment (PPE), hand sanitizer, media devices and equipment and more,” says Bureau. “Over the past year, COVID-19 disruptions have affected many industries, but manufacturing has been particularly impacted. Against this backdrop, the transition to smarter supply chains has never been more important: many manufacturers’ legacy supply chain systems simply haven’t been agile enough to react to disruption, let alone anticipate and avoid it. This is driving a shift towards smart supply chains,” adds Yang.

SMART MANUFACTURING

Bureau also adds Industry 4.0 as a driver for smarter supply chains, “Advanced automation is primed to cause large growth for the manufacturing sector over the next few years and the broader supply chain needs to advance at the same rate for the industry to scale the benefits. In addition, the increased demand for mass customisation calls for a smarter, data-driven approach to manage the complexity that comes with producing these tailor-made products while minimising costs, shortages and excess inventory.” How Can Manufacturers Develop Smarter Operations in Their Supply Chain? “For a manufacturer to develop a smart supply chain, it all begins with digitisation,” says Hughes. “As a first step, manufacturers must look inwards and ensure that a comprehensive data-driven picture of their

organisation exists. Every factory floor is unique, with unique processes, so there’s no one-size-fits-all approach. With a centralised view, organisations can see clearly which processes might not be driving as much efficiency as they should. “By digitising operations across the shop floor, manufacturers will be equipped with the data-driven insights they need to ensure each area within the supply chain is as efficient as possible. By sharing these insights with each link, suppliers can react and adjust their supply according to demand, all in real-time. Call it autonomous, or hyperconnected — essentially what we’re talking about is achieving the maximum visibility of information.” Agreeing with Hughes, Yang adds that it is important to “identify the use-cases and challenges you want to overcome. A pragmatic approach to implementing new manufacturingglobal.com

SMART MANUFACTURING

Smart supply chains: the top trends Jim Bureau, CEO of JAGGAER Agility and better collaboration: the supply chain pressures brought to light by the pandemic have led organisations to crave agility and the ability to quickly respond to change. With the visibility and real-time monitoring the smart supply chain provides, manufacturers and their downstream partners can work together more easily and effectively to solve issues at any point in the supply chain when they arise. This drives efficiency, performance, stronger relationships, and resilience. Sustainability: in the broad sense – environmental but also social and economic – has also been an urgent issue, and manufacturing organisations are increasingly becoming more intentional about developing resource-efficient behavior and really knowing the suppliers with which they work. Driving efficiencies, optimising routes, increasing transparency across the supply base through greater traceability through n-tier suppliers, ensuring compliance, and limiting overproduction, waste, and excess inventory, are just a few of the ways a smart supply chain can further sustainability. Hong Mo Yang, SVP and GM of the Manufacturing Sector at Blue Yonder Artificial Intelligence (AI)/ Machine Learning (ML): there are many use-cases for AI/ML across the supply chain. From predicting demand and anticipating disruptions, to optimising

June 2021

transportation routes, resource planning and customer fulfillment strategies, AI/ML is widely implemented to drive efficiencies, automation, and enable greater visibility and integration across the supply chain network. Digital twins: to help supply chain leaders make the right decisions across the end-toend supply chain, a digital twin is critical. By creating a digital representation of the physical supply chain, companies can leverage the digital twin to make local and global decisions, increase situational awareness, and evaluate the impact of various scenarios with confidence. More importantly, organisations can anticipate the impact of decisions to strategic business objectives such as revenue growth, margin control, and customer satisfaction targets. Demand for data scientists: as companies continue to invest in new technologies across AI/ML, IoT and robotics, combined with requirements for companies to aggregate higher volumes of data across internal and external resources, the demand for data scientists will grow. Today, data scientists are working to solve many challenges, such as modeling data and building plans to make the supply chain more sustainable, improving response times and agility with greater visibility and control, and automating decision-making processes with AI/ML and big data to enable companies to make smarter and more strategic business decisions.

SMART MANUFACTURING

“ Over the past year, COVID19 disruptions have affected many industries, but manufacturing has been particularly impacted” HONG MO YANG,

SVP AND GM OF THE MANUFACTURING SECTOR AT BLUE YONDER

technologies to create a smart supply chain will allow companies to scale and deliver greater value. Many companies today are looking to build resilience into their supply chains, and that requires real-time visibility and actionable analytics to navigate supply chain shocks and make data-driven decisions. “Let’s look at the recent Suez Canal disruption, where a 1,300-foot container ship became stuck sideways in one of the busiest shipping arteries connecting Asia to Europe. With our AI/ML Control Tower, we were able to help our Blue Yonder customers prepare for the early ripple effects by predicting the impact to inventory, production capacity and sales in real-time so they could take corrective actions to mitigate the impact of the disruption.” With current events such as COVID-19 and the Suez Canal posing severe risks to the supply chain industry, “smart supply chains have never been more important,” says Hughes. “The smarter a supply chain is, the more efficient and resilient it is. There will always be disruptive events that pose a threat to supply chains, both minor and major, but smart supply chains have a better chance of successfully mitigating these risks. True optimisation means dealing with the anomalies, not the norm.

Blue Yonder

“Ultimately, it’s a case of collecting as much data as possible to increase visibility across the whole supply chain. A smart supply chain will take care of the larger data points and self-optimise to an extent (sudden fluctuations in demand draining stock levels for example). This frees up those on the ground to focus on the small, disruptive anomalies: the flat tyres of the supply chain that can’t be optimised away." manufacturingglobal.com

AI & AUTOMATION

Why Should Manufacturers Adopt AI and Big Data?

June 2021

AI & AUTOMATION

WRITTEN BY: GEORGIA WILSON

CVH: Cobus Van Heerden, Senior Digital Product Manager at GE Digital

MP: Mark Powell, Partner, EY (UKI Consulting)

Manufacturing Global speaks to executive leaders at EY, Infor and GE Digital to get to the bottom of this question

hilst the drive to digitally transform the manufacturing industry has been a topic of conversation for the last decade, recent events have only increased the need for the agility, scalability and resilience that industry 4.0's smart manufacturing capabilities can provide. Speaking with Cobus Van Heerden, Senior Digital Product Manager at GE Digital, Mark Powell, Partner, EY (UKI Consulting), and Phil Lewis, Vice President, Solution Consulting EMEA at Infor Manufacturing Global looks at how technologies that harness AI and Big Data can help manufacturers unlock real-time operational visibility to achieve improved process reliability and performance. Q. What are the current applications of artificial intelligence (AI) and Big Data in the manufacturing industry?

PL: Phil Lewis, Vice President, Solution Consulting EMEA at Infor

CVH: Industrial AI uses a combination of targeted AI technologies, data, physics, and deep domain knowledge to solve key industrial business challenges. Traditional AI mimics human intelligence, whereas industrial AI builds upon it to unlock insights and determine causal knowledge in highstakes, dynamic, and variable industrial environments. In Manufacturing, Industrial AI can be used to detect and predict key process and asset problems to help companies optimise their operations including capacity, quality, and cost structures. manufacturingglobal.com

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AI & AUTOMATION

70%

of manufacturers will use digital copies of the physical world (digital twins) to conduct simulations and scenarios by 2022

70%

of manufacturers moving into robotics will need operations talent to manage more automated and flexible production

“ Digitisation is forcing manufacturers to reimagine their supply chains” MARK POWELL

PARTNER, EY (UKI CONSULTING)

PL: Textbook definitions of AI or Big Data miss the point that industries differ and will have drastically different demands for the technology. It is about the application of a given technology to a specific issue that a business may be experiencing. This issue may be an ‘industry-standard’ one, or something that arises in the configuration of the technology. But there is most value in the application of tools such as Big Data and AI to the critical 10% of a business that is truly idiosyncratic. We classify this as a 60/30/10 split and it is how we look to apply these technologies to drive maximum value.

