The IoT in Manufacturing:

Transcription

1 The IoT in Manufacturing:

2 MANUFACTURING JOURNAL LEADERSHIP A Market Leadership Opportunity Manufacturers that capitalize on the Internet of Things can position themselves for a more competitive future by transforming into smart enterprises.... By Russell Fadel 3

3 MANUFACTURING LEADERSHIP JOURNAL... Russell (Russ) Fadel is the President and General Manager of ThingWorx, a PTC business. He is responsible for driving ThingWorx ongoing business to help customers in a wide range of industries seeking to leverage the IoT. He previously co-founded and led Lighthammer Software Development, and two successful manufacturing operations software and hardware companies. He holds a B.S. in Mechanical Engineering from Duke University.... SINCE THE DAWN OF MODERN INDUSTRY, NO PHENOMEnon has created such a rich array of value opportunities for manufacturers as the Internet of Things (IoT). Today billions of manufactured products from simple appliances to complex industrial machines are communicating in real-time with the people, systems, and things that design, operate, and service them. These products are smart, connected, and multiplying in number with no signs of slowing down. According to McKinsey, the Internet of Things will unleash $6.2 trillion in new global economic value annually by 2025, with $2.3 trillion coming from the global manufacturing industry alone. To put this into perspective, the total global gross domestic product for 2013 was approximately $75 trillion. Companies that can quickly leverage the full opportunity presented by the Internet of Things will seize the greatest value, and assume market-leader status in the next decade. Strategic Positioning and Operational Effectiveness According to Harvard Business School Professor Michael Porter, sustainable business success requires both the right strategic positioning and operational effectiveness. While each is essential for competitive advantage, they represent two different sets of activities. Together they provide a framework by which manufacturers should pursue an IoT strategy, transforming a product offering into one that is highly differentiated and assimilating best practices to deliver manufacturing operational excellence. Successful strategic positioning hinges upon differentiation and requires organizations to make a unique set of choices that delivers distinct value to the market. Consider companies like Apple or IKEA, which created differentiation by doing things in a new way. By redefining their product categories and disrupting the status quo, these leaders carved out long-lasting, strategic positions in the marketplace. Operational effectiveness means outperforming market rivals at comparative activities. It includes any number of practices that improve asset and resource utilization (e.g., reducing downtime in manufacturing, developing products faster, and enabling sales organizations to sell more). Consider ATI Technologies, which has been successfully leveraging practices like Six Sigma, and using ThingWorx, an IoT platform, to combine machine data with their business systems such as ERP and MES to drive new levels of operational efficiency. Companies that neglect strategy or operational effectiveness do so at their own peril risking apathetic market interest and an inability to cost-effectively build, operate, and service products. In short, the value potential of the IoT is tremendous, but will only be fully realized if organizations can effectively harness it for 4

4 Feature/ The IoT in Manufacturing: A Market Leadership Opportunity /4/9 both strategic positioning and operational effectiveness. How IoT Elevates Business Strategy IoT is having an unrivaled strategic impact on manufacturing organizations, revolutionizing how products are created and serviced. Product usage data is now available to R&D, customer relationships are strengthened through continuous engagement and enhancements, and equipment can be remotely diagnosed, administered, serviced, and repaired. These innovations not only improve product performance, they can also enable companies to leverage new business models that capture more of the value created from the IoT and maximize returns across the entire useful life of the product. To learn more about the strategic impact of IoT, read the recent Harvard Business Review piece by PTC CEO Jim Heppelmann and Michael E. Porter, Professor at Harvard Business School (available at Operational efficiency is expressed through ongoing improvement across all enterprise functions. The Internet of Things introduces new methods for driving operational efficiency that can be immediately realized with little disruption to existing business. IoT technology creates the unique opportunity to collect real-time data from Sustainable competitive advantage requires a distinctive strategic positioning and operational effectiveness. STRATEGIC POSITIONING Creating a unique value proposition Doing things differently to deliver value compared to rivals Making Choices + things (sensors, devices, and equipment) and combine them with data and intelligence from business systems and people. Business processes become smart and connected and operational performance can be improved within individual functional organizations including engineering, manufacturing, supply chain, quality, support and service or across the enterprise as a whole. Such comprehensive visibility introduces real-time optimization capabil- OPERATIONAL EFFECTIVENESS Assimilating, attaining, and extending best practices Doing things better and better Validating and executing This graphic is a representation of an idea originally published by Michael E. Porter in "What is Strategy," Harvard Business Review, November/December When processes and data are locked away in dispersed silos, manufacturers can t recognize and unlock business potential.

