Heidelberg Pioneers the Smart, Connected Printing Press. Challenges facing printing industry

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1 Heidelberg Pioneers the Smart, Connected Printing Press Challenges facing printing industry The trend away from print media and towards digital communications is having a major impact on the printing industry. Some printing markets, such as newspapers and corporate printing, have seen significant reductions in demand while others, such as packaging and in-store displays, are still growing. Overall, the printing industry has considerable excess capacity which has resulted in debilitating price wars. The commercial printing industry has adapted to these trends through a process of consolidation in which many less efficient printers have gone out of business while a smaller number of well managed and technologically astute printers have thrived. Many of the well managed companies that have succeeded in this challenging environment utilize digital printing technology to provide highly flexible and customized production, often providing the capability to customize each individual printed piece. Today s leading edge print shops are often integrated in a digital supply chain with their customers and suppliers. Some offer value-added services such as publishing and logistics, 7X24 operation and serve a global market. Page 1 of 6 Heidelberg Case Study

2 First attempt at smart, connected services achieves limited success Perhaps no company in the world is as closely tied to the fortunes of the commercial printing industry as Heidelberger Druckmaschinen, known in English as Heidelberg, which makes printing presses for sheetfed offset, digital and flexo printing, as well as prepress and finishing machinery and software for integrating all of the processes within a print shop. The company is by far the largest producer of printing presses with a market share that encompasses approximately half the world market. Heidelberg has spent more than 15 years transforming its products, organization and business model to deliver value to its customers with smart services. This initiative originated with the vision that smart, connected services had the potential to revolutionize the printing machinery business by enabling presses to deliver much higher levels of uptime and productivity to print shops. Heidelberg made its first attempt at building connectivity into its printing presses in the late 1990s by offering an optional dial-up service that captured a few key operating parameters from the machine and uploaded them to remote service personnel who used them in diagnosing the customer s problem. This first effort was limited to a very small number of data points so it was useful in solving a relatively small proportion of potential press problems. But it demonstrated the potential of the concept and thus encouraged further development in this direction. Strategic choices are made and products are transformed By 2002 the project showed positive results but the company decided that in order to exploit its full potential it needed to be expanded. At this point, Heidelberg already had several thousand sensors in each of its printing presses that monitored nearly every aspect of press operation and transmitted data to the control system where it was used to make operating decisions in real time. Heidelberg management decided that taking full advantage of the potential of smart services required that the control systems for each of its presses be redesigned nearly from scratch so that all sensor data would be available for remote access. The decision was made to approach the challenge incrementally by providing support for remote access whenever a control system was upgraded. Over the course of a few years, the company upgraded each of its presses with typical presses providing more than 3,000 sensors that can be accessed remotely. In 2004 Heidelberg introduced its first web-based service which offers remote diagnosis of customer problems on a much larger scale. The company s Remote Diagnosis service provides instant remote troubleshooting and application advice. The operator in a print shop provides a Heidelberg service expert with access to the press directly from the press control system to review log files, run diagnostics and analyze faults. The customer maintains control of the process by determining what information is transferred to the Heidelberg expert. This approach saves time by eliminating the need for the customer to provide the information over the phone such as the press serial number, software version, etc. Many electronical issues can be fixed over the remote connection, eliminating the need for site visits by technicians and associated labor and travel costs, but most important helping to reduce customer downtime. Page 2 of 6 Heidelberg Case Study