73%

of manufacturers plan to invest more in smart factories to support innovation and automation

70%

of manufacturers feel that robotics will drive the need for highly skilled workers registrar

Q. For manufacturers looking to adopt Industry 4.0, smart manufacturing capabilities, why should manufacturers use AI and Big Data to do so? CVH: Smart manufacturing deploys industrial advanced analytics to predict future asset and process performance using real-time and historical data and optimising in a closed loop. This involves the use of AI and machine learning to enable process engineers to combine data across industrial data sources and rapidly identify problems, discover root causes of issues in the plant, predict future performance of assets, and automate actions employees can take to improve quality, productivity, and operations. manufacturingglobal.com

AI & AUTOMATION

Big data analytics for manufacturing Samsung Nexplant Analytics

“ The combination of AI and data provides acceleration of digitisation through analytics-based solutions” COBUS VAN HEERDEN

SENIOR DIGITAL PRODUCT MANAGER, GE DIGITAL

MP: Digitisation is forcing manufacturers to reimagine their supply chains. As an example, most companies use internal data to track demand-supply balances and it is challenging for them to foresee external events impacting their supply chains. Using AI techniques that understand unstructured external data sets, such as social media and other data on events, manufacturers can plan for supply chain disruptions much sooner. 58

June 2021

In addition, manufacturers can use AI and Big Data to build digital replicas of their manufacturing operations and tap into transformative possibilities of reducing cycle time in production, adding manufacturing capacity and predicting unplanned maintenance activities etc. PL: Some of the poster child statistics for AI and Big Data simply demand attention. Recently, Siemens automated one of its factories in Germany, with 75% of the processes digitised or having increased automation. Productivity improved by

AI & AUTOMATION

1,400%. That is game-changing for any business. Which means many manufacturers are now looking at how they plug AI and Big Data into their plans for the future. Q. What is the best strategy for manufacturers striving to realise the value of AI and Big Data in their operations? CVH: Process engineers have exceptional domain expertise to put together process models – or Process Digital Twins – and be able to interpret the models. This is the foundation for improving competitive advantage and success with analytics. To drive analytics and improve processes, manufacturers should put together a strategy that can align domain expertise

to five capabilities: Analysis - automatic root cause identification accelerates continuous improvement; Monitoring – early warnings reduce downtime and waste; Prediction – proactive actions improve quality, stability, and reliability; Simulation – what-if simulations accelerate accurate decisions at a lower cost; and Optimisation – optimal process setpoints improve throughput at acceptable quality by up to 10%. All process engineers can and need to develop capabilities in analytics and machine learning to remain competitive. Over time, engineers can go from small projects to pilots to multi-plant optimisation with deep application of analytics. Their deep domain expertise provides a manufacturingglobal.com

AI & AUTOMATION

Is artificial intelligence (AI) and Big Data driving the fourth industrial revolution (Industry 4.0)? “The combination of Industrial AI and data produces what we call a Process Digital Twin which helps manufacturers to rapidly troubleshoot continuous, discrete, or batch manufacturing process performance by mining insight from available sensor and production data. This technology, which utilises predictive analytics, enables users to analyse operating scenarios, qualifying the impact that operational changes will have on key performance metrics and identifying causes for performance variation. Digital Twins inspire continuous improvement, a key goal of the future of the industry by looking back to historical data as well as real time to move forward rapidly” - Cobus Van Heerden, Senior Digital Product Manager at GE Digital “We see daily increases in AI / ML uses – inventory optimisation, maintenance, faster finance processes are all key areas that we see arise many times. For this to continue, and return on investment to continue, AI needs to be plumbed in and ready to go with other systems, rather than a bolt-on, or businesses face a hefty, and costly integration project. In terms of the next specific technology, it really depends on the maturity of the individual company or project – businesses are only just reaching the point of a digital fabric rather than a bunch of digital projects. Prescriptive working, driven by AI and fed by masses of sensor data, holds a huge amount of promise for the B2B / industrial markets and we see some very encouraging early shoots in asset maintenance and field service” - Phil Lewis, Vice President, Solution Consulting EMEA at Infor

June 2021

“ Many manufacturers are now looking at how they plug AI and Big Data into their plans for the future” PHIL LEWIS

VICE PRESIDENT, SOLUTION CONSULTING EMEA AT INFOR

AI & AUTOMATION

foundation for modelling processes and developing the analytics that are game changers in very specific applications. Most importantly, get started with analytics. “Trystorm” some projects; put your intuitive ideas to the test and put data and analytics behind them. Don’t wait to become a data science expert. That isn’t necessary. Leverage proven easy-to-use industrial analytics tools fueled with your domain expertise. That’s going to drive big improvements quickly.

PL: Businesses – including manufacturers - tend to assess digital projects with a focus on either customer, supply chain, internal efficiency or people - those are the four main drivers for any foray into digital. These are often organic and arise from an ongoing ‘how can we do better’ attitude. This has been accelerated by concerns of competition as companies are now fearful of being left behind competition and disruptive entrants. There is palpable fear around being digitally relevant and this is promoting a lot of investment. However, it is worth noting that many manufacturers have already invested heavily in technology (even before COVID forced a move to digitalisation) so the first point of definition is to align AI and Big Data to existing technology. When businesses assess their technology in use today, they need to bear in mind not only a shortterm perspective of will the technology handle current processes but also does it provide a platform for the future? This latter perspective is built on data. Both elements are equally important but the second “platform perspective” demands big data. It is no longer enough to choose a platform that just supports / tweaks the ongoing processes – there has to be future capabilities built in. There is then the need to ensure that this technology is deployed in the best way possible. This necessitates an open, cloudbased application landscape so a business can seize new opportunities such as Big Data or AI without having to go through a cumbersome integration and bolt on process. This makes an organisation more agile, focusing on the creative application of the technology to the needs of the business, such as identifying new opportunities for revenue. manufacturingglobal.com

AI & AUTOMATION

“ The key challenge in adopting AI will come down to manufacturers’ ability to establish alignment across the organisation” MARK POWELL

PARTNER, EY (UKI CONSULTING)

Q. What are the challenges when it comes to adopting AI and Big Data analytics into manufacturing operations? CVH: Manufacturers are challenged with reducing waste, costs, and risk while meeting customer demand. The combination of AI and data provides acceleration of digitisation 62

June 2021

through analytics-based solutions that empower workers with data in context so that people, assets, and processes work together efficiently. Another challenge for companies is just getting started. They want to learn more about how to use analytics in their operations but don’t see it as a job for their

AI & AUTOMATION

will make an impact. For example, using machine learning and computer vision to predict and identify faults in equipment before they occur, thus reducing production downtime and decreasing maintenance costs. Another challenge is establishing a culture of infusing AI into their processes through a test-and-learn culture. For too long, organisations have talked about becoming ‘data driven’ and this has generally not worked as well as it had been hoped. Manufacturers need to take a different approach that starts with understanding where value can be driven from new insights and then focus on the data needed to drive the insights that can then drive business value. Organisations need to become ‘insight driven and data enabled’ and not simply ‘data driven’ - only then will they really leverage the power of AI and big data.

current workforce. Fortunately, Industrial AI solutions can help and not require process engineers to be data scientists. MP: The key challenge in adopting AI will come down to manufacturers’ ability to establish alignment across the organisation on some of the high-value areas where AI

PL: It is all about how attitudes towards data have changed. It was previously seen as a necessary evil but is now the number one asset in a business. Typically this drives an obsession with big data labels but it is what you do with the data that matters – using the likes of AI / BI / IoT etc to turn that data into a truly valuable asset. The automotive industry is the prime example – using and selling the data produced by a car. Interestingly, we now almost take ‘cloud’ for granted – had we answered this question 24 months ago, cloud would have been the first consideration, but it is now table stakes. It is no longer if a business will go cloud but more a question of what type of cloud / cloud use? – We have moved far beyond the infrastructure conversation –the how and into the what – and into the why a business looks to embrace digital. manufacturingglobal.com

TECHNOLOGY

Cyber Threats and How Manufacturers Can Mitigate the Risks Manufacturing Global looks at the types of threats faced by manufacturers and the ways in which they can protect themselves from attacks

WRITTEN BY: GEORGIA WILSON

nlike prior industrial revolutions, Industry 4.0 is not about replacing existing assets and technologies with new ones, but about mastering the challenges and opportunities posed by disruptive technologies like AI, machine learning, and big data, which are blurring the lines between the physical and digital world. While the increase in technological adoption is driving smarter manufacturing operations that are more agile, flexible and productive, it isn’t without challenges. As more and more operations become digital and converge to the cloud the need for effective cybersecurity measures only increases in its importance. Cyber Threats in the Manufacturing Industry “Cyber threats faced by manufacturers come in all shapes and sizes, including phishing, IP theft, ransomware, IoT attacks and supply chain attacks,” begins Mo Cashman, Principle Engineer at McAfee. “Manufacturers are vulnerable to cyberattacks wherever digital is present,” adds Bobby Bono, Partner and Industrial Manufacturing Practice Leader at PwC,

June 2021

TECHNOLOGY

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TECHNOLOGY

While

70%

of CISOs and CIOs say they increased security training as a result of COVID-19, only

30%

of employees say their employer has offered training on the dos and don’ts of protecting company and personal digital assets, data, and information.

" After spending 2020 playing defense against cyberattacks, it is time to take a step back and create a secure foundation for the future” BOBBY BONO

PARTNER AND INDUSTRIAL MANUFACTURING PRACTICE LEADER AT PWC

“manufacturing is not a siloed industry— supply chains span numerous countries and industries. A company is only as secure as those it works alongside. Companies must determine what their stakeholders are doing to protect not only their information but also any shared information,” he continues. With the number of connected systems and devices multiplying over the last year because of remote working and the increased desire for digital sales and marketing by consumers. “Attacks

Bobby Bono, Partner and Industrial Manufacturing Practice Leader at PwC

relating to COVID-19 continue to impact the sector. Research from McAfee found 9,435,863 malicious detections related to the pandemic since April last year, with 2% of these attacks targeting the manufacturing industry. Trojans have been the main tactic used across all sectors, followed by viruses and potentially unwanted programmes,” says Cashman. “Another thing to keep in mind is that the manufacturing sector—like all sectors of the economy—is coping with massive workforce changes,” adds Steve Gansen, Sales Business Development Manager for Manufacturing Industry, Cisco. “Baby boomers are retiring in large numbers, and that’s driving the adoption of technology solutions, including analytics, remote expert and other networkmanufacturingglobal.com

TECHNOLOGY

“ Cyber threats faced by manufacturers come in all shapes and sizes” MO CASHMAN

PRINCIPLE ENGINEER AT MCAFEE

The evolution of cyber threats in manufacturing “Cyber threats in the manufacturing industry have dramatically evolved over the last decade as the intelligence and creativity of cyber attackers has grown. Most significantly, we see attackers repurposing threats like ransomware and entering through workplace systems to attack industrial systems,” - Mo Cashman, Principle Engineer at McAfee “Cyber attacks are more sophisticated than ever. For companies that have transitioned the largest parts of their business to the cloud, a breach could undermine the entire foundation of a company and its workforce,” - Bobby Bono, Partner and Industrial Manufacturing Practice Leader at PwC. “To say cyber threats have grown more complex over the last five to 10 years is a serious understatement. Back then, it was a lot easier to spot a suspicious email or an illegitimate link to a website. Today, the attacks are increasingly sophisticated. We are only a click away from a big mistake,” Steve Gansen, Sales Business Development Manager for Manufacturing Industry, Cisco.

