Digital Transformation Impacts Manufacturing Innovation and Supply Chain

Digital Transformation Impacts Manufacturing Innovation and Supply Chain

Digital transformation professional services companies provide value to owner/operators and manufacturing companies. But their services are often expensive. I have done some work on platforms such as MIMOSA’s OIIE (which is still in development) that are designed to use standards and interoperability to help these customers reduce their expense and dependence on these firms.

It’s sort of a “good news, bad news” thing.

At any rate, the PR firm representing Cognizant contacted me toward the end of December with an opportunity to interview an executive. The purpose of this interview would be to update me on the company and talk a little about digital supply chain, workforce, and other manufacturing innovation topics.

Anxious to get something done before the end of the year (billable hours?), they even offered times between Christmas and New Years. Prasad Satyavolu, global head of innovation, manufacturing, and logistics practice, talked with me shortly before Christmas.

When I laid out the conversation on a mind map, the map was huge. So I thought about it off and on for the past couple of weeks. These thoughts reflect about half of the conversation. There is a lot to think about.

Cognizant was a very familiar name, but I couldn’t place it. “We are familiar with SCADA and plant floor,” Satyavolu told me. “We acquired Wonderware’s R&D operations. In fact, we still work with Schneider Electric. We also work with Rockwell Automation.”

Core Manufacturing services include:

• Transportation/Material Handling

• Process industry

• Energy/Oil & Gas

• Aerospace (some)

• Automation

• Utilities/Smart Grid/Smart Meters

When Cognizant evaluates a customer’s processes and lays out a plan, it includes everything from incoming supply to manufacturing to shipping to customer. The demand and supply chain.

One opportunity Satyavolu sees considers more instrumentation leading to additional sensing of movement of materials and workers in order to capture better decisions and enable efficiencies.

Then consider the confluence of changing workforce and technology. “Consider reality on shop floor. 5-10 years ago a maintenance engineer listened to a machine, diagnosed the problem, and fixed the machine.

The next generation doesn’t have that knowledge. Today the time to fix has gone from 15 minutes to 4 hours. How can we tackle knowledge gap? Further, is the next generation even interested in this sort of work?

Looking ahead, by 2025 we will be short 8 million people with manufacturing skills. How does this impact global mid-sized companies? How can we further leverage robotics to help solve this problem? Would robotics technology even make the work more attractive to a new generation of workers from the world of gaming and drones?

Huge opportunities exist with visibility outside the plant to planning and execution. It’s the Amazon effect—velocity so high that you almost have to produce on demand. Predictive maintenance systems enable managers to manage schedules and demands. This leverages infastructure such as cloud, digital technologies. These improve scheduling, reschedules lowering carrying costs; aids risk management / mitigation; global organizations bringing parts from around the world, global demand/supply increases uncertainty.

On shop floor, plant has fixed schedules / horizons. Scheduling systems and a lot of modeling bring stability and improve effectiveness. You can simulate production quickly, get status of inbound parts, changes in demand side, sync with labor requirements. With better scheduling, you get better visibility—you can save 12-13% of costs with sync. You can track supply chain, transportation, and change schedules in advance improving risk management.

Digital Transformation Impacts Manufacturing Innovation and Supply Chain

Recognizing Digital Transformation Does Not Equate To Achieving It

Two research studies have crossed my inbox recently regarding management knowledge of and actions toward Digital Transformation and the Industrial Internet of Things. Suffice to say that there is a disconnect.

Get smart: Humans have perceived for millennia the disconnect between knowing and doing. These research surveys show that even when managers acknowledge the importance of modern digital technologies they cannot get the job done.

Big Thought: Implementers have realized significant cost reductions and increased speed of product development.


The first study was conducted by enterprise business solutions provider, HSO. It found 54% of managers in the manufacturing industry believe that their company is not effectively using predictive engineering technology, despite the technology being billed as a leading industry trend.

In an era that has been dominated by the rise of IoT and predictive analytics technology, it was also surprising to find that only 15.2% of those polled placed predictive engineering as a business priority for the next five years.  In addition to this, a quarter of the 250 managers involved in the study feel that a lack of integrated technology across different departments is the main reasons that firms do not implement predictive engineering.

However, the study did reveal that more than four in ten managers in manufacturing feel that the rise of IoT technologies is crucial to help drive predictive engineering, with artificial intelligence and machine learning also being rated as important factors.

Out of the manufacturers that are using predictive engineering to help make their processes more efficient, over half (55.6%) stated that they are benefitting from significant cost reductions while 44.8% are seeing an increase in the speed of product development.

