Make Things Cheaper or The Wal-mart Effect

Make Things Cheaper or The Wal-mart Effect

I have been reading a good book that I highly recommend. Food Rules: An Eater’s Manual by Michael Pollan.

This short, concise book packs much thought and makes you also think. Here, for example, is rule 44 out of 64:

With food, as with so many things, you get what you pay for. There is also a trade-off between quality and quantity, and a person’s “food experience”—a meal’s duration or quotient of pleasure—does not necessarily correlate with the number of calories consumed. The American food system has for many years devoted its energies to increasing quantity and reducing price rather than to improving quality. There’s no escaping the fact that better food—measured by taste or nutritional quality (which often correspond)—costs more, because it has been grown or raised less intensively and with more care. Not everyone can afford to eat well in America, which is a literal shame, but most of us can: Americans spend less than 10 percent of their income on food, less than the citizens of any other nation. As the cost of food in America has declined, in terms of both price and the effort required to put it on the table, we have been eating much more (and spending more on health care). If you spend more for better food, you’ll probably eat less of it, and treat it with more care. And if that higher-quality food tastes better, you will need less of it to feel satisfied. Choose quality over quantity, food experience over mere calories. Or as grandmothers used to say, “Better to pay the grocer than the doctor.”

As with food, so with other things.

Pondering this section, I recalled the Wal-mart effect. Are you old enough to remember when Wal-mart’s message was “Made in America”?

Suddenly its message was “Low Prices”.

The low prices translated to “No Longer Made in America.” The company’s buyers forced supplier manufacturers to chase ever lower costs. How could you make stuff even cheaper? Quality meant nothing. Buying a brand name product at Wal-mart you received a completely different product than if you bought one directly from the manufacturer’s distribution channel.

The idea spread everywhere. And buyers didn’t always play fair, either.

Once many years ago, I was at a Starbucks in Mount Prospect, IL doing something on my Palm Pilot (told you it was a while ago). A guy beside me asked to see the stylus.

Turns out he owned a small manufacturing company in the area that had bid on manufacturing the stylus. He quoted according to the specs as low as he could go–pretty much just to keep the machines in his plant busy. They told him “do not change the specs.”

He examined my stylus from the finished product. It was made much more cheaply than the spec. The Chinese supplier convinced Palm to change the spec, cheapen the product, and got the sale. Probably for a profit.

Tells me a couple of things:

  1. Be wary chasing the low cost supplier and customer
  2. Don’t be afraid to suggest changing the specs in the quest for business

Oh, and buy the book and practice the “rules”.

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

The popular saying holds that the future is here just unevenly distributed. According to a survey released by PWC and The Manufacturing Institute, that thought is certainly true about the Fourth Industrial Revolution (which PwC labels 4IR but many others label Industry 4.0). This research confirms my observations that many manufacturers have projects at a variety of stages, while many others have adopted a wait-and-see attitude.

The report notes that fourth industrial revolution has been met with both enthusiasm and fence-sitting. While sentiments and experiences have been mixed, most business leaders are now approaching 4IR with a sense of measured optimism. Indeed, larger systemic changes are underway, including building pervasive digital operations that connect assets, developing connected products and managing new, real-time digital ties to customers via those products.

While manufacturers recognize the potential value of advanced technologies and digital innovation—particularly robotics, the Industrial Internet of Things (IIoT), cloud computing, advanced analytics, 3D printing, and virtual and augmented reality—they are still deliberating how and where to invest and balancing the hype with their own level of preparedness. Meanwhile, they’re also well aware of the significant changes 4IR will bring to a new manufacturing workforce—that is, one that is increasingly symbiotic and increasingly beneficial for many workers and manufacturers alike.

This narrative is reflected in a new survey of US-based manufacturers carried out by PwC and The Manufacturing Institute, the workforce and thought leadership arm of the National Association of Manufacturers. We see a definitive—and, indeed, inevitable—shift to 4IR as companies seek to integrate new technologies into their operations, supply chain, and product portfolio. At the same time, they acknowledge that scaling, justifying 4IR investments, and dealing with uncertainty surrounding use cases and applications usher in a new set of challenges.

