Digitization is on everyone’s lips these days. If you have not taken steps to implement and improve digital data flow, you are probably already behind. I receive information regularly from PwC and here is a new report on how digitization is reshaping the manufacturing industry. The report takes a look at 8 companies and showcase how they improved their efficiency, productivity and customer experience by ensuring they have the right capabilities central to their operating model and by matching them with strong skill sets in analytics and IT.
Pressure from the consumer, new regulations and advances in information technology are all reasons that are pushing manufacturing organizations to digitize so they can avoid falling behind the new breed of market-leading ‘digital champions.’ The report identifies 4 significant changes CEOs must implement to maximize the benefits of digitization.
1. Drive organizational changes that address new digital capabilities and digitalized processes – e.g., product and process design and engineering, end-to-end procurement, supply chain/distribution and after-sales – right from the top, because these are so new and different
2. Hire more software and Internet of Things (IoT) engineers and data scientists, while training the wider workforce in digital skills
3. Learn from software businesses, which have the ability to develop use cases rapidly and turn them into software products
4. Extend digitalization beyond IT to include significant operational technologies (OT) such as track and trace solutions and digital twinning
From the report, “Already, digitally ‘smart’ manufacturers are gaining a competitive advantage by exploiting emerging technologies and trends such as digital twinning, predictive maintenance, track and trace, and modular design. These companies have dramatically improved their efficiency, productivity, and customer experience by ensuring these capabilities are central to their operating models and by matching them with strong skill sets in analytics and IT. “
During 2018 and early 2019, PwC conducted in-depth digitisation case studies of eight industrial and manufacturing organisations in Germany, the US, India, Japan and the Middle East. Drawing on discussions and interviews with CEOs and division heads, we explored the key triggers for change these companies faced, assessed how digital solutions are being implemented and how digitisation is affecting key aspects of their operating models. We also compared our eight organisations with other publicly cited digitisation case studies, and leveraged PwC’s 2018 study Digital Champions: How industry leaders build integrated operations ecosystems to deliver end-to-end customer solutions and other ongoing PwC research.
This paper is the result of ongoing collaboration between PwC and the Global Manufacturing and Industrialisation Summit (GMIS). GMIS provides a forum for industry leaders to interact with governments, technologists and academia in order to navigate the challenges and opportunities brought about by the digital technologies of the Fourth Industrial Revolution. PwC has been a knowledge partner with GMIS since 2016.
The eight case studies in this report make clear how far the role of digital technology goes beyond traditional IT systems. It also encompasses OT and data and analytics technologies. Full integration and linkage among these different technologies, and the ecosystems they are part of, are essential to a successful digital transformation. Yet success is impossible without a digitally smart workforce that is familiar with Industry 4.0 skills and tools.
These challenges are the subject of the second part of the report Digital Champions: How industry leaders build integrated operations ecosystems to deliver end-to-end customer solutions, which will be published in January 2020.
The report will elaborate further on the emerging theory of digital manufacturing and operations, in which successful, digitised industrial organisations will increasingly have to act like software companies in response to four key factors:
- The connected customer seeks a batch size of one, necessitating greater customisation of products and delivery time, improved customer experience, use of online channels and outcome-based business models.
- Digital operations require both engineering and software abilities to enable extensive data analysis and IoT-based integration, as well as digitisation of products and services.
- Organisations need augmented automation, in which machines become part of the organisation via closely connected machine–worker tasks and integrated IT and OT.
- Future employees will be ‘system-savvy craftspeople’ with the skills to use sensors in order to collect and analyse accurate data, as well as design and manage connected processes.
About the authors
Anil Khurana is PwC’s global industrial, manufacturing and automotive industry leader. He is a principal with PwC US.
Reinhard Geissbauer is a partner with PwC Germany based in Munich. He is the global lead for PwC’s Digital Operations Impact Center.
Steve Pillsbury is a principal with PwC US and the US lead for PwC’s Digital Operations Impact Center.
As manufacturing shifts towards smart factories, with interconnected production systems and automation, engineers at the University of Nottingham are leading a £1.9m project to develop a predictive toolkit to optimise productivity and communication between human workers and robots.