June 2021

driven solutions, so they can do more with less without losing their competitive advantage.  But these solutions come with their own risks; they create a wide and vulnerable threat landscape, that is compounded by the historically aging infrastructure within outdated plants. Manufacturers must adapt to avoid cyber threats.” “Five to 10 years ago, many thought that enterprise-grade firewalls were enough to secure an IT network. But this thinking has significantly evolved. Firewalls alone can't provide the protection that digitalfirst, smart factories and connected manufacturers need,” says Raj Krishna, VP of Strategy & Planning, Cisco Meraki. As the industry becomes increasingly data-driven and reliant on technology, security professionals across the manufacturing industry will face significant challenges when defending their organisations from threats across connected machines and connected networks.

TECHNOLOGY

“Migrating to the cloud and embracing a smart factory mindset has highlighted pressing cybersecurity issues, which is an evolving area and must consistently be at the forefront,” adds Bono. “Whether it is an enhanced digitalcustomer experience or the option to work remotely, the increasing presence of digital has altered almost every aspect of our personal and professional lives. We have grown accustomed to the newfound ease and flexibility that comes with digital enhancements but need to keep in mind the risks associated with it as well,” continues Bono. “Much of the industry continues to practice ‘just-in-time’ manufacturing which allows little room for error, further emphasising the need for cyber-protected digital assets. The recent Suez Canal blockage halted global trade, and companies faced the financial impact of catching up to demand. A cyber attack against the entire company would be much more costly.”

The average time from intrusion to detection of a cyber-criminal is

56 days

792,000 incidents with a reported loss of over

US$4.1bn in 2020 (69% increase compared to 2019) There were

2,474 Ransomware attacks documented in 2020 Steve Gansen, Sales Business Development Manager for Manufacturing Industry at Cisco discussing the FBI report on cyber attacks between 2019 and 2020 manufacturingglobal.com

TECHNOLOGY

The benefits of strong security in manufacturing “A strong cybersecurity program should mean that plant infrastructure is also well connected. This opens up possibilities for leveraging plant solutions that can hit your bottom line quickly and efficiently. Solutions like artificial intelligence or augmented reality, asset management tools, and analytics tools all require a well-connected network to gather, move and analyse the data. Security is about having visibility to connected and unconnected devices. That same strategy can help manufacturers gather data to make information-based real-time decisions for productivity gains” - Steve Gansen, Sales Business Development Manager for Manufacturing Industry, Cisco “Companies must focus on understanding how cybersecurity can affect their business. If they do not prioritise vulnerability to cyberthreats until an attack strikes, it is too late. Addressing potential threats head-on by developing short-term and long-term plans will build a strong cybersecurity foundation internally and externally. Having a strong cybersecurity foundation is also vital from a reputational standpoint. Businesses and

June 2021

consumers alike are seeking partners they can rely on to safely deliver products while protecting private information. A breach goes beyond one company – it impacts everyone in the supply chain all the way down to the enduser” - Bobby Bono, Partner and Industrial Manufacturing Practice Leader at PwC “Our recent research found that the monetary cost of global cybercrime is around US$945bn. These costs aren’t just the result of monetary losses, but also include significant reductions in both productivity and lost work hours. When businesses fail to maintain and evolve their cyber defences, it is now the difference between their ability to thrive or just survive within the market” - Mo Cashman, Principle Engineer at McAfee “With a strong cybersecurity strategy in place, manufacturing organisations will be able to reap the benefits - including seamless maintenance of operations, improved efficiencies and better outcomes from leveraging connected devices, physical safety, supply chain integrity and more” - Raj Krishna, VP of Strategy & Planning, Cisco Meraki

TECHNOLOGY

“ Firewalls alone can't provide the protection that digital-first, smart factories and connected manufacturers need” RAJ KRISHNA

VP OF STRATEGY & PLANNING, CISCO MERAKI

So What Can Manufacturers do to Protect Themselves from Cyber Threats? “Cybersecurity is not a one-and-done occurrence,” says Bono. “Once initial measures are put in place, it is time to shift focus to building the foundation for cybersecurity excellence. As technology advances so do potential cyberattacks, and your employees are the first line of defense in protecting your business, emphasising the need to make sure they are trained and prepared,” he added. Agreeing with Bono that there is no ‘onesize-fits all’ approach to cybersecurity, Gansen says that “First, manufacturers need to invest in modern security tools that do deep-packet inspections to identify vulnerabilities. If they use firewalls as their primary strategy, then they’re in trouble. Secondly, they need to embrace the fact that security isn’t just a concern for executives or managers. It’s something every employee needs to be trained on so that they’re making the right choices,” he

also comments that “they need to work with experts to find solutions that work for their unique situations and give them full visibility into the network and everything on it. If it doesn’t look right, it probably isn’t. Having that visibility will let managers act on it.” Adding to Gansen’s comments, Bono says "After spending 2020 playing defense against cyberattacks, it is time to take a step back and create a secure foundation for the future. Looking ahead one to two years, companies should begin evaluating how they are addressing cybersecurity at every level of their organisation and allocating sufficient resources for it.” “What’s required is a sophisticated and powerful security strategy for data and networks – the ability to evolve with speed, and at scale with security. This is the foundation for manufacturing organisations to win with confidence and become true differentiators from their competitors,” concludes Krishna. manufacturingglobal.com

TOP TEN

Global Innovation Leaders

in Manufacturing Manufacturing Global lists its Top 10 global innovation leaders in manufacturing from BCG’s latest ‘Most Innovative Companies 2020’ report

June 2021

TOP TEN

attling global markets that rapidly evolve and fluctuate, leading innovators “need a well-tuned innovation system that can spot emerging product, service, and business model opportunities,” says BCG, one that can be rapidly developed and successfully scaled over and over again.

WRITTEN BY: GEORGIA WILSON

BCG states that successful serial innovators get three things right: 1. T hey are committed to making innovation a priority, and decisive when it comes to investments and ambitions 2. They embrace the value of scale 3. T hey develop their innovation system to drive a cycle of continuous success In this Top 10 Manufacturing Global lists its top 10 global innovators in the industry.

manufacturingglobal.com

TOP 10

Siemens With a rich innovative history of more than 170 years, Siemens has pioneered many inventions that have shaped the way the world operates today. Such inventions include the Pointer telegraph which revolutionised telecommunications, the Dynamo which laid the foundations for today’s electrification, and SIMATIC which has been reshaping automation for decades.

“ Siemens makes its mark with innovations that count –innovations that are not merely new but actually redefine market standards as new products, solutions, or services,” says Siemens. 74

June 2021

Volkswagen Driven by its mission to “shaping mobility, for generations to come,” by “becoming a sustainable mobility provider with a role model function in the areas of environment, safety and integrity.” Since 2019, Volkswagen Group Innovation has formed the basis for a global innovation ecosystem. The group dedicates its innovation - using a wide range of skills and international network - to decarbonisation, security, conserving resources and future mobility.

TOP 10

08 Intel

With big ambitions, Intel is driven by its mission to “create world-changing technology that enriches the lives of every person on earth.” Central to this mission is innovation, which Intel drives to make the world safer, build healthy and vibrant communities, and increases productivity. Working relentlessly to drive the digital revolution, Intel’s innovations in the industry are rooted in Gordon Moore’s (Co-Founder) prediction in 1965 that the number of transistors on a microchip doubles every two years. “The insight, known as Moore’s Law, became the golden rule for the electronics industry, and a springboard for innovation.”

“The choice of materials and how they are manufactured are the two main ways by which our innovation teams can influence the environmental footprint of our products,” says Adidas, who is taking affirmative action to tackle plastic waste, recycle materials and reduce its use of virgin plastic.

Adidas The guiding principle of adidas founder - Adi Dassler is one that is simple: to make athletes better. It is this, coupled with the desire to manufacture products that deliver high performance in a sustainable way, that puts innovation at the core of the business. manufacturingglobal.com

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TOP 10

05 Tesla

06 Nike

While the Nike brand can be described in many ways, its mission remains simple to “bring inspiration and innovation to every athlete in the world.” With thought and deliberate strategy Nike reaches across multiple sports, lifestyle categories, and price points, diversifying its opportunities for innovation and long-term growth. “Behind every corner of the Nike business is a singular focus – innovation. It is our nature to innovate. It is the fuel that powers our performance,” says Nike. “It’s our connection to athletes and consumers that allows us to create game-changing technologies and products.