Some key survey findings include:
• While the sector as a whole is making assertive forays into 4IR, many manufacturers still inhabit the awareness and pilot phases. Nearly half of manufacturers surveyed reported that they are in the early stages of a smart factory transition (awareness, experimental, and early adoption phases).
• Manufacturers do expect the transition to accelerate in the coming years—73% are planning to increase their investment in smart factory technology over the next year.
• While we see a number of fence-sitters, the bulk of manufacturers are indeed prioritizing 4IR, the digital ecosystem, and emerging technologies. 31% report that adopting an IoT strategy in their operations is “extremely critical” while 40% report that it’s “moderately critical.”
• About 70% of manufacturers say the biggest impacts of robotics on the workforce in the next five years will be an increased need for talent to manage in a more automated, flexible production environment and the opening of new jobs to engineer robotics and their operating systems.

…While adopters have identified clear signs of success. Though most manufacturers are still climbing the 4IR adoption curve—albeit at different speeds—those that have made progress are reporting a modicum of performance boosts measured by productivity gains, reduced labor costs, new revenue streams from IoT-connected products and services, as well as improved workforce retention and worker safety. Those that have effectively defined their use cases with a focus on outcomes rather than technology are seeing early wins, and are looking for ways to generate even more value.

The Takeaway
Manufacturers are seeking to balance 4IR hype and reality. And most acknowledge that sitting back and waiting for the inevitable may not be an option.

The road may be longer than the hype would have companies believe, but preparing for and embracing change is a muscle many of today’s manufacturers are ready to flex. Those that can build on their ad hoc pilots and prioritize investments and strategies with their long-term desired business outcomes will be better positioned to create lasting value for their organization.

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

Innovation—A Word Often Loosely Used

People send about a dozen press releases per day to me, only slightly fewer on weekends. Many boast innovation in products, services, or pricing models. The word comes dangerously close to over use.

Siemens, however, consistently shows how users in a large variety of settings use the fruits of its own innovation of bringing together PLM, IT, automation, and industrial control for their own innovation.

My last post from the recent Siemens Innovation Forum discussed design and manufacture digitally using Siemens PLM and 3D printing. I also discussed a young woman using Siemens CAD and her own hard work to engineer a new prosthetic foot for a veteran of Afghanistan.

Next up at the Forum was Mayor Buddy Dyer of Orlando speaking on smart cities and the many places technology—principally from Siemens—were helping build infrastructure, water/wastewater controls, microgrids, and other elements of his administration’s smart cities work. Orlando has progressed far from its sleepy tourist-town roots.

Dr. Norbert Gaus, Head of R&D in Automation and Digitalization, AI at Siemens presided over an interlude with an example of robot picking utilizing AI + Digital Twin. Both are important components of an innovative manufacturing future.

The program jumped a level from travel by prosthetic foot to highways to aircraft carriers. Bharat Amin, VP & CIO of Newport News Shipbuilding discussed the entirely new way of building large ships using Siemens PLM, digital twin, digital thread, and electronic devices. This new workflow eliminated carrying huge piles of drawings to the site. The armloads of blueprints were replaced by a digital tablet.

People who have accomplished a digital turnaround always have timely advice for those of us beginning projects. Amin’s list: Start with people; Cultivate disruption; Nurture trust and relationships; Cut through bureaucracy; Go against the grain; Have an entrepreneurial spirit; Be willing to take risks.

Chester Kennedy, CEO Bridg—a microelectronics manufacturer, took Digital Twin from huge war ships to silicon wafers—microelectronics. He began with an MES to track through the entire process. The idea being that if they could find a flaw maybe at step 14 and scrap the part before investing more time and process only to find it at a later stage, they would save a ton of money. The digital twin idea is developing for work on security. At the beginning, Bridg just wanted an RFP for MES. Siemens came in and offered to go beyond Camstar (MES) to work in partnership to look at the system from design to physics and material science to workflow. The company needs security confidence by its customers, so it’s adding blockchain to help catch any potential sabotage within the microelectronics at manufacture.