A second study by IFS, and enterprise applications provider, found lack of integration stands between companies and digital transformation benefits of IoT. According to a survey of 200 IoT decision makers at industrial companies in North America, only 16 percent of respondents consume IoT data in enterprise resource planning (ERP) software. That means 84 percent of industrial companies face a disconnect between data from connected devices and strategic decision making and operations, limiting the digital transformation potential of IoT.

The study posed questions about companies’ degree of IoT sophistication. Respondents were divided into groups including IoT Leaders and IoT Laggards, depending on how well their enterprise software prepared them to consume IoT data—as well as Digital Transformation Leaders and Digital Transformation Laggards depending on how well their enterprise software prepared them for digital transformation.

The two Leaders groups overlapped, with 88 percent of Digital Transformation Leaders also qualifying as IoT Leaders, suggesting IoT is a technology that underpins the loose concept of digital transformation. Digital Transformation Leaders made more complete use of IoT data than Digital Transformation Laggards; Leaders are almost three times as likely to use IoT data for corporate business intelligence or to monitor performance against service level agreements.

Digital Transformation Leaders were more likely than Digital Transformation Laggards to be able to access IoT data in applications used beyond the plant floor. They were more than four times as likely to have access to IoT data in enterprise asset management software, twice as likely than Digital Transformation Laggards to be able to access IoT data in high-value asset performance management software, and almost twice as likely to be able to be able to use IoT data in ERP.

The data suggests a real need for more IoT-enabled enterprise applications designed to put data from networks of connected devices into the context of the business.

ABB Launches New Products And Digital Enterprise Platform

ABB Launches New Products And Digital Enterprise Platform

ABB CEO Ulrich Spiesshofer

ABB held its customer conference in Houston this week and showcased many new products and unveiled its digital enterprise platform ABB Ability.

ABB Ability is the name given to its portfolio of digital solutions. I was trying to place it into a competitive landscape when one speaker showed a slide positioning ABB Ability with GE Predix, Siemens Mindsphere, and Schneider Electric’s Ecostruxure. CEO Ulrich Spiesshofer likened it to putting all the Lego blocks of ABB’s digital offerings together.

ABB Chief Digital Officer Guido Jauret

ABB Ability is a platform, database, and analytics that allows such things as helping customers in utilities, industry, transport and infrastructure develop new processes and advance existing ones by providing insights and optimizing planning and controls for real-time operations. The results can then be fed into control systems to improve key metrics such as factory uptime, speed and yield.

“As a pioneering technology leader in digital solutions, with an installed base of more than 70 million connected devices and 70,000 control systems, ABB is uniquely positioned to support its customers’ digital transformation,” said Spiesshofer. “With ABB Ability, we are combining ABB’s entire portfolio of digital solutions and services. We are creating additional customer value by bringing together ABB’s domain expertise, advanced connectivity and the latest digital technologies. With this, our customers can achieve unprecedented improvements in operational performance and productivity.”

Digital offerings provided by ABB Ability include performance management solutions for asset-intensive industries; control systems for process industries; remote monitoring services for robots, motors and machinery; and control solutions for buildings, electric-vehicle charging networks and offshore platforms. Some of the more specialized offerings address energy management for data centers and navigation optimization for maritime shipping fleets, among many others.

Customers who are already using the portfolio of digital solutions that are now part of ABB Ability include some of the world’s leading utilities, manufacturers and service providers, among them Shell Oil, CenterPoint Energy, Con Edison, BASF, Royal Caribbean, Cargill, Volvo, BMW and many others.

“Building our solutions on the Azure platform means we can take advantage of all of its capabilities and add value with our domain-specific offering,” said ABB Chief Digital Officer Guido Jouret. “In effect, we are turning ABB’s decades of industrial domain expertise into software offerings that our customers can access through the world’s largest and most advanced digital platform. From being a hidden digital champion, we are becoming the partner of choice for customers embarking on a digital transformation. They can now know more, do more, do better, together. We can help them assess, automate, optimize and collaborate.”

This product was the coolest thing at the show for me. It is ABB’s take on the trend toward smaller I/O devices with configurable racks. Admittedly not having first-mover advantage, ABB was able to build on existing competitive offerings and release an updated take on the technology.


ABB Ability System 800xA Select I/O, a new addition to System 800xA, is a redundant, Ethernet-based, single-channel I/O system. It supports ABB’s next-generation project execution model, Intelligent Projects, which offers a range of efficiency improvements for automation projects. With Select I/O, customers can undertake major projects on a faster schedule with fewer cost overruns. It uses standardized cabinets that allow installers to digitally marshal signals instead of using labor-intensive marshalling panels. Loop checks can be done before the rest of the system is delivered, minimizing the impact of late changes and allowing for project tasks to be executed in parallel.