This research fits in with much other reporting I’ve done including the work of Dell Technologies on “human-machine partnerships.”
DigiTOP is one of seven national projects to create novel digital tools, techniques and processes to support the translation of digital capabilities into the manufacturing sector, funded by the Engineering and Physical Sciences Research Council (EPSRC).
It comes following the industry-led Made Smarter review, chaired by Siemens Chief Executive Juergen Maier, which stated that industrial digitalisation could be worth as much as £455bn to UK manufacturing over the next decade.
DigiTOP officially started on 1st July with the first month dedicated to project set up activities culminating in our internal kick off meeting at the end of the month, after which we should have a more outward focus. The project will take 39 months and complete on 30 September 2021. The twitter account @DigiTOP_Project will be regularly updated, and they are in the process of setting up a website to aid dissemination of progress.
A digital toolkit for the optimisation of operators and technology in manufacturing partnerships, DigiTOP will be led by Professor Sarah Sharples at the University of Nottingham in collaboration with Loughborough University, Cranfield University, University of the West of England, BAE Systems, Babcock International, Synertial Labs Ltd, Artinis Medical Systems B.V., High Value Manufacturing (HVM) Catapult and Jaguar Land Rover Ltd.
The toolkit will focus on using human factor theories and data to digitally capture and predict the impact of digital manufacturing on future working practices. Demonstrators will be used to test the implementation of sensing technologies that will capture and evaluate performance change and build predictive models of system performance.
The project will also provide an understanding of the ethical, organisational and social impact of the introduction of digital manufacturing tools and digital sensor-based tools to evaluate work performance in the future workplace.
DigiTOP’s findings will help companies that are planning to implement digital manufacturing technologies to understand how it will alter working practices, and how to optimise workplace designs to take these changes into account.
The tools developed within DigiTOP will help industry to design future work which might take place with a human and robot working in collaboration to complete a task or help with understanding how to design a data visualisation which shows how current parts of the factory are performing, and where maintenance or systems change might be needed in the short or long-term future.
Professor Sharples said: “The manufacturing industry, with the drive towards ‘Industrie 4.0’, is experiencing a significant shift towards digital manufacturing. This increased digitisation and interconnectivity of manufacturing processes is inevitably going to bring substantial change to worker roles and manual tasks by introducing new digital manufacturing technologies to shop floor processes.
“It may not be enough to simply assume that workers will adopt new roles bestowed upon them; to ensure successful worker acceptance and operational performance of a new system it is important to incorporate user requirements into digital manufacturing technologies design.
“New approaches to capture and predict the impact of the changes that these new types of technologies, such as robotics, rapidly evolvable workspaces, and data-driven systems are required,” adds Professor Sharples, who is Associate Pro-Vice Chancellor for Research and Knowledge Exchange for Engineering at Nottingham.
“These approaches consist of embedded sensor technologies for capture of workplace performance, machine learning and data analytics to synthesise and analyse these data, and new methods of visualisation to support decisions made, potentially in real-time, as to how digital manufacturing workplaces should function.”
The EPSRC investment arose out of work conducted by the Connected Everything Network Plus, which was established to create a multidisciplinary community focussed on industrial systems in the digital age.
EPSRC’s Executive Chair, Professor Philip Nelson, said: “The adoption of advanced ICT techniques in manufacturing provides an enormous opportunity to improve growth and productivity within the UK.
“The effective implementation of these new technologies requires a multidisciplinary approach and these projects will see academic researchers working with a large number of industrial partners to fully harness their potential, which could generate impact across many sectors.”
Most companies think they lead their Industry 4.0 competitors in AI and robotic technologies. This sounds like Garrison Keillor describing the mythic village of Lake Wobegon, MN where “all the children are above average.” I’m finding increased interest in digital manufacturing, Industry 4.0, smart manufacturing, or whatever the initiative is called locally.
As always, hype exceeds reality until that point in time when we suddenly realize that everyone is doing it rather than talking about it. Cloud computing falls into that category.