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

Siemens Spotlight on Innovation

I flew to Orlando May 22 as a guest of Siemens along with a select few other “influencers” to be introduced to a number of innovation projects fueled by Siemens technology. We met at the Dr. Phillips Center for Performing Arts in downtown Orlando (did you even know there was a downtown?), which itself is filled with Siemens equipment. There are few companies in the industrial area which I cover that have the vision and execution that Siemens is exhibiting right now.

By the way, there is a fantastic little taco place in downtown Orlando. Email or DM on Twitter, and I’ll share the name. Greg Hale of ISSSource.com and I had dinner there Wednesday. We agreed—among the best tacos we’ve had.

Barbara Humpton, CEO Siemens USA, led with an overview. Siemens has made a greater than $1B investment in R&D in the US with 7,000 engineers churning out 700 inventions per year.

She introduced former stunt man and motorcycle racer turned CEO Mike “Mouse” McCoy, CEO & Founder of HackRod. McCoy built on a foundation of Siemens PLM and SolidEdge CAD. He added a gaming engine. He was able to use VR for design reviews, interference checking, and simulation during the design process. We followed along with design and review of a new motorcycle. A few parts required somewhat exotic materials. Oak Ridge National Labs printed the parts from the design files downloaded from HackRod. The design teams were in Ventura, CA and Princeton, NJ with input from Munich, Germany. Collaboration was not a problem.

Beginning of design until component parts shipped to Orlando—2 weeks. The parts arrived Tuesday. McCoy and a partner assembled the motorcycle on Tuesday evening and wheeled (not drove) it onto the stage Wednesday about 1:30. Not bad? Heck, in my early career, we couldn’t have done a foam-core mock up in that time frame.

One thought McCoy left us with. “We need to talk STEAM, not just STEM—science, technology, engineering, arts, math.” It is now possible for artists and designers to be an intimate part of the team going from art to finished product quickly. 3D printing from PLM files. Way cool.

How about a high school mechanical design student given a project to provide a lighter prosthetic foot for an Army vet? Humpton introduced 18-year-old high school student Ashley Kimbel who had undertaken just such a project. She worked with the veteran to analyze his current “foot” looking for areas where weight could be eliminated. Then she had to learn how to fabricate and manufacture the device. We saw films of the veteran running with Ashley proving out the new prosthetic.

This is a long way from projects I had as a 17-year-old senior. Education and technology have come a long way in a lifetime. Oh, and her future? She wants to work in bioengineering designing and 3D printing organs. She will be working on that during her tenure at UAB. She is going to make a difference for many people.

I have many more ideas and conversations to capture. This will serve for now.
Check out #SiemensInnovates

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

HPE Acquires Cray Consolidating Supercomputer Market

Today’s big enterprise IT news concerns Hewlett Packard Enterprise (HPE) and Cray entering into a definitive agreement under which HPE will acquire Cray for $35.00 per share in cash, in a transaction valued at approximately $1.3 billion, net of cash.

This is another example of technology industry consolidation. We’re seeing it with instrumentation, control, and automation companies. Enterprise IT is rapidly going that way. Both HPE and Dell Technologies have been scarfing up companies either matured and not growing or in need of capital to survive.

Signs of maturing industries mean one kind of shock waves for employment within them. But also this usually means preparing room in the market for new companies with disruptive new technologies and business models. It’s possible that we’re about to see a leap in quantum computing out of all this.

What does this mean for industrial users? We are seeing already companies like HPE moving their powerful compute platforms to the edge. With every advancement, we’ll see additional compute power bringing databases, analytics, AI, video and other applications to more remote installations.

Some additional details from the press release:

“Answers to some of society’s most pressing challenges are buried in massive amounts of data,” said Antonio Neri, President and CEO, HPE. “Only by processing and analyzing this data will we be able to unlock the answers to critical challenges across medicine, climate change, space and more. Cray is a global technology leader in supercomputing and shares our deep commitment to innovation. By combining our world-class teams and technology, we will have the opportunity to drive the next generation of high performance computing and play an important part in advancing the way people live and work.”