ABB Ability Asset Health Center – Among the first ABB Ability solutions to be launched on Azure is ABB’s next-generation asset performance management solution, Asset Health Center 3.0. Available since January 2017, it uses predictive and prescriptive analytics and customized models to identify and prioritize emerging maintenance needs based on probability of failure and asset criticality.

ABB Ability Collaborative Operations – This powerful solution, now being brought to scale across industries, helps customers collaborate more effectively. It allows experts to work together across organization boundaries, using the same data and analytics platforms. It focuses on such outcomes as improving productivity, reducing equipment failures, lowering the cost of asset maintenance and transforming overall business performance. This is done while maximizing security and protecting data, people and assets at every level of integration. The solution has been delivering sustainable, long-term results to early adopters.

ABB Ability Digital Substation – ABB’s digital substation provides customers in the utility sector with unmatched control and efficiency. The digital substation incorporates fiber optic current sensors and disconnecting circuit breakers to reduce maintenance requirements and the need for miles of conventional cabling. ABB Ability takes these advances several steps further by combining the latest electrical gear with digital sensors and cloud computing. The result is that grid operators can make decisions based on comprehensive, up-to-the-moment information, while predictive algorithms can improve maintenance practices and asset management.

ABB Ability Smart Sensor – This smart sensor solution, unveiled last year, connects low-voltage electric motors to the Industrial Internet, allowing them to be monitored continuously. The solution, which can be easily affixed to a motor, transmits data on vibration, temperature, loads and power consumption to the cloud. Alerts are generated as soon as any of the parameters deviates from the norm, allowing the operator to take preventive action before the motor malfunctions. Early indications are that the smart sensor solution leads to a reduction in downtime of motors by up to 70 percent and extends their lifespan by up to 30 percent. Acting on the data to optimize the motor’s performance reduces energy consumption by as much as 10 percent.

Industrial Software Now More Important Than Hardware?



[Industrial] “Software’s Where It’s At.” The blog title was intriguing. It was implied that  industrial software was increasingly more important than hardware. Then I began to look at my accumulating queue of news. There is a bunch. Here is a sampling. It appears that more innovation time and investment is going into software than hardware. What do you think? Software is now where it’s at?


Cloud and Analytics

GE and Microsoft announced a partnership that will make GE’s Predix platform for the Industrial Internet available on the Microsoft Azure cloud for industrial businesses. The move marks the first step in a broad strategic collaboration between the two companies. This continues a trend I’ve noticed recently of a newly resurgent Microsoft adding clients to Azure cloud.

“Connecting industrial machines to the internet through the cloud is a huge step toward simplifying business processes and reimagining how work gets done,” said Jeff Immelt, CEO of GE. “GE is helping its customers extract value from the vast quantities of data coming out of those machines and is building an ecosystem of industry-leading partners like Microsoft that will allow the Industrial Internet to thrive on a global scale.”

Bringing Predix to Azure, according to GE, means industrial customers will now have access to additional capabilities such as natural language technology, artificial intelligence, advanced data visualization and enterprise application integration.

Microsoft predicts Azure will support the growth of the entire industrial IoT ecosystem by offering Predix customers access to “the largest cloud footprint available today”, along with data sovereignty, hybrid capabilities, and advanced developer and data services. In addition, GE and Microsoft plan to integrate Predix with Azure IoT Suite and Cortana Intelligence Suite along with Microsoft business applications, such as Office 365, Dynamics 365 and Power BI, in order to connect industrial data with business processes and analytics.

“Every industry and every company around the world is being transformed by digital technology,” said Satya Nadella, CEO, Microsoft. “Working with companies like GE, we can reach a new set of customers to help them accelerate their transformation across every line of business — from the factory floor to smart buildings.”

Software’s Where It’s At

This is the blog that brought my thinking to a focus. ARC analyst Mark Sen Gupta wrote about a recent CEO appointment. Honeywell recently announced that Dave Cote is retiring after 14 years at the helm and will be succeeded by Darius Adamczyk.

In the announcement Mr. Cote states, “Scanning & Mobility and Honeywell Process Solutions are software-based businesses with advanced offerings that blend physical and digital capabilities, and they serve as benchmarks for where the rest of Honeywell is heading. Darius’ deep expertise in software will open new growth paths for all of our businesses, which are blending Honeywell’s advanced software programming capabilities with leading-edge physical products and unparalleled domain expertise in a wide variety of industries.”  This is a very interesting statement because it recognizes a crucial shift in automation.