5 MANUFACTURING LEADERSHIP JOURNAL... ities including orders, materials, equipment status, costs, and product quality. A personalized view of this information can be delivered via role-based applications to anyone, anywhere, at any time, allowing employees, customers, and suppliers to make educated, split-second decisions with confidence. Limitations on Operational Excellence To realize operational excellence, manufacturers must have realtime and unified visibility into their operations, but today s complex manufacturing environment can limit getting to this level of visibility. The typical manufacturing landscape is composed of heterogeneous shop floor equipment that is different from plant to plant and can be coupled with multiple layers of manufacturing systems, at different levels of adoption. Additionally, legacy investments in disparate software systems are creating challenges for manufacturers trying to adapt and expand how they share information. Challenges that can prevent operational excellence and IoT enablement include: Limited visibility. The inability to aggregate and consolidate meaningful operational intelligence across things (equipment, systems, and people) can lead to a number of challenges. The root cause for failure can be difficult to identify and it tends to repeat. KPIs are challenging to standardize across lines, plants, and the enterprise. The data is typically somewhere, but numerous system-specific, often archaic user interfaces make it difficult to find critical information in a timely manner and to react quickly and efficiently to failures. Lack of interoperability. Operational excellence requires agility and flexibility, but traditional manufacturing business systems (MES and ERP) are often too rigid and require a full plant roll-out first. They also tend to be focused on enabling repeatability, limiting their ability to expose and solve problems. Some BI systems are not well suited to solve this challenge since they simply lack the flexibility to connect directly to equipment, sensors, and devices. Lack of flexibility. Huge capital investments are typically locked into manufacturing capacity; however, return on investment gets rapidly outpaced by the ever-accelerating need for product and manufacturing processes changes. Manufacturers need a way to gain new operational benefits from these investments without having to change equipment and systems altogether. These challenges can serve as a barrier to operational excellence, and result in serious business implications like:... The hard truth for manufacturers who continue to rely on traditional tools to keep pace... is that they will increasingly fall behind their competitors.

6 Feature/ The IoT in Manufacturing: A Market Leadership Opportunity /6/9 Poor performance. Proactive improvements are off the table, and organizations reactively attend to glaring performance problems. Throughput and asset utilization are reduced, low performance quality can result in scrapping and rework, downtime and inventory spikes can occur without warning, delivery dates can be missed, and fines can be levied. Reduced Innovation. Efforts to modernize processes, systems, and equipment are stretched out across years and come at a high cost. Less-effective people. Lacking the tools to monitor and optimize production, opportunities to improve performance are missed by operators, supervisors, managers, and executives. Training costs escalate, while productivity is reduced. When processes and data are locked away in dispersed silos, manufacturers can t recognize and unlock business potential. This draws out time-to-market and production and increases the cost associated with manufacturing products. As competitors successfully leverage the IoT to improve operational efficiency across their organizations, they will define the new minimum standard for doing business. To become and remain market leaders, manufacturers must act quickly and align their operations to successfully adopt the Internet of Things and transition to smart manufacturing. Transitioning to Smart Manufacturing IDG recently conducted a survey of IT leaders in the manufacturing industry who expect to enter the IoT market in the near future. They were asked to list likely challenges in transitioning to smart manufacturing. These responses were 7 compared with responses from IT leaders and from manufacturers who had already begun building, operating, and supporting smart, connected products. While the former group correctly identified security as a top issue, there were several stated challenge areas that were not being appropriately recognized. These challenges, cited by smart manufacturers, can serve as a guide for transitioning to smart manufacturing: Create realistic deadlines. IT managers are encouraged to identify problem areas, participate in sound systems engineering practices, and conservatively budget time when planning to adopt smart manufacturing processes. Storing and managing data. With an estimated 50 billion connected devices by 2020, Gartner has outlined the need for organizations to prepare now for data challenges, including plans for availability, privacy, storage management, effective data mining, and hardware. Development of new business and software. Smart, connected products elevate service commitments. Sensors that monitor and measure device statuses are only useful if they actuate responses. Organizations need to expand plans to accommodate tracking and automation software, and service processes. Connectivity with remote assets. Globally competing manufacturers will find their products being utilized in increasingly remote geographies. Consider smart machinery being used in rural locales with an under-developed telecommunications infrastructure. Effective data exchange and actuation in remote locations should be regarded as a substantive challenge. Expansion of partner ecosystem. From transmitter and software developers to telecommunications and service fulfill- Companies that can quickly leverage the full opportunity presented by the Internet of Things will seize the greatest value, and assume marketleader status in the next decade.