Founded in 2003, Tesla’s mission remains as true today as it did then, “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” It is this dedication to sustainable transport that has fueled Tesla’s relentless innovation, forging partnerships with others in the industry to expand the market for electric vehicles (EVs). Its recognition of the importance of advancing battery technology, has dubbed Tesla as a pioneer in the EV battery industry.

manufacturingglobal.com

TOP 10

With over 70 years of innovation under its belt, Sony has had many firsts over the years including: Japan’s first magnetic tape recorder in 1950, the first commercially successful transistor radio in 1995, the first commercial battery-powered portable TV in 1959, the first video cassette recorder (VCR) in 1971 and the first commercial consumer grade camcorder in 1983. When it comes to innovation Akio Morita Co-Founder of Sony, offers three phases of wisdom: ‘try innovation by elimination’, ‘Ignore the doubters, believe in yourself’, and ‘ignore focus groups and instead anticipate the needs of customers’.

Over the past 30 years, Huawei has invested more than US$100bn in research and development, “innovative activity is in the corporate DNA of Huawei,” says David Harmon, Director EU Public Affairs, Huawei. In 2019, Huaweii outlined its future plans transitioning from Innovation 1.0 to Innovation 2.0. “In Innovation 1.0, we have focused on technological and engineering innovations to meet customer needs. In Innovation 2.0, we will focus on theoretical breakthroughs and inventions driven by our shared vision for the future,” said William Xu, Director of the Board and the President of the Institute of Strategic Research at Huawei.

Sony

June 2021

Huawei

TOP 10

Samsung Devoted to “creating superior products and services that contribute to a better global society,” Samsung sets high values for its people and technologies. The electronics company heavily invests in its people, with an innovative culture built on training, repeatable methods and an elite creative formation. Samsung’s dedication to innovation can be seen in its ‘Samsung Strategy and Innovation Center (SSIC), where the electronics manufacturer strives to discover and develop groundbreaking technologies collaborating with visionary entrepreneurs and innovators to help people around the world lead happier, healthier, richer lives.

“ Through innovative, reliable products and services, talented people, a responsible approach to business and global citizenship, and collaboration with our partners and customers, the Samsung Strategy and Innovation Center is taking the world in imaginative new directions,” says the SSIC. manufacturingglobal.com

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TOP 10

Apple — Diversity — Inclusion inspires innovation

“ This quarter for Apple wouldn’t have been possible without the tireless and innovative work of every Apple team member worldwide” Tim Cook, CEO at Apple 82

June 2021

TOP 10

Apple With strong Q1 results for 2021 totalling US$111.4bn in revenue, Apple’s title as the world’s ‘most valuable company’ certainly rings true, but Apple’s CEO Tim Cook states that “this quarter for Apple wouldn’t have been possible without the tireless and innovative work of every Apple team member worldwide.” Over the years Apple has had many influential innovations in the manufacturing of technological devices, such as the iPhone in 2007 which for

the first time offered a full, non-scaled down version of the internet. Today, Apple continues to strive to take its innovations to the next level, manufacturing its own computer chips known as the M1 processor. What previously required multiple chips to deliver its features, are now combined into a single system on a chip (SoC). “Every Mac with M1 is transformed into a completely different class of product. This isn’t an upgrade. It’s a breakthrough,” says Apple.

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INDUSTRY 4.0

Blueprint for Efficiency

June 2021

manufacturingglobal.com

SAP INDUSTRY 4.0

INDUSTRY 4.0:

Excellence in Industrial Productivity Industry 4.0 enables enterprises to face supply chain disruptions directly and the new normal for manufacturing and production, says Dominik Metzger, the lead on SAP’s Industry 4.0 programme

n a period of unrivalled disruption, an organisation's supply chain has become either its strongest or weakest facet. Those businesses with agile and resilient supply chains have succeeded throughout the events of the past 18 months, while those that have been slow to adapt to digital transformation struggled and, in some cases, face falling further behind in the years to come. It is uncertain what the future holds, but it is clear that transparency and resiliency will be key to navigating localised threats to productivity, such as the Suez Canal blockage, and the unforeseen global disasters highlighted by the unprecedented and pernicious impact of the COVID-19 pandemic. At the same time, enterprises are faced with increasing customer expectations in product cost, quality, excellence and experience. Industry 4.0 offers a holistic approach to both these long-term and short-term obstacles to growth and productivity, says Dominik Metzger, Head of Product Management, Manufacturing and Industrial 86

June 2021

IOT at SAP, and the lead on SAP’s Industry 4.0 programme. “The main philosophy we at SAP follow with Industry 4.0 is to bring productivity increases into supply chains so that organisations of all sizes and industrial sectors are more resilient to disruptions.” This process of connecting all core business operations revolves around the transformation of four often disparate but integral pillars across manufacturing, design operations, and employees: Intelligent Factories, Intelligent Products, Intelligent Assets and Empowered People. “Often you find that too many companies focus on what happens within the four walls of a factory, but with our strategy for Industry 4.0, the real value creation goes far beyond that by connecting these four strategic pillars into end-to-end business processes,” Metzger says. “You can truly achieve a tremendous productivity increase if you connect your entire industrial processes not only the factory - but where products are being engineered and designed, where

FORESIGHT

The main philosophy we at SAP follow with Industry 4.0 is to bring productivity increases into supply chains so that organisations […] are more resilient to disruptions DOMINIK METZGER

recipes are formulated, materials are supplied to production, machines and assets are maintained and serviced, all the way through to the shop-floor, from end-to-end. Supply chains are constantly encountering disruption, and Industry 4.0 is all about equipping users at the right point in time with valuable insights to make the right decision and resolve such a disruption.” Connecting business applications end to end through Industry 4.0 repositions businesses to be more resilient and increase productivity. But there are a multitude of other benefits, including increasing manufacturing quality and, as customers continue to raise the

bar in terms of service expectations, significantly increase customer experience and satisfaction. “Industry 4.0 can really be a differentiator to your customer service levels,” Metzger says. "An example that we find fascinating is allowing companies to move towards service offerings and away from classic product offerings. If you consider discrete manufacturers, rather than selling machines, automation equipment or other assets as their primary business model, Industry 4.0 allows them to offer output-based service models. In this way you guarantee the outcome of an industrial asset, and sell this as the primary service to your customers, rather than the manufacturingglobal.com

SAP INDUSTRY 4.0

Dominik Metzger from SAP talks about Industrial Productivity

physical asset itself. This allows businesses to diversify their product offering against international competition.” SAP has been at the forefront of Industry 4.0 strategy since its inception more than a decade ago. As the global leader in enterprise business applications, SAP has guided many companies to successfully adopt Industry 4.0 and make it work for them. “This is one of our biggest strengths,” says Metzger. “Our ability to deeply embed the wealth of machine, sensor and device data, in other words Industrial Internet of Things (IOT) data into business applications, from engineering to logistics and manufacturing to maintenance and service, thereby significantly improving end-to-end business processes.” SAP even offers a hyperscaler agnostic approach to leverage industrial IOT data. Cloud computing allows 88

June 2021

a tremendous scalability for Industry 4.0 strategies, while Edge computing ensures robustness of even the most mission critical manufacturing operations. The second strength is SAP’s leadership on defining and developing initiatives for pan-industry adoption. The company is highly engaged in standardisation bodies and industry consortiums, and continues to drive the conversation forward. “SAP was one of the founding members of consortias, such as the Platform Industrie 4.0 and the Open Industry 4.0 Alliance which are among the leading institutions driving standardisation and execution for Industry 4.0. The main obstacle for many customers has been TCO, the total cost of operations, the cost of ownership, and of manually integrating the worlds of hardware and software, IT and OT while making it scalable,” says

FORESIGHT

Metzger. "I think this is where we have seen a huge leap forward in the past 10 years. That’s why standardising is key, and we are involved in this process at every level.” The third strength of SAP is its unparalleled ecosystem of partners. Moving from ‘egosystems’ to ecosystems is the new normal in successfully bringing productivity increase with Industry 4.0 from concept to reality. SAP has partnerships with leaders, such as Microsoft for Cloud and Edge computing technologies as well as Siemens for Engineering and Design

SAP was one of the founding members of Platform Industry 4.0, which is still one of the leading institutions driving standardisation for Industry 4.0 applications, to name a few. The strong partnerships expand into many other areas such as System Integrators and Machine and Equipment Makers. The following series of white papers explores the four pillars of SAP’s Industry 4.0 strategy in depth. Discover expert insight into how to begin or supercharge your Intelligent Factory transformation journey, how to reduce downtime and overheads with Intelligent Assets, and realign your business to take advantage of the challenges and opportunities of today and tomorrow.