A huge confidence gap exists between the number of companies that try digital manufacturing strategies and those that successfully apply them, a new McKinsey & Co. survey found. In the 2018 Manufacturing Global Expert Survey, 92 percent of respondents think they lead or are on par with competitors in Industry 4.0 manufacturing strategies.
The survey consisted of 700 companies in seven nations. Each had at least 50 employees and $10 million in annual revenue. It found that two-thirds rank digitizing the production value chain as a top priority. Industry 4.0 pursuits fall in three areas:
Connectivity – Using digital performance management and augmented reality to move the right information to the right people in real time. These tactics help communicate interactive work instructions and standard operating procedures.
Intelligence – Advanced analytics and artificial intelligence are fostering better decision making. Examples: Predictive maintenance; digital quality management and AI-driven demand forecasting.
Flexible Automation – New robotic technologies are safer and improve productivity. Human-machine interactive “cobots” and driverless guided vehicles are changing life on the factory floor.
“Despite this focus and enthusiasm, companies are experiencing ‘pilot purgatory.,’ They have significant activities underway. But they are not seeing meaningful bottom-line results,” said Richard Kelly, a McKinsey partner.
China, India and the United States think they lead their competition in digital manufacturing. Japan was an outlier. Its view for the potential of digital manufacturing dropped from over 90 percent in 2017 to 75 percent. Japan’s loss of enthusiasm was far greater than declines in the other three countries. Even so, the success in implementing Industry 4.0 solutions rose significantly in Japan, China and the U.S. while stagnating in Germany.
Digital manufacturing topped the operations-strategy agenda at 68 percent of companies. India led China and Brazil in setting an Industry 4.0 agenda. At 63 percent, the U.S. was 5 percentage points below the 68 percent average.
Companies are piloting an average of eight different Industry 4.0 solutions. India leads with 10.6 digital pilots. China had 10.2 and Brazil had 8.9. The U.S. was fourth at 8.5.
“The challenge is to roll out successful pilot projects to the entire organization,” Kelly said. “That’s what makes transformation happen.”
Across business sectors, connectivity, intelligence and flexible automation solutions showed relevance. Pilots under way trailed that sentiment by 16 to 19 points.
A bigger drop off came when comparing pilot programs in the three areas with those that made it to scale. Only 30 percent rolled out companywide. Industrial automation, software and semiconductors fared best. Healthcare, automotive components and paper and packaging trailed.
In Germany, the U.S., Japan and China, optimism toward digital manufacturing fell after an all-time high in 2017.
“It is quite possible companies still believe in the potential of the various technologies of Industry 4.0,” Kelly said. “But pilot purgatory has been demoralizing. Many are less hopeful about their individual chances of reaping benefits at scale. But we’re seeing great success in the number pilot projects being launched, and the general attitude toward digital manufacturing is quite positive.”
So I decided not to make a cross country trip to San Diego for Rockwell Automation’s RATechEd event this year. I have cross country trips coming up the next two weeks followed by family time. So, I’m doing a one-day business trip plus taking my wife out for dinner in Chicago this week. Anyway, they had informed me that they wouldn’t be setting up interviews but that I’d be welcome to sit in any sessions I wanted. I passed.
Then I see a tweet from PTC today. Blockbuster news. Rockwell Automation’s Connected Enterprise just became connected. It has invested $1B in PTC for an approximate 8% ownership. PTC has [ERP], PLM, and IIoT (Kepware and ThingWorx). By connecting with these technologies, Rockwell now has the possibility of a technology convergence rivaling its rivals in Europe.
There are three of my questions about Rockwell answered:
- Other than a refreshing change of culture, what else was Blake Moret going to do to put his stamp on the company?
- When was Rockwell Automation going to really connect the enterprise like its slogan has held for several years (about the time I came up with Manufacturing Connection for the new title for my blog)?
- How was Rockwell going to answer the digital manufacturing and Industry 4.0 moves made by its European competitors Siemens, Schneider Electric, and ABB?
This is far from an acquisition and just a partnership right now. But it is a big step in the right direction.
Here is the press release I downloaded from Business Wire.