7 MANUFACTURING LEADERSHIP JOURNAL Smart, connected equipment empowered with systemconfigured workflows and rules can automatically respond to conditional triggers and drive action across users, devices, and business systems.... ment firms, the IoT revolution is challenging manufacturers to seek out new technology partners. Realizing the Benefits of IoT through Smart Manufacturing Fortunately for challenged manufacturers, the industry is in the midst of a global trend towards aligning IoT-based strategy with operational efficiency. Germany s Industrie 4.0 and the Smart Manufacturing Leadership Coalition in the U.S. reinforce the soundness of these strategies, and provide a framework and long-term vision of smart manufacturing. Connected machinery and systems are nothing new. Even organizations facing the previously referenced challenges utilize equipment that creates data. The true promise of IoT is in creating a network of equipment and systems that unify factories into a cohesive, aligned, smart environment. Operational excellence is achieved through real-time visibility, execution, and collaboration across people, systems, and things, and using that data in ways that are meaningful for your business and its objectives. Smart manufacturing is transformative, and companies that move quickly to execute on an IoT strategy will gain substantial and long-lasting operational advantages. At a minimum, true enterprise-grade smart manufacturing platforms will deliver: Unified visibility and visualization. Smart and actionable dashboards extend real-time visibility into information from existing systems, equipment, and people across all data types (transactional, time series, and unstructured). Visualization is both granular and expansive and connects to heterogeneous landscapes to provide standardized KPIs across lines and plants throughout the enterprise. Role-based visibility. Visibility into operational performance is required in every level of an organization, from the boardroom to the shop floor. Flexible views filter and target role-relevant performance data such as KPI calculations, automated alerts and warnings, and event- and user-generated actions. Aggregated information also becomes fully searchable to enable ad hoc visibility into all information. Crowdsourced collective intelligence. Smart manufacturing platforms facilitate knowledge and experience sharing across the entire enterprise, allowing the expertise of the entire employee base to be included in every operational excellence decision. Real-time responses. Systems not only provide an aggregated view of performance data, but enable real-time action to prevent or respond to issues, minimizing, if not eliminating, disruption to operations. Alert systems can be configured according to tolerance and condition boundaries, and predictive modeling can be introduced to prevent issues before they even occur. On-demand access. User access is device-independent to enable monitoring, interaction, and execution from behind a desk, down on the shop floor, or in the field. Smart equipment is flexibly supported for on-premise or cloud data solutions, and wireless provisioning. Flexible. A system-agnostic view across system, people, and things, combined with rapid mashup capabilities, allows for rapid creation and updates of actionable dashboards to empower every stakehold- 8