Says Sen Gupta, “When we think of automation we normally think of hardware: DCS, PLC, sensors.  However, most of the innovation in the industry is happening in software. This aspect of automation innovation has not escaped the attention of ExxonMobil and has led to culmination of it’s open automation initiative.  IIoT, cloud, analytics, edge computing have far more to do with what is provided from a software aspect than from a hardware aspect.  This is not to say that hardware has no value.  In fact if you were to check the balance sheets, you would find that the large automation companies earn more revenue on what we consider hardware, and something has to host the software.”

Digital Twin

Fellow ARC analyst, Dick Slansky recently wrote on how manufacturing and production systems will undergo significant changes. He foresees the eventual realization of the “lights-out” factory with adoption of all the new digital technologies.

“This is a case of leading PLM solutions providers offering advanced analytics solutions applied to the manufacturing processes and to operational optimization. The common objective is to use predictive and prescriptive analytics to improve the overall performance of production operations.”

He continues, “One of the most sought after but elusive goals of product design engineering is to validate that you have achieved all the design criteria in the as-built product. That is, closing the loop between the as-built to the as-designed, and validating that the physical product will meet all design criteria before the product is manufactured. This is where the concept of the digital twin in now being applied to product design criteria, and the goal of ‘closed-loop PLM’.”

“As IIoT, the digital thread and digital twin evolve within the overall ecosystems of product and process, the methodologies, including analytics, for both product development and production processes will  converge. The intent and goal of the digital enterprise is to maintain a continuous and real-time digital thread that connects the lifecycle from concept through design, test, and build, to supply chain and products in field.”

ABB Robotics

There has been little radical innovation within industrial robots for some time. Improvements, yes; Innovation, not so much.

But ABB has been working on the software side. It just announced SafeMove2, the latest generation of its safety certified robot monitoring software.

SafeMove2 includes a host of cutting-edge safety functions, including safe speed limits, safe standstill monitoring, safe axis ranges and position and orientation supervision.  The new generation functionality encourages the development of innovative robot applications by integrating safety features directly into the robot controller.

“To be efficient, robots must be able to move at speeds suited to the given application. At high speeds this can present a potential hazard for people working in the immediate vicinity. Historically, fences or cages have been used to separate man from machine in an effort to keep them out of harm’s way,” says Dr. Hui Zhang, Head of Product Management, ABB Robotics. “SafeMove2 allows robots and operators to work more closely together by restricting robot motion to precisely what is needed for a specific application.”

SafeMove2 allows for the creation of more efficient and flexible production scenarios, and provides tools that speed the commissioning workflow for faster setup and validation. It also integrates safety fieldbus connectivity into ABB’s IRC5 robot controller family as well as the IRC5 Single, Compact and Paint controllers.

Building A Digital Industrial Ecosystem

Building A Digital Industrial Ecosystem

Industry and manufacturing leaders recognize the trend to the next step in the evolution of enterprise effectiveness and success. The industrial digital revolution is an overnight sensation that has been 30 years in the making. We began with digital controls then adding human interface and then information handling.

Internet of Things with its proliferation of sensors and other smart edge devices, IP networking, data science, and advanced analytics (business intelligence) combined take us to a whole new level of enterprise effectiveness.

The trite question from marketing people often goes, “What’s keeping our customers awake at night?”

Well, are executive worried about the capability of technology?

Two research reports just came my direction recently from a couple of my go-to sources for what’s happening with the thinking in the industrial/manufacturing executive suite. One is from PwC, What’s Next in Manufacturing: Building an Industrial Digital Ecosystem, and the other from Accenture Digital Skills Gap Slows Manufacturers’ Push to Build Digital Factories.

No, it’s not technology that worries them. First it’s people and culture. Are there sufficient people with digital skills? Will the culture make the transition? Then, of course, they worry about how large the investment might become and what the return will be. It’s people and economics.

PwC Digital Industrial Survey

In this report, PwC shares results from a survey of global industrial products companies, shedding light on what manufacturers are doing now to build out their digital operations and what bottom-line benefits they expect to yield through those efforts.

Buying into digital: manufacturers plan to ramp up investments

In the last two years, US manufacturers invested an average 2.6% of their annual revenue in digital technologies. In the next five years, they expect to lift that investment to 4.7% of revenue—for an estimated $350 billion in investments in digital operation technologies across automotive, industrial production and manufacturing industries alone.