3 Early solutions create value and require additional transformation The Remote Diagnosis service was very well received by customers. Since then, smart services have become an important part of the development process at Heidelberg for every new press, ranging from the concept stage, when the parameters that will be available for remote access are selected, to the later stages where a remote connection is used to test the functionality of the smart services. Heidelberg s ecall, which was introduced in 2008, takes smart, connected services to the next level by sending automatic notification to the printer in case of a problem. The printer can then request service with the click of a button. An automated pre-analysis tool transmits the fault details to the responsible Heidelberg service expert who can then immediately get started on solving the problem. The combination of automated notification to Heidelberg and guaranteed response time which is included with the ecall service agreement reduces response time by 50% compared to the normal incident process without ecall. Gerhard Keinath, CEO, of commercial printing firms Keinath Offetdruck GmbH & Co., had this to say about his company s experience with ecall: Shortly after ecall was installed, we had an error message on our press control. We only had to touch the ecall button and 20 minutes later got a callback from the Heidelberg service team. The problem was solved remotely. As Heidelberg began delivering smart services, it quickly became clear that customers required assurance that connecting their presses to Heidelberg will not create any security risks. Heidelberg developed a security plan that began with the development of security standards for the company s computing systems. Each press is designed so that it cannot be operated remotely in order to prevent accidents that might otherwise occur if an operator was working on the machine when it began to operate based on a remote command. Heidelberg hired the TÜVIT independent German technical inspection organization to audit the security of the company s smart services. Heidelberg was certified twice and created a whitepaper document to communicate its security standards with its customers. It soon became clear that smart services provided a fundamentally better way to provide service on printing presses that was advantageous both to customers and to Heidelberg s own service team. Smart services benefit customers by offering faster solutions to machine problems and benefit the press manufacturer by reducing travel expenses and increasing customer satisfaction. Based on this insight, Heidelberg management decided to offer remote service at no charge during the first year after a machine is sold as part of the warranty program. The Heidelberg sales force discovered that once the customer experiences the benefits of smart services during the warranty period, it is easier to convince them to pay for the service after their warranty expires. Even when customers choose not to purchase a remote service contract, the machine is connected to the Internet so that customers can choose to utilize the remote services on a per-incident basis. Page 3 of 6 Heidelberg Case Study

4 Enhanced solutions create more value and require more transformation Heidelberg s Predictive Monitoring service introduced in 2012 pioneers the use of predictive maintenance to reduce downtime to even lower levels. The machine continuously sends data via the Internet to a Heidelberg big data analytics system that analyzes it and searches it for trends that predict the occurrence of a problem long before it has a noticeable impact on the performance of the press. Whenever the big data analytics system identifies an issue, a Heidelberg expert is notified, pours over the data and personally makes the decision as to whether the customer should be notified. The ability to detect indications of failure prior to an actual breakdown makes it possible for the customer to avoid production downtime by scheduling required maintenance for a time when the machine would normally not be operating. This approach also reduces downtime by making it possible to combine tasks that are required now or in the future in a single service call. Besides addressing potential press problems, the Predictive Monitoring service also includes information that can help increase machine utilization such as the time spent on production, setup and maintenance as well as scrap. Heidelberg s Performance Plus launched in 2013 with the goal of optimizing the operation of the entire print shop. Performance Plus is a smart service that takes advantage of the performance data provided over the remote network to help printers increase profits either by lowering costs per job produced or by achieving a higher total output per hour. Press performance data as well as anonymous values from a comparable peer group are displayed in an online portal that can be accessed by the customer as a service called Performance Benchmarking. If the customer sees a need for action, he or she can decide to contact the Performance Plus team to get further assistance. In the beginning of a Performance Plus engagement, the customer and Heidelberg engineers examine the operation of the printing plant and data that has been collected from the data analytics system. This is more detailed than the Performance Benchmarking data and gives more information about individual points that need improvement. Heidelberg experts work with the customer to develop a customized program that sets measurable goals for achieving improvements in all aspects of the plant s operation and includes a project plan designed to achieve these goals. During monthly performance reviews, Heidelberg guides the customer through the data and provides recommendations on how to improve output on an ongoing basis. Heidelberg collects a percentage of the savings achieved by the customer as its consulting fee. As of 2015, 10 Performance Plus consultations were in progress in the U.S. The average project duration was twelve months and customers saved between 1,000 to 2,000 production hours per project. The dramatic expansion in the Heidelberg smart services prompted major changes in the required skills and business processes used by the service organization. Heidelberg created a training program that was used to train over 1,000 technical experts in the service team on how to utilize smart services in solving problems for customers. For example, the experts were trained in how to interpret event messages in order to diagnose an ongoing or emerging problem. The service team was also trained to explain to the customer the process that they used analyze the customer s data and arrive at their diagnosis. In addition to retraining the existing service team, the expanding role of smart services in the press service process was used to update Page 4 of 6 Heidelberg Case Study