PTC Inc. and Rockwell Automation, Inc. today announced that they have entered into a definitive agreement for a strategic partnership that is expected to accelerate growth for both companies and enable them to be the partner of choice for customers around the world who want to transform their physical operations with digital technology.
As part of the partnership, Rockwell Automation will make a $1 billion equity investment in PTC, and Rockwell Automation’s Chairman and CEO, Blake Moret, will join PTC’s board of directors effective with the closing of the equity transaction.
The partnership leverages both companies’ resources, technologies, industry expertise, and market presence, and will include technical collaboration across the organizations as well as joint global go-to-market initiatives. In particular, PTC and Rockwell Automation have agreed to align their respective smart factory technologies and combine PTC’s award-winning ThingWorx IoT, Kepware industrial connectivity, and Vuforia augmented reality (AR) platforms with Rockwell Automation’s FactoryTalk MES, FactoryTalk Analytics, and Industrial Automation platforms.
“This strategic alliance will provide the industry with the broadest integrated suite of best-in-class technology, backed by PTC, the leader in IoT and augmented reality, and Rockwell Automation, the leader in industrial automation and information. Our combined customer base will benefit from two world-class organizations that understand their business and deliver comprehensive, innovative, and integrated solutions,” said Jim Heppelmann, President and CEO, PTC. “Leveraging Rockwell Automation’s industry-leading industrial control and software technology, strong brand, and domain expertise with PTC’s award-winning technology enables industrial enterprises to capitalize on the promise of the Industrial IoT. I am incredibly excited about this partnership and the opportunity it provides to fuel our future success.”
Blake Moret, Chairman and CEO, Rockwell Automation, said, “We believe this strategic partnership will enable us to accelerate growth by building on both companies’ records of innovation to extend the value of the Connected Enterprise and deepen our customer relationships. As IT and OT converge, there is a natural alignment between our companies. Together, we will offer the most comprehensive and flexible IoT offering in the industrial space. Our equity investment in PTC reflects our confidence in the partnership and the significant upside we expect it to create for both companies as we work together to profitably grow subscription revenue.”
Rockwell Automation’s solutions business will be a preferred delivery and implementation provider, supported by a robust ecosystem of partners that both companies have established. The strength of both companies across geographies, end markets, and applications is complementary.
Under the terms of the agreement relating to the equity investment, Rockwell Automation will make a $1 billion equity investment in PTC by acquiring 10,582,010 newly issued shares at a price of $94.50, representing an approximate 8.4% ownership interest in PTC based on PTC’s current outstanding shares pro forma for the share issuance to Rockwell Automation. The price per share represents an 8.6% premium to PTC’s closing stock price on June 8, 2018, the last trading day prior to today’s announcement. Rockwell Automation intends to fund the investment through a combination of cash on hand and commercial paper borrowings. Rockwell Automation will account for its ownership interest in PTC as an Available for Sale security, reported at fair value.
Hannover Messe was the place to learn the latest about all things digital—digital twin, Industry 4.0, Industrial Internet of Things (IIoT). SAP was one of the many stops in my itinerary advancing the trend.
My contact at the SAP booth at Hannover wasn’t around when I arrived for my appointment, so I left—only to get a text a half-hour later that he had arrived. But I was off to another appointment by then. However I did glean this information from the company at and following the show.
SAP enters the digital twin era
SAP SE has introduced SAP S/4HANA Cloud for intelligent product design, a new solution for collaborative research and development.
The solution, which is built on SAP Cloud Platform using SAP’s latest digital twin technology, is one of the building blocks for a network of digital twins to enable new business models.
Powered by SAP Leonardo and integrated with business processes in the digital core, SAP S/4HANA Cloud for intelligent product design enables customers to accelerate product design and development with requirement-driven systems engineering and instant collaboration across an extended network of suppliers and partners.
“The solution provides shared views of digital twin information for customers to gain live insights on new products and to store, share and review engineering documents with internal and external participants,” said Bernd Leukert, Member of the Executive Board of SAP SE, Products & Innovation.