DOMINIK METZGER TITLE: GLOBAL VP – HEAD OF PRODUCT MANAGEMENT | MANUFACTURING AND INDUSTRIAL IOT Dominik Metzger is part of the SAP product engineering organization for Digital Supply Chain and works as Head of Product Management for Manufacturing & Industrial IOT. A key cornerstone of SAPs Digital Supply Chain strategy is to bring significant productivity increase and cost reduction to customers with the capabilities of Industry 4.0. SAPs Industry 4.0 strategy is called Industry 4.Now with a high focus on Intelligent Products, Intelligent Factories/Plants, Intelligent Assets and Empowered People based on technology enablers with the Industrial IOT. With around 14 years of experience in the SAP Digital Supply Chain space Dominik has a deep background in consulting and go-to-market responsibilities. Dominik was based out of New York City for the past 4 years where he was a Managing Director for the implementation partner Westernacher Consulting. Prior to his time in the US, Dominik worked as a Solution Architect for Digital Supply Chain solutions in Singapore (for 4 years) and Germany. He delivered numerous successful implementation projects across Europe and Asia within different industries including Automotive, Chemicals, Consumer Products, Logistics Service Providers, IM&C and Retail.

INDUSTRY 4.0

Intelligent Products Report

June 2021

manufacturingglobal.com

Consumers now expect every product they buy to be delivered their way: in their colours and with their chosen combination of capabilities KEITH ZOBOTT

GLOBAL VICE PRESIDENT OF DIGITAL PRODUCTS AND PROJECTS

INTELLIGENT PRODUCTS REPORT

INTRODUCTION

Intelligent Products Intelligent Products take many forms and are redefining the relationship between manufacturers and end users

ntelligent Products take many forms and are tough to define. A custom t-shirt in colours chosen by a consumer and shipped to their door is an Intelligent Product. So is an industrial machining unit using sensors and IoT to collect data and inform operators of maintenance issues or how processes could be more efficient. A mobile device is both of these things: aesthetically distinct and operationally customised by the user. The only truly consistent characteristic is that demand is growing, and manufacturers unable to adapt and deliver will fall behind the curve. Intelligent Products is one of the four pillars of SAP’s Industry 4.0 initiative, alongside Intelligent Factories, Intelligent Assets and Empowered People. Keith Zobott, Global Vice President of Digital Products and Projects, describes Intelligent Products as “very complex devices, whether they're aircraft or machinery, but with some common threads in all of them”. Here he explores how both consumers and enterprises stand to benefit from the wider adoption of these connected and customised smart products, from greater customer satisfaction, to cost savings and fundamental improvements in the way businesses design, manufacture and deliver.

The IoT in manufacturing market size is projected to grow to

$45bn+ by 2022 marketresearch.com

SAP INDUSTRY 4.0

EXECUTIVE INTERVIEW

Custom Products for the Connected Customer Keith Zobott, Global Vice President of Digital Products and Projects at SAP explores the fundamentals of Intelligent Products, and the benefits for both consumers and manufacturers

ou’ve probably used an Intelligent Product, whether you realised it or not. Cars which use sensors to remind drivers to refuel, or cameras to assist their parking, are Intelligent Products. The custom case protecting your mobile device is an intelligent product, too. They all share fundamental characteristics, including the ability to adapt to their environment or how they're being used, the ability to minimise maintenance costs, or maximise performance, and the ability to be personalised by customers. But the concept is far reaching and can broadly be divided into two categories: aesthetic customisation and performance optimisation. “At SAP we’re tackling both of those things,” says Keith Zobott, Global Vice President of Digital Products and 94

June 2021

KEITH ZOBOTT

Projects at SAP. Zobott uses a pair of exercise shoes as an example of how a product can be both, simultaneously. A runner may buy a pair of smart shoes to help improve their performance. The footwear can track their movements, distance travelled, the locations they visited and other common data points that wearables on the market can already measure. But they can also pinpoint specifics such as foot positioning while taking a stride, or which part of the foot is taking most of the pressure. On the other side of the equation, a consumer may simply want a shoe that looks great. “We know that consumers now expect every product they buy to be delivered their way: in their colours and with their chosen combination of capabilities,” Zobott explains. “So SAP is building an ecosystem that allows manufacturers to provide products that

FEATURE HEADER SAP: WHITE PAPER

are unique to consumer needs, but in a way that is quick and efficient.” INTELLIGENT PRODUCTS IN BUSINESS The positives Intelligent Products bring to end users are obvious, but manufacturers also stand to reap their own benefits as they gain traction. “We already see the need for Intelligent Products in a lot of machinery today, whether it's industrial machinery, or aircraft and automotive machinery,” says Zobott. “I would say that’s rooted in the fact that OEMs want to reduce the total cost of ownership of this equipment. And manufacturers can take advantage of this flexibility to optimise both the non-recurring costs related to the cost of developing an asset or a product, as well as the recurring costs that are built into a product. “Others are benefiting by leveraging a product platforming strategy, which enables them to drive reuse significantly within their particular product families,” Zobott adds. “We're gathering all this

SAP has integrated design solutions connecting the data that allow manufacturers to provide unique products for consumer needs

really interesting data, but if we don't find a way to reconstitute that data in an efficient way in the next design, what good is it? These are just some of the ways it adds value.” Once implemented, the model perpetuates a cycle of self improvement. “Every process, every tool, and every set of data feeds back at every stage to continually learn and improve,” Zobott continues. “So businesses can understand more about the engineering assumptions that were made early in the design process, and either validate or invalidate them. “From a business standpoint, what we're really talking about here is the future of changing the whole experience, instead of just changing the product or service you're selling. The most expensive things for an airline operator, for example, are delays and cancellations. So there is tremendous manufacturingglobal.com

SAP INDUSTRY 4.0

Keith Zobott from SAP talks about digital products in Supply Chain

value in reducing those by just a fraction through gaining more insights into the performance of an engine or any aircraft system. Using this data, you can maybe tweak maintenance intervals to avoid any unwanted delays and cancellations. The benefits to customer satisfaction and other costs can be dramatic.”

What we're really talking about here is the future of changing the whole experience instead... 96

June 2021

THE KEY IS GETTING STARTED A digital transformation journey of this magnitude can rapidly become “overwhelming”, Zobott admits. The initial and most common hurdle to overcome is often organisational: how siloed a company’s departments are and how much data they share, from procurement and supply chain, to engineering and manufacturing. The COVID-19 pandemic exasperated this issue. Organisations that were once only partially disconnected have become more fragmented and siloed. “It really validated the need for improved collaboration capabilities, to be more connected and have resilient processes,” Zobott says. “Many companies are now looking at Intelligent Products and how

INTELLIGENT PRODUCTS REPORT

SAP can help them reach their business goals. They are especially interested in our digital thread concept. That’s not simply connecting the dots, but connecting processes and actually breaking down those organisational barriers so that businesses can begin to get visibility upstream and downstream in these processes. That's a key part of our design operation strategy.” Here SAP is leveraging its vast wealth of expertise, data and integrated platforms to guide businesses of all sizes through their digital transformation. “These are expensive investments, they are hard projects to successfully accomplish, and they can

Our digital thread concept is not simply connecting the dots, but helps break down organisational barriers take anywhere from 18 months to five years depending on how comprehensive they are. At SAP we’re delivering packages that allow customers to access rapid start capabilities. That can be in product lifecycle costing, or maybe in manufacturing through the cloud. We’re creating those on-ramps to make it easy for our customer to try out these capabilities and see if it works for them, and then build on it. The key thing is getting started.”

KEITH ZOBOTT TITLE: GLOBAL VICE PRESIDENT OF DIGITAL PRODUCTS AND PROJECTS Keith's background includes over 30 years of experience with product development, discrete manufacturing, Product Lifecycle Management (PLM), advanced analysis tools, and portfolio & program management. Keith led initiatives in large, complex, global organizations to reduce time to profitability, drive increased customer value, and increase cross-functional process integration. Currently, leading SAP’s Digital Product & Projects solution management organization where our customers’ digital twin begins and initiates our design to operate digital transformation journey toward becoming an Intelligent Enterprise. Industry 4.0 technologies, including Product Lifecycle Management (PLM), are leading to significant disruption across manufacturing industries. Before joining SAP, he held various global leadership roles including developing strategic plans for Enterprise Product Lifecycle Management (PLM) and other product development enabling technologies for multi-billion-dollar global businesses.

SAP INDUSTRY 4.0

INTELLIGENT PRODUCTS BY THE NUMBERS

36% vs 33%

Profit margin of smart products compared to other goods, on average

1 in 3 sales are generated by products

with embedded smart devices or intelligence

67%

of manufacturers produce finished products with embedded smart devices or intelligence

46%

of manufacturers are focused on embedding smart devices into products...