5 the qualities that the company sought in new members of the service team. The company s sales team, which traditionally focused on equipment sales, had to be trained in selling smart services. For example, they learned how to demonstrate to customers how smart services can help printers generate additional revenues by preventing breakdowns. The future shows the opportunities for value creation Heidelberg has responded to the challenges faced by the entire printing industry by putting more emphasis on developing integrated overall processes that can ensure the success of its customers. Today, Heidelberg generates about 40% of its sales from services, consumables and spare parts and it continues to reorient its product portfolio towards global growth segments, especially digital printing, consumables and services. Heidelberg focused its initial rollout of smart services to developed economies in Europe, North America and Japan. More recently, the company has recognized that the owners of printing businesses in the developing world are increasingly eager to maximize utilization of their capital assets by reducing production downtime. Heidelberg is moving to address this trend by selectively offering smart services to new markets around the world. Heidelberg has always sold and serviced at least 90% of the machines it sells with its own internal staff. Smart services are a good fit with the company s direct sales and service model in that they deepen the relationship of Heidelberg with its customers and better utilize the time of its highly skilled service engineers by reducing travel time. Heidelberg plans to continue to maintain direct relationships with its customers without going through an intermediary or dealer for the vast majority of its sales. Heidelberg remote services have revolutionized the process of detecting and rectifying printing machinery failures in a fraction of the time required in the past. Heidelberg smart, connected services are capable of solving about 70% of press electronic problems and application questions and 90% of software problems without the need for an onsite service call. In cases where the problem cannot be fixed remotely, the expert can at least diagnose the problem to ensure that the right expert with the right parts is sent to fix the problem. The savings that accrue to the customer from Remote Diagnosis and other smart services from avoiding the need for a service call are substantial. The cost of a typical service call might include 200 in travel and expenses. The machine might also typically sit idle for 5 hours while waiting for the service engineer at a cost of 300 per hour for another 1,500. With Remote Diagnosis, on the other hand, travel expenses are eliminated and downtime is typically reduced to 15 minutes, resulting in savings of 1,625. Page 5 of 6 Heidelberg Case Study

6 Going forward, the Heidelberg product development team is continually identifying new data points that can be captured to deliver even greater value to the company s customers. The company is seeking to expand its product portfolio by collecting more data from its machines and using the data that is collected to expand the capabilities of its service offering. Significantly, the company plans to continue to expand its Performance Plus program in order to deepen its commitment to working ever more closely with its customers to help ensure their success. The companies that succeed in the printing industry are increasingly likely to be those with management teams that are capable of harnessing technological advancements in the industry and most efficiently utilizing their capital assets. By focusing on the delivery of smart services that increase uptime and provide information that can be used to better manage a printing operation, Heidelberg is well positioned to continue to expand its leadership position in the printing machinery business. To learn more, please visit: /internet-of-things. 2016, PTC Inc. All rights reserved. Information described herein is furnished for informational use only, is subject to change without notice, and should not be taken as a guarantee, commitment, condition or offer by PTC. PTC, the PTC logo, Product & Service Advantage, Creo, Elements/Direct, Windchill, Mathcad, Arbortext, PTC Integrity, Servigistics, ThingWorx, Product- Cloud and all other PTC product names and logos are trademarks or registered trademarks of PTC and/or its subsidiaries in the United States and other countries. All other product or company names are property of their respective owners. J06684 Heidelberg CaseStudy EN 0216 Page 6 of 6 Heidelberg Case Study