8 Feature/ The IoT in Manufacturing: A Market Leadership Opportunity /8/9 er to get the right information they need. Smart process automation. Smart, connected equipment empowered with system-configured workflows and rules can automatically respond to conditional triggers and drive action across users, devices, and business systems. Human error is reduced and response times are accelerated. Translating IoT Benefits into Smart Manufacturing Success These benefits translate into better outcomes for manufacturers. The ability to innovate new processes is accelerated, the return on existing manufacturing investments is increased, and companies are better positioned to identify new value opportunities. Manufacturers can dramatically improve uptime while maximizing asset utilization. Better utilization and uptime optimizes inventory turnover, shortening the cycle. Automation and visibility improve performance and quality, reducing the need to scrap and rework products. As a result of improved efficiency and quality, delivery dates are more reliable, improving relationships with customers and vendors. Smart manufacturing and the resulting operational efficiency is and will be fundamental to how manufacturers derive value from the IoT revolution and will be necessary to gain and sustain market leadership in the next decade. In addition to the general, ongoing process of efficiency goals, IoT-enabled smart manufacturing opens the door to new operational objectives: Customizing for personalization and regulation. Smart factories are more flexible to change in product demand. This can include broader customization to meet the regulatory requirements, or finely grained differences (even one-off items) to meet customer specifications. A fully successful smart factory will be able to customize without disrupting processes. Minimizing external disruptions. Particularly as manufacturers operate within a global market, external conditions, such as supplier disruptions or power outages, are unavoidable. Smart, dynamic processes enable real-time adjustments to minimize the effects of disruption and enable manufacturers to react to the disruptions quickly and with laser focus. Blurring product and service boundaries. Smart manufacturers are able to position themselves more strategically by improving the value of products through IoT-enabled smart services. These smart, connected products can be remotely monitored, updated and serviced increasing uptime, improving performance, extending product life, and strengthening the relationship between manufacturers and customers through raised product value and customer satisfaction.... Smart manufacturing and the resulting operational efficiency is and will be fundamental to how manufacturers derive value from the IoT revolution.

9 MANUFACTURING LEADERSHIP JOURNAL... The Larger Social Context Smart manufacturing goes beyond direct operational improvements and objectives, and addresses some of the systemic challenges caused by global industry, such as resource and energy efficiency, urban production, and demographic change. Continuous resource productivity and efficiency gains that are delivered across a value network result in diminished resource demands and smaller waste footprints. Smart industries have organized work in such in a way that demographic changes and social factors can be taken into account. Smart assistance systems liberate workers from performing routine, mundane, and repetitive tasks, enabling them to refocus on more creative, value-added activities. In the context of the predicted global shortage of skilled workers in the coming years, smart manufacturing will reduce physical demands of employees, allowing workers to enjoy longer, more productive careers. Operational performance improvements, particularly those created by smart manufacturing, can drive swift improvements for the bottom line. As organizations assess the need for and advantage in leveraging the IoT, they should be asking themselves candid questions. We probably have the data we need somewhere, but do we have real-time visibility into this data? Can the current visibility keep pace with rapidly changing processes, business needs, and conditions? Can the morning daily production reports we get (describing what happened yesterday) be used to drive interactive and automated responses to make improvements, solve, and prevent operational issues? The hard truth for manufacturers who continue to rely on traditional tools to keep pace with the IoT market transformation is that they will increasingly fall behind their competitors. The strategic consideration of incorporating the IoT into manufacturing operations will, perhaps more than any other decision made over the next decade, impact a manufacturer s competitive positioning in the global manufacturing landscape. The good news for those seeking to move forward is that only a fraction of the market has made concrete steps, such as embedding sensors and provisioning wireless capabilities. This offers a temporary, but substantial, opportunity to lay claim to market leadership now. Operational improvements are not an event, but a continual process; manufacturers know this in their bones. The question for these companies is not if, but when they will adopt the necessary transformations to continue improving operational efficiencies and create strategic value through smart manufacturing and IoT. M... The strategic consideration of incorporating the IoT into manufacturing will... impact a manufacturer's competitive positioning in the global manufacturing landscape.

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