Venture capital funds flowing, too

Since 2011, some $3.6 billion has poured into VC-backed start-ups across a selection of digital technology sub-sectors, with investment rising at a 47% clip–more than double the annual growth of total VC funding (18%) in all sectors over the same period.

“Digital deals” have comprised 15% of all US M&A activity since 2012

According to a PwC/Strategy& analysis, more than $6.0 billion has been invested on “digital deals” in North America alone since 2012, comprising some 15% of all M&A deals over that period.

The greatest challenge to a “digital vision” is cultural

In the context of embracing digital operations technology, three of the top 10 challenge areas identified by surveyed companies relate to organizational readiness and financial concerns. Some companies anticipate high investment requirements with unclear return on investment, and lack of digital standards and issues related to data security and intellectual property are also noted.

PwC Mfg Research 1 May 2016

Monetizing digital operations sought through cost reductions, revenue generation

Nearly two-thirds of manufacturers expect that adopting digital manufacturing technologies will translate into lowering operating costs by at least 11% mostly via efficiencies through automating processes and production.  Meanwhile, over half of these manufacturers expect such adoption to boost revenues by at least 11%.

How digital technologies drive bottom-line results   Manufacturers are just scratching the surface of monetizing digital manufacturing.  Some key drivers to achieving cost-cutting and revenue uplift from digitization with the introduction of smart, connected manufacturing technologies and products and services include:

  • Lowered “price of variability” across production and processes
  • Moving from analogue products to  “connected, digital products”
  • Manufacturing data…and  new business models
  • Software-enabled upgrades to products
  • Pay-as-you-go model

Building a digital manufacturing strategy

Building a digital strategy requires a thorough self-assessment to determine a company’s “current state” of its digital evolution—and, just important, defining its “target state”.  This means tailoring digital operations solutions to a business’ assets and making the right moves at the right time—from ramping up data analytics capabilities, to monetizing product data to considering a “digital deal”.

PwC Digital Mfg Research 2 May 2016

PwC concludes, “The future of digital manufacturing holds many “what-ifs”.  But, if it unfolds as dramatically as our survey indicates, most all manufacturers will be altered to some degree.  And, for every “what if”, there are choices manufacturers ought to consider.”

Accenture Researches Industrial Digital

Take a look at some of the results of Accenture’s research. Although the majority ofmanufacturers have implemented digital platforms, more than half (51 percent) lack the skills to operate digital factories. The more successful manufacturers have advanced talent strategies in place to digitally enable the workforce of the future.

Cracking the Code on the Digital Factory, a report based on a global study of 450 manufacturers, found that a growing skills gap is one of their biggest concerns – a situation that has worsened in recent years as manufacturers have transformed their operations using new technology, analytics and mobility capabilities.

Accenture May 2016

Fifty-five percent of manufacturers, up from 38 percent in 2013, reported a skills gap among skilled trades laborers, who need to operate increasingly advanced digital machinery and equipment, such as 3D printers or modeling and simulation tools on the plant floor. Likewise, 60 percent of manufacturers, up from 31 percent in 2013, cited a shortage of maintenance workers skilled in the use of predictive maintenance analytics that leverage data from embedded sensors in a machine-to-machine environment.

“For manufacturers to realize the full potential value of digital factories, they need to redesign their workforce to include new manufacturing skills, such as analytical reasoning and data-driven decision support,” said Russ Rasmus, managing director, Accenture Strategy. “Developing a comprehensive talent strategy inclusive of new digital skills is an imperative for today’s manufacturers.”

Digital Factory Leaders

The research identified a small group of manufacturers (8 percent) that outperformed their peers by increasing production and profitability by more than 10 percent since 2013. These “leaders” are more likely than their peers to understand which new skills they need for future growth and success, and have a more effective strategy to attract, develop and retain this new breed of manufacturing talent.

A majority of these leaders (73 percent) more frequently reported already having the requisite digital skills, as compared to 49 percent of other manufacturers, and they were nearly 50 percent more likely to report a higher degree of visibility into what skills they needed. That has allowed most of the leaders (81 percent) to achieve greater internal workforce mobility in roles involving digital, enabling them to match employees with managers who need those skills.

Barriers to Success

While these digital factories are enabled with rapidly developing technology innovations, the technological aspect of their implementation is not the top barrier to success. Seventy-five percent of the deployment challenges cited by survey respondents are related to skills, organizational change or structure, and the talent within the organization.
Chief obstacles that hinder manufacturers’ digital adoption.

“Manufacturers must aggressively manage these non-technical barriers as they deploy their digital factory capabilities. These include the ability to create new processes, lead teams made up of workers and machines, and constantly update training programs,” said Rasmus.

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