45%

…Yet of manufacturers face challenges accessing the required technologies

34%

face challenges finding suppliers capable of delivering high quality smart devices 98

June 2021

29%

still struggle to clearly define the customer needs or where smart products can add value Source: MPI/SAP

FEATURE HEADER INTELLIGENT PRODUCTS REPORT

Types of Industry 4.0 products created by percentage of manufacturers Our company’s finished products with embedded smart devices and/or intelligence

27%

Parts/components for other manufactures' products with embedded smart devices and/or intelligence

31%

Industry 4.0 software for manufactures' products

42% 40%

23% Some products

42%

Many products

Financial impact of the application of Industry 4.0 products in past year by percentage of manufacturers

Increase more than 10 percent

17% 16% 43% 42%

Increase 6-10 percent

27% 28%

Increase 1-5 percent

Branding and market awareness

Differentiating products in the market

Source: MPI/SAP

42%

37%

26%

Fluids/substances for other manufactures' products with embedded smart devices and/or intelligence

Customer support

39%

27%

Materials devices for other manufactures' products with embedded smart devices and/or intelligence

by percentage of manufacturers reporting “significant improvement”

41%

28%

Smart devices for other manufactures' products

Biggest areas of improvement through Industry 4.0 products

30%

8% 9%

No change Decrease No Industry 4.0 currently or planned

0% 1% 5% 5%

manufacturingglobal.com

INDUSTRY 4.0

Intelligent Factories Report

100

June 2021

manufacturingglobal.com

101

All of our customers have initiatives that are looking at how they're going to change for the future MIKE LACKEY

GLOBAL HEAD OF SOLUTION MANAGEMENT FOR DIGITAL MANUFACTURING

INTELLIGENT FACTORIES REPORT

INTRODUCTION

Intelligent Factories Intelligent Factories are meeting the demands of today and defining the future of manufacturing through SAP’s Industry 4.0 initiative

he manufacturing sector has pioneered global shifts in commerce and trade since the first industrial revolution brought affordable consumer products to the masses. Automation, a commonplace feature in factories and production plants for generations, increased efficiency, delivered better value to stakeholders and customers alike, and placed safety at the forefront of the workplace. Today, assailed on all sides by the global disruption of a prevailing pandemic, regionalised geopolitical complexity including Brexit or trade wars, and customer demands that can shift with the wind, manufacturers stand on the digital transformation of Industry 4.0, the next seismic shift. Positioned at the centre of this industry shift is the Intelligent Factory, a self-optimising, data-driven strategy that will define the future of manufacturing and production. Agile enough to overcome unforeseen disruption and prescriptive enough to drive and shape the direction of consumer habits and expectations, Intelligent Factories

promise to revolutionise the quality, customisation and speed of delivery in everything from specialist medical equipment to consumer running shoes. The result is an industry that realises change is a necessity rather than a means to a competitive edge. “All of our customers have initiatives that are looking at how they're going to change for the future,” says Mike Lackey, Global Head of Solution Management for Digital Manufacturing at SAP. Lackey is at the forefront of SAP’s Intelligent Factory initiative, driving agility, efficiency and resilience, to deliver on the customer demands of today. Here he explores the Geopolitical benefits this model upheaval brings to efficiency, can fluctuate resilience, and agility, demand between and outlines how SAP is guiding businesses through their digital transformation journey to future growth and innovation.

400% 50%

capacity down to

capacity

SAP INDUSTRY 4.0

EXECUTIVE INTERVIEW

The Intelligent Future of Manufacturing

SAP’s Mike Lackey explores the benefits Intelligent Factories bring to efficiency, resilience, and agility, and how SAP is guiding businesses through their digital transformation journey to future growth and innovation

n light of global disruption and shifting customer demand, the manufacturing sector finds itself faced with too many questions and not enough answers. The solution is Intelligent Factories, says Mike Lackey, Global Head of Solution Management for Digital Manufacturing at SAP. Rather than promising a one-sizefits-all solution, the model is infinitely configurable and as varied as the business cases and disruptions it aims to solve. Lackey describes the system as “self optimising”. Driven by data, the Intelligent Factory can react to immediate issues, as well as improving over time to minimise disruption and boost efficiency in the long term. “As the factory is producing more intelligent products, and as it incorporates more intelligent assets, you’re able to collect more data than ever before,” Lackey explains. “But it’s not just about more data, it’s about 104

June 2021

looking at the real data that impacts the business and acting upon it. To bring cost, customer, and supplier data all down to the shop floor, that’s what we mean by the Intelligent Factory.”

MIKE LACKEY

INTELLIGENCE IN THE PANDEMIC ERA The COVID-19 pandemic has been an eye-opening experience for business leaders, accelerating the rate of change across all industries. Though the global outbreak is the most extreme circumstance, manufacturers are all too familiar with the disruption of global events beyond their control. Geopolitical upheaval such as Brexit and global trade wars brought their own set of complications to the sector in 2020, while earthquakes, tsunamis and other natural disasters can be equally damaging, as evidenced in the ongoing shortage of semiconductor chips. In these situations, demand can fluctuate between 400% capacity down

INTELLIGENT FACTORIES REPORT

to 50% capacity, or more. With Industry 4.0, businesses are able to consolidate their entire global operation, shifting production on a global-level. “Wherever operations are based, whether Asia, Europe or North America, businesses cannot look at each plant as a single silo. They must look at all plants in their global operation, and how best to leverage those to deliver on all their customer demand. By building standardisation and intelligence into those plants, they can understand where to move production. They can see the impact on their business.” Lackey considers the prevailing congestion in global ocean freight and shipping, and whether flying goods could be a suitable alternative. “That adds an exponential cost, but by bringing all of that data together, professionals can clearly assess what the impact will be on the business, on profitability, and on the actual ability to

To bring cost, customer and supplier data all down to the shop floor to aid decision making that's what we mean by the Intelligent Factory deliver. All that data together gives them the ability to make the decisions to best support their customers. RISE OF THE INTELLIGENT CONSUMER With more information at their fingertips than ever before, the intelligent consumer is another major forcing factor for manufacturing. Demand for more personalised products is growing at both an enterprise and consumer level, alongside expectations that they are produced from sustainably sourced materials, and delivered in a time frame of their choosing. Responding to that demand will be critical for growth, says Lackey: “They’re willing to pay for that level of customisation,” Lackey says. “And the companies that are offering that level of customer service, that are customer driven and are making decisions based on data-driven information, are the ones that are going to succeed. When you start going from mass production to mass customisation, though, you still have to hit volumes. There’s still a production plan to adhere to, and high manufacturingglobal.com

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SAP INDUSTRY 4.0

Mike Lackey from SAP talks about Supply Chain

quality standards - all of which must be delivered with the resources on hand. Bringing intelligence to the process allows manufacturers to respond faster and achieve these outcomes.” Here Intelligent Factories come into their own. Quality control at every step of the process creates a virtuous feedback loop, empowering

All that data together gives them the ability to make the decisions to best support their customers 106

June 2021

employees and leveraging data to eradicate missteps sooner, rather than as a reactionary step. AI and ML technologies which “can see more than the human eye” can automate this process, freeing humans to spend time on value-add tasks. “The result is more quality throughout the entire system,” Lackey says. “You’re demanding more quality from your suppliers, more quality from the design phase, and you have better visibility into your planning. That makes everything that comes together on the shop floor even stronger, and the quality level goes up exponentially.” INTELLIGENCE POWERED BY SAP Intelligent Factories is, in many ways, the culmination of SAP’s industry

INTELLIGENT FACTORIES REPORT

defining Industry 4.0 initiative: operated by Empowered People, leveraging Intelligent Assets, to produce Intelligent Products. “We’re tying everything in to digital supply chain, how assets are managed, the OEB, and keeping machines running at 99.9% uptime and efficiency. SAP is also bringing in the environmental and sustainability concerns, ensuring we know if the materials are sustainably sourced and processed, the carbon footprint of the factory, and what that means to corporate compliance reporting. And then there’s

The innovation that we're delivering can take our customers through that entire journey, fully integrated throughout the supply chain health and safety, guaranteeing workers are operating safely. And SAP brings that all together. “The innovation that we're delivering can take our customers through that entire journey, fully integrated through end-toend business processes,” Lackey says. "We're delivering value with all the assets and the innovation and the applications you need for digital transformation that is connected through your supply chain. And that's a big win for our customers when they have the agility and resilience to respond to changing customer demand eliminating waste and complexity.”

MIKE LACKEY TITLE: GLOBAL VICE PRESIDENT OF SOLUTION MANAGEMENT, DIGITAL MANUFACTURING Mike Lackey joined SAP in 2008 through the acquisition of Visiprise and is the Global Head of Solution Management, Digital Manufacturing. With previous roles at Visiprise, NetVendor and Teradyne Manufacturing Software Group, Mr. Lackey has a unique set of knowledge that covers both manufacturing software and design collaboration along with over 30 years of experience in the manufacturing sector. Early in his career, he started as a manufacturing engineer with DCA/ Attachmate, which provided him with invaluable first-hand knowledge and understanding of how SAP customers can use SAP’s Digital Manufacturing Solution Portfolio to improve their global operations. Mr. Lackey earned a Bachelor of Science degree in Industrial Engineering from Georgia Institute of Technology and an MA in Business Administration from Mercer University with dual concentrations in International Business and Marketing.