SAP’s network of digital twins synchronizes the virtual, physical, conditional, and commercial definitions of assets and products in real time to accelerate innovation, optimize operating performance, predict service requirements, improve diagnostics and enhance decision-making. It enables new levels of collaboration among manufacturers of products, operators of assets, suppliers and service companies. The approach combines digital twins with manufacturing solutions from SAP, cloud networks and SAP Leonardo capabilities, including machine learning, blockchain and Internet of Things (IoT), to optimize the product lifecycle with:
• Digital representation: SAP synchronizes digital twin business data, product information, asset master data and IoT-connected data from both on-premise and cloud solutions enabling companies to represent the world digitally. Solutions including SAP Predictive Engineering Insights, SAP Predictive Maintenance and Service and the SAP 3D Visual Enterprise applications provide access to rich data processing capabilities and live configuration, state, condition and control information.
• Business process: Rich enterprise-grade data processing capabilities allow customers to create, access and update digital twins to support business processes. SAP solutions provide an integrated data model from design, production and maintenance to service, including packaged integration to existing systems for computer-aided design, ERP, and product lifecycle management. Offerings providing end-to-end process support for manufacturers and operators include SAP S/4HANA, the SAP Engineering Control Center integration tool, SAP Hybris Service Cloud solutions, and the SAP Manufacturing Integration and Intelligence and SAP Manufacturing Execution applications.
• Business networks: With leading network offerings such as SAP Ariba solutions, SAP Asset Intelligence Network, and the SAP Distributed Manufacturing application, SAP is uniquely positioned to provide a virtual platform for collaboration on products and assets. The network of digital twins enables secure data access, sharing and governance on a global scale.
• Networks of digital representation: SAP enables twin-to-twin connections in systems within a specific asset and on an asset-to-asset level. SAP solutions such as SAP Asset Intelligence Network provide semantic and industry-standards support in an asset core modeling environment to enable live enrichment during the product or asset lifecycle.
Digital Manufacturing Cloud
SAP Digital Manufacturing Cloud helps companies optimize performance, elevate production quality and efficiency, and ensure worker safety.
Drawing on SAP’s expertise in the Industrial Internet of Things (IIoT), predictive analytics and supply networks, the solution enables manufacturers to deploy Industry 4.0 technologies in the cloud.
The new cloud solution extends and complements the digital manufacturing portfolio of on-premise solutions from SAP and is available in different bundles to serve manufacturers of varying sizes in both discrete and process industries and roles within their respective organizations.
SAP customers can choose from the SAP Digital Manufacturing Cloud solution for execution, which provides all solutions in the manufacturing cloud portfolio, or the SAP Digital Manufacturing Cloud solution for insights, which focuses on performance management and predictive quality.
“Manufacturers in the era of Industry 4.0 require solutions that are intelligent, networked and predictive,” said Leukert. “Our manufacturing cloud solutions help customers take advantage of the Industrial Internet of Things by connecting equipment, people and operations across the extended digital supply chain and tightly integrating manufacturing with business operations.”
SAP Digital Manufacturing Cloud includes the following:
• SAP Digital Manufacturing Cloud for execution: Industry0-enabled shop floor solution features “lot size one” and paperless production capabilities. It integrates business systems with the shop floor, allowing for complete component and material-level visibility for single and global installations.
• SAP Digital Manufacturing Cloud for insights: Centralized, data-driven performance management enables key stakeholders to achieve best-in-class manufacturing performance and operations.
• Predictive quality: This helps manufacturers gain valuable insights to conform to specifications across processes and streamline quality management. It also allows manufacturers to apply predictive algorithms that can reduce losses from defects, deficiencies or variations, and recommend corrective actions.
• Manufacturing network: The network provides a cloud-based collaborative platform integrated with SAP Ariba solutions connecting customers with manufacturing service providers, such as suppliers of 3D and computer numerical control (CNC) printing services, material providers, original equipment manufacturers (OEM) and technical certification companies.
Also at Hannover Messe 2018, SAP announced SAP Connected Worker Safety, a solution designed to reduce risks, costs and protect employees. Information from wearables and other sensor-enabled equipment can help companies react immediately to a hazardous situation or incident while proactively managing worker fatigue and other hazard inducers. Real-time information allows monitoring of compliance at all times against regulatory and other parameters.