The Explosion of Data is Driving Strong HPC Growth

The explosion of data from artificial intelligence, machine learning, and big data analytics and evolving customer needs for data-intensive workloads are driving a significant expansion in HPC.

Over the next three years the HPC segment of the market and associated storage and services is expected to grow from approximately $28 billion in 2018 to approximately $35 billion in 2021, a compound annual growth rate of approximately 9 percent. Exascale is a growing segment of overall HPC opportunities and more than $4 billion of Exascale opportunities are expected to be awarded over the next five years.

“This is an amazing opportunity to bring together Cray’s leading-edge technology and HPE’s wide reach and deep product portfolio, providing customers of all sizes with integrated solutions and unique supercomputing technology to address the full spectrum of their data-intensive needs,” said Peter Ungaro, President and CEO of Cray. “HPE and Cray share a commitment to customer-centric innovation and a vision to create the global leader for the future of high performance computing and AI. On behalf of the Cray Board of Directors, we are pleased to have reached an agreement that we believe maximizes value and are excited for the opportunities that this unique combination will create for both our employees and our customers.”

High performance computing is a key component of HPE’s vision and growth strategy and the company currently offers world-class HPC solutions, including HPE Apollo and SGI, to customers worldwide. This portfolio will be further strengthened by leveraging Cray’s foundational technologies and adding complementary solutions. The combined company will also reach a broader set of end markets, offering enterprise, academic and government customers a broad range of solutions and deep expertise to solve their most complex problems. Together, HPE and Cray will have enhanced opportunities for growth and the integrated platform, scale and resources to lead the Exascale era of high performance computing.

Survey Sees 4th Industrial Revolution Moving From Buzz to Reality

Industrial, Cloud, AR, Subscriptions

I am often asked about what industrial digital transformation really means and about technologies such as cloud, edge, AR/VR, and so forth. This press release from AVEVA promised to answer much of that—until I sat down to parse it and figure out what to write. After editing out close to half of the document which was laced with buzz words—revolutionary, innovative, digital transformation, (BINGO), I think I have boiled it down to its essence. The essence is actually pretty good and didn’t need all the fluff to build it up. (I go here, because in my old age, I’m tired of fluff. Why not just tell us what you have? It’s probably pretty good!)

First, the cloud. AVEVA Connect, a cloud-based digital transformation hub, enables customers to seamlessly access AVEVA’s software portfolio, enabling digitalization of design, build, operations, and maintenance processes across a wide range of industries. Over the past year, AVEVA Connect has launched eight new cloud-enabled offers, more than 75 updates to its digital services including the launch of cloud Operator Training Solution (OTS), visualization, and condition management capabilities, and grown to support over 5,500 daily users.

Second, the AR/VR and OTS. Total OLEUM has implemented AVEVA’s cloud- based operator training systems. No real details were added by the PR people regarding benefits, but they worked in the words, revolutionary, innovative, benefitted. Evidently Total is happy with the training results. When I’m asked about AR/VR (augmented reality and virtual reality), my response is that it’s great for training.

Third is not a technology but a pricing plan. AVEVA’s new subscription program, AVEVA Flex, includes “advanced HMI visualization, operations control and information management, manufacturing execution, and asset performance capabilities. With subscription-based, feature-rich software tiers, AVEVA Flex offers a broad range of flexibility in the purchase, design, and utilization of industrial software solutions.” What this sounds like to me is a repackaging of Wonderware’s pricing modal to bring it in line with the latest industry trends. Without knowing pricing details, it sounds like the company is on the right track.

Among the first to take up the new AVEVA Flex subscription program, Giovanni Borinelli – General Manager from Italian Steelmaker NLMK Verona, said: “For us to compete in today’s volatile market, we need a trusted partner who can help us master our digital transformation. The technical and commercial flexibility that AVEVA Flex provides is fundamental to that change and will help us remain agile and successful into the future.”