SAP INDUSTRY 4.0

INTELLIGENT FACTORIES BY THE NUMBERS

$210 billion

Investment in Industry 4.0 is expected by 2026 Source: Facts & Factors

8 10

70%

in manufacturers agree intelligent automation will help their business improve results

of manufacturers in “pilot purgatory”, unable to scale smart factory innovations

Source: 2020 IBM Institute for Business Value

Source: McKinsey

59% 88%

of manufacturers say Industry 4.0 will have “significant impact” on the industry in next five years

of manufacturers forecast an increase in smart devices and embedded intelligence in their production processes within two years…

46%

…despite this just of company executive have full access to the data access they need for Industry 4.0 analytics and planning Areas of biggest performance improvements from Industry 4.0

85%

Machine reliability and uptime 108

June 2021

84% Product quality

83% Customer Satisfaction

Source: MPI/SAP

FEATURE HEADER INTELLIGENT FACTORIES REPORT

Top challenges of Industry 4.0 Network capacity to handle Industry 4.0

18% Network capabilities to handle Industry 4.0

Adapting existing technologies

Impact of Industry 4.0 in next 5 years 4%

Limited impact

33% Some imapct

No impact

24%

19% 19%

20%

Assembly

28%

Warehousing

Welding

37% 40%

29%

Packaging

37% 39%

27% 26%

33% 39%

26%

38%

25% 24%

Fabrication/ Stamping

22%

Additive Manufacturing

22%

Some application

Source: MPI/SAP

30%

Document Management

Heat-treating

39%

30%

Shipping/Logitistics/ Transportation

Maintenance

Significant imapct

Incorporating smart devices and embedded intelligence

Processes where smart devices and embedded intelligence has been applied

Plating or Painting

56%

Identifying opportunities and benefits

33% 43% 38%

Significant application

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INDUSTRY 4.0

Intelligent Assets Report

110

June 2021

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INTELLIGENT ASSETS REPORT

INTRODUCTION

Intelligent Assets Intelligent Assets reduce downtime, increase efficiency and empower employees to secure greater resiliency throughout the supply chain

cting as the backbone of any Industry 4.0 organisation is the Intelligent Asset. Gathering and analysing data from connected equipment and machinery gives employees greater control over how to increase efficiency, remove unplanned downtime, and reduce overheads by eliminating the need for unnecessary maintenance. Intelligent Assets is one of the four pillars of SAP’s Industry 4.0 initiative, alongside Intelligent Factories, Intelligent Products and Empowered People. Rachel Romanoski, Solutions Manager, Digital Assets, SAP, says: “Intelligent Assets allow businesses to ensure that they have a resilient supply chain, by making sure that the products are where they need to be when they need to be there, regardless of who the end consumer, user, operator, or service provider might be.” Here she explains what an Intelligent Asset is and how it can influence all facets of an organisation’s operation, from design and manufacturing, to delivery.

Intelligent Assets allow businesses to ensure that they have a resilient supply chain

More than half of maintenance leaders report that their companies have strategies to implement Industry 4.0 into plants and processes

Source: The Power of Industry 4.0 in Asset Management report / MPI Group

SAP INDUSTRY 4.0

EXECUTIVE INTERVIEW

The building blocks of intelligent business Rachel Romanoski, Solutions Manager, Digital Assets, SAP, shares insight on the fundamentals of Intelligent Assets, and how to mitigate risk, downtime and supply chain volatility

business’ most “You can do a lot with just a little valuable assets intelligence,” Rachel Romanoski, are those that Solutions Manager, Digital go relatively Assets, SAP says. “Oftentimes unnoticed day to people think Intelligent day. When a machine on a Assets need to be the latest shop floor is fully lubricated, and greatest cutting-edge running at optimum technology. They can be super temperature and pumping advanced, such as leveraging out its required units per hour, it physics-based engineering requires no intervention or conscious simulations to forecast potential thought. The same can be said for the failures, and help mitigate them. But it employee that has all the necessary could be as simple as a temperature information at their fingertips to reading. You can pull a lot of simple RACHEL complete their tasks and dedicate their ROMANOSKI information from most equipment, and time to improvements. by enhancing that data through ancillary The harsh reality is often more solutions and digital capabilities, you complicated. Machines break down, they can create that Intelligent Asset.” must undergo routine maintenance and they can quickly become a disruption CUTTING THE COST OF POOR to productivity and a costly hit to an ASSET MANAGEMENT organisation’s bottom line. Through the Intelligent Assets provide two power of Industry 4.0, Intelligent Assets fundamental benefits for business, promises to change that. Romanoski explains. "First and foremost, 114

June 2021

INTELLIGENT ASSETS REPORT

Intelligent Assets can help mitigate and eliminate unplanned downtime - those catastrophic events that can have major impacts on your supply chain and cost in general.” Allowing companies to take a more proactive approach to routine maintenance and critical repair instantly improves risk mitigation. Traditional asset management is an inexact science, at best, often informed by OEM recommendations, time-based best practices or, in some instances, the heuristic gut instinct of individual engineers and operators. Take the equipment used in an oil field. In this high pressure, technical environment, traditional asset management would usually dictate that maintenance on a centrifugal pump is informed by time-based metrics. Blanket assumptions such as these,

Intelligent Assets allow you to be more lean in using materials for repairs or maintenance however, do not account for a wide variety of variables such as uptime or operating conditions. “With a simple vibration sensor integrated into that pump, operators are able to change the way they look at maintenance, pull information and data, plot trends and analyse that accordingly,” Romanoski says. “The result is a more dynamic and prescriptive understanding of exactly when a pump needs lubricating, for example. The true power of the Intelligent Asset is in changing the basic, reactive emergency work or timebased, planned maintenance and being more prescriptive and tailored to that specific asset and use case. Ultimately, you can reduce the unplanned events that often carry a big price tag.” Intelligent Assets can also alleviate cost leakage. Unnecessary maintenance not only means machines are unproductive and idle when they could be serving customers, it carries hidden costs in the form of labour and the use of expensive spare parts. “Intelligent Assets allow you to be more lean in using materials for repairs or maintenance,” Romanoski says. “Because you have a full understanding manufacturingglobal.com

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SAP INDUSTRY 4.0

Rachel Romanoski talks about predictive maintenance

of what will be needed and when, you’re able to significantly reduce overhead costs. If we further look at the costs from an overhead perspective, Intelligent Assets also allow businesses to better sweat their assets. Maybe you can consider the lifecycle of the asset and understand whether you can push it a little bit further.”

Intelligent Assets are the building blocks of the Intelligent Factory and Industry 4.0 116

June 2021

EMPOWERING PEOPLE FOR RESILIENT SUPPLY CHAINS The second major opportunity Intelligent Assets provide is in empowering employees to build more resilient and more efficient supply chains. A more informed worker is, after all, a more productive worker. “Not every asset is going to be applying this more prescriptive maintenance strategy,” Romanoski says. "It might be that the best course of action for a low cost item is to run it to failure. Having this information that we collect over time empowers those people to make those better decisions, but also has a trickle down effect to building resiliency and efficiency into the entire supply chain.” At SAP, Intelligent Assets represents the “through line” that connects the four

INTELLIGENT ASSETS REPORT

pillars of its Industry 4.0 approach. The company has a rich heritage in plant maintenance and operation solutions, with decades of data, best practice and market stewardship to draw from. “If we consider Intelligent Products, being able to leverage the information that we get from the assets themselves can actually have an impact on things like quality in that particular product that's being manufactured or produced,” Romanoski says. “This

People think Intelligent Assets need to be the latest and greatest cutting-edge technology […] But it could be as simple as a temperature reading allows organisations to start to correlate trends based on how a machine might be performing to what's the actual appropriate yield you might be getting out of that product, for example. “Intelligent Assets are the building blocks of the Intelligent Factory and Industry 4.0, and then ultimately, with Empowered People, it’s about bringing the people, the assets, the processes all together to really drive a resilient supply chain, no matter which of the pillars you’re looking to implement from Industry 4.0”.

RACHEL ROMANOSKI TITLE: SOLUTIONS MANAGER, DIGITAL ASSETS Rachel is part of Digital Asset Solution Management, globally responsible for strategy, direction, go-to-market and customer adoption across SAP’s Maintenance & Service solution portfolio. Rachel specializes in business processes across the entire asset lifecycle with a focus on mobile, geospatial, predictive and maintenance management solutions. Rachel has been with SAP for 8 years and while her background and education are in Biomedical Engineering from Texas A&M University, she has spent her career primarily focused on operational excellence within Oil & Gas, Chemical and other asset intensive industries.

SAP INDUSTRY 4.0

INTELLIGENT ASSETS BY THE NUMBERS

Up to

30%

of OEM-recommended maintenance activities happen too frequently Source: IBM

40%

Research suggests up to of all preventive maintenance costs provide only minor improvement in uptime Source: IBM

58%

of maintenance leaders believe Industry 4.0 is a competitive differentiator…

…A further

39% Two thirds

say it will continue to be in the near future

Inability to share equipment information with professionals and applications is seen as the biggest challenge, with

62% of maintenance leaders reporting machine-to-enterprise IT systems communications need improving (4% need an entire network overhaul)

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June 2021

of maintenance leaders report their companies invested more than 5% of sales into Industry 4.0 strategy implementation in plants and processes in 2019…

95%

… say that figure will increase in the next two years, with 10% expecting a more than 20% rise Source: The Power of Industry 4.0 in Asset Management report / MPI Group

INTELLIGENT ASSETS REPORT

Process in which smart devices/ embedded intelligence have been applied Shipping/Logitistics/ Transportation

27%

42%

30%

Maintenance

28%

43%

29%

26%

41%

28%

Assemby

Packaging

27%

43%

28%

Document Management

25%

46%

28%

by percentage of manufacturers N/A

No application

Some application

Significant application

Impact of Industry 4.0 to plants and processes on productivity and profitability over next 5 years 33%

Increase more than 10 percent

34% 49%

Increase 6-10 percent

41% 14%

Increase 1-5 percent

No change

Decrease

No Industry 4.0 currently or planned

19% 0% 3% 0% 0% 4% 3% by percentage of manufacturers Productivity

Profitability

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INDUSTRY 4.0

Empowered People Report

120

June 2021

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121

122

June 2021

EMPOWERED PEOPLE REPORT

INTRODUCTION

Empowered People Empowering a business’ most valuable asset, people, is critical to success in Industry 4.0

o amount of automation, AI or ML will supplant the ingenuity of the human mind. From the C-suite to the shop floor, people will always be central to any organisation. Better informed people make better business decisions, and by breaking down barriers, companies can achieve more. Empowered People is one of the four pillars of SAP’s Industry 4.0 initiative, alongside Intelligent Factories, Intelligent Products and Intelligent Assets. Andy Hancock, Global Vice President, Centre of Excellence at SAP Digital Supply Chain, says: “We're never going to replace the people, or take the human out of the process. But the key thing is, if we can automate predictable tasks and mitigate risk through technology, those highly skilled workers can move to high value, complex decision-making tasks that are further up that chain.” Here he explores how empowering people comes to life in an organisation, how each individual can achieve more and, ultimately, how businesses can remain competitive and innovative in the era of Industry 4.0.

We're never going to replace the people, or take the human out of the process

Accessing Industry 4.0 data remains a major challenge for employees. Company executives believe only

50%

of manufacturers currently provide access to all who need it 123

Source: MPI Group

manufacturingglobal.com

SAP INDUSTRY 4.0

EXECUTIVE INTERVIEW

Empowering people, improving business Andy Hancock, Global Vice President, Centre of Excellence at SAP Digital Supply Chain on empowering people for better business

ehind the platforms, IoT sensors and connected assets in digital transformation sits the humble human, without which the entire system comes to a crashing halt. Employees can be a business’ most valuable asset, but they can also be the most costly if left behind in the revolution of Industry 4.0. Ultimately the goal should be to elevate an individual’s role within an organisation, remove dead weight from their desk and aid them in reaching their full potential. “The people will always be the centre,” says Andy Hancock, Global Vice President, Centre of Excellence at SAP Digital Supply Chain. “It doesn't matter how much automation that you adopt or how much you increase AI integration, there will always be tasks 124

June 2021

ANDY HANCOCK

that only a human can actually execute on. In fact, as we do more automation, there’s an even higher complexity of decision-making required that only a human can do.” SAP envisions a reality of Empowered People as a critical pillar in its approach to Industry 4.0. “What we mean by Empowered People is empowering individuals to be agile in the moment,” Hancock says. “The whole concept and ethos surrounds organising data, whether that comes internally or externally, to make it insightful and, most importantly, actionable.” BREAKING DOWN BARRIERS A real world example that made headlines earlier this year is the Suez Canal crisis. In the operation to rescue the Ever Given container ship wedged across the narrow channel, hundreds

SAP: WHITE PAPER

of experts worked in collaboration. Excavators worked around the clock to dig the bulbous bow of the container ship out of the sand. Dredgers were called upon, who understood the crosssectional area of the Suez canal, and exactly where to dig to help refloat the vessel. And there were the pilots on board who understood that an approaching high tide would give an extra two metres of lift. In essence, this was a microcosm of modern business, where siloed departments use their expertise to help a business reach its objectives. “What happened in the Suez is that these dredgers, excavators, tug boats and pilots all pooled their information together and realised that they can actually refloat this ship in five days and let it sail,” Hancock says. "Go back 20 or even 10 years and this information would have been in people’s heads, in different places, and instead the situation would’ve taken weeks and required the costly job of removing containers. That’s a good illustration of where Industry 4.0

What we mean by Empowered People is empowering individuals to be agile in the moment

brings all of these technology enablers to empower people to make those informed decisions.” EMPOWERING THE WORKPLACE In less extraordinary circumstances, Empowered People is realised through a layering of information that filters throughout an organisation. “Start with the operator who has maybe one or two pieces of equipment to run. To empower that operator to do his job efficiently, he needs to know if it’s running correctly, if it’s going out of bounds, does he need an indicator to do something in order to avoid a failure? That’s the basic level,” Hancock says. “We then lift it up to the next layer, moving from operational execution to areas of financial core values. The plant manager can collate the information from each of the production lines, assess the KPI, form a plan, and measure that against their actuals.” manufacturingglobal.com

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Andy Hancock from SAP talks about Industry 4.0

Beyond the four walls of the siloed plant, SAP enables businesses to stack further data from external suppliers, their wider network and begin to derive true value. In the boardroom, executive

Where this empowerment truly comes into effect is in the time it takes to make decisions and implement them 126

June 2021

leadership, now fully informed by this aggregated data, are able to deliver to their shareholders. “The CEO or CFO have their core values that they need to meet, whether that’s sustainability goals, P&L, or something else,” Hancock says. "Where this empowerment truly comes into effect is in the time it takes to make decisions and implement them. We can now actually bring the data all the way down the individual steps to the operator, because it's all connected. Decisions made at the top can be actioned incredibly fast throughout the business. That's a very simple example, but it shows how this layered approach works in a lot of our businesses that we see.”

EMPOWERED PEOPLE REPORT

Empowered People are the culmination of SAP’s Industry 4.0 strategy, and a company value that it wears on its sleeve. "The key thing when we talk about industry 4.0, is that SAP cannot do it on its own,” Hancock says. "We need our partner ecosystem, hardware vendors and integrators, and consultancies to understand these big shifts like digital transformation. And we also contribute to those discussions.

It doesn't matter how much automation that you adopt […] there will always be tasks that only a human can actually execute on

ANDY HANCOCK TITLE: GLOBAL VICE PRESIDENT, CENTRE OF EXCELLENCE Andy Hancock is a Global Vice President of the Center of Excellence, SAP Digital Supply Chain. Using his background in Human Computer Interaction, Enterprise Mobility and Industry Expertise, Andy merges a strong technical foundation, a passion for solving problems and real world situations he has encountered during his 14 years tenure at SAP to fulfill his role as trusted advisor for leading global brands. He understands how to quickly undercover the root of the problem and articulate a clear path to the right business outcome. Having worked in more than 40 countries and experienced a vast array of cultures he knows the importance of operating efficiently at the point of performance and put simply, getting the Right Information at the Right Time to make that informed decision.

“The first step is always the hardest in any project. It requires an amount of energy that some organisations may start but never finish and continually transform. And so what SAP has done is to make the entry point very low, so businesses can come and see the best course of action in our industry hubs. We have SAP services to support the maturity assessment, the evaluation of where they are on that journey. And then we have our partner ecosystem to help them move in the right direction.” manufacturingglobal.com

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SAP INDUSTRY 4.0

EMPOWERED PEOPLE BY THE NUMBERS

74%

of EMEA industrial product leaders believe training and developing their workforce with new skills is a priority for Industry 4.0 realisation Source: Deloitte

People are at the core of Industry 4.0 initiatives, with three quarters of organisations saying training and development of their workforce is a priority, and 28% focusing on attracting and retain talent Source: Deloitte

Demand for physical and manual skills in repeatable, predictable tasks is expected to shrink by nearly 30% over the next decade…

Industry 4.0 is expected to increase employment prospects for workers with IT skills, 50% of automakers report…

…25%

expect to need more employees with logistics and planning expertise to derive true value from the insights provided by Industry 4.0 strategies

Source: BCG

…Demand for technological skills, and acumen in interacting with technology is predicted to grow by more than

50%

Greater automation and digitalisation also worries workforces. Cultural adaptation and acceptance of Industry 4.0 is a challenge for

27%

of manufacturers…

…Meanwhile around

June 2021

a fifth

of manufacturers struggle with redefining the roles of their employees Source: MPI Group

128

Source: McKinsey

EMPOWERED PEOPLE REPORT

Impact of Industry 4.0 in next five years 1% 1%

29%

On Industry

69%

2% 3% On their business

30%

65%

by percentage of manufacturers

No impact

Limited impact

Some impact

Significant impact

10 biggest challenges with Industry 4.0 adoption

47%

Identifying opportunities/benefits of Industry 4.0

45%

Adapting existing technologies

38%

Security of corporate devices, network, and data

37%

Network capabilities to handle Industry 4.0 Incorporating smart devices/ embedded intelligence

35%

Necessary skills/talent to leverage data/intelligence

35% 32%

Network capacity to handle Industry 4.0 Leadership support for Industry 4.0

27%

Cultural adaptation/acceptance of Industry 4.0

27%

Changing business processes and workflows to accommodate Industry 4.0

26% by percentage of manufacturers

Source: MPI Group

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