Capturing value from disruption in manufacturing

Manufacturers can optimize the digital thread and overcome potential barriers, according to Richard Kelly, partner, McKinsey and Co. Inc. in a presentation about Industrie 4.0 and its potential at the SAP Manufacturing Industries Forum. See five barriers and five ways the digital thread captures value.

06/29/2016


Richard Kelly, partner, McKinsey & Company Inc. talked about Industrie 4.0 and its potential in his presentation at the SAP Manufacturing Industries Forum and how manufacturers can optimize the digital thread and overcome potential barriers. Image courtesThe Industrial Internet of Things (IoT) and Industrie 4.0, a similar initiative in Europe, have received a lot of attention in recent years. The next industrial revolution in manufacturing-will be achieved through leveraging data and ubiquitous connectivity through the supply chain, according to Richard Kelly, partner, McKinsey & Company, Inc. He talked about Industrie 4.0 and its potential in his presentation, "Capturing Value from Digital Disruption in Manufacturing Industries," at the SAP Manufacturing Industries Forum on June 14.

Whatever you call it, the discussions have been more theoretical rather than practical. Kelly said that is starting to change. "We're at a tipping point, and we're starting to see real results," he said.

Three aspects are driving Industrie 4.0, Kelly said: Computing power (Moore's Law), data, and connectedness. And as they become more sophisticated and intertwined, this will have a positive impact on manufacturing, which generates more data than any other sector, including government.

There is a generally positive feeling, Kelly said, about Industrie 4.0. More than half of companies worldwide believe that Industrie 4.0 will increase their ability to be competitive. The U.S., however, is more optimistic about Industrie 4.0's potential than Germany and Japan. He added that Germany and the U.S. are implementing strategies to take advantage of Industrie 4.0 while Japan remains hesitant. 

Barriers, benefits to Industrie 4.0

While there is a lot of optimism and buzz about Industrie 4.0, there are some common issues that are keeping manufacturers from moving forward. Kelly highlighted five barriers mentioned by manufacturers:

  • Difficulty to coordinate actions across organizational units
  • Lack of courage to push through radical transformation
  • Lack of necessary talent, for example, data scientists
  • Concerns about cybersecurity when working with third-party providers
  • Lack of a clear business case that justifies investments in underlying information technology (IT) architecture.

Other issues cited by manufacturers include data ownership when working with third-party providers, challenges with integrating data, and uncertainty about in- versus outsourcing.

Even with the concerns, Kelly said that many manufacturers are using and realizing Industrie 4.0's benefits on the plant floor. He mentioned five applications where Industrie 4.0 is showing its benefits:

Digital performance management: Kelly said that the gateway to digital manufacturing due to minimal resource requirements is producing simple solutions that achieve as much as 50% improvement in overall equipment effectiveness (OEE).

Predictive maintenance: Advances in integrating diverse data sets and deep learning algorithms are increasing machine availability and reducing maintenance costs by 10% to 15%. Kelly said, "Predictive maintenance is an area a lot of people are focusing on. There's a great deal of potential."

Yield and energy optimization: Kelly said that integrating data from process control systems with other data to optimize yield, energy, and throughput is becoming a major priority for manufacturers. It is a priority for major companies to become more cost-effective and efficient, and Industrie 4.0 can play a major role in that. The key, Kelly said, is to combine the available data with the right algorithms for maximum effect.

Next-level automation: Industrial robotics are becoming more sophisticated, and some are being developed to work safely with humans, which would have been unheard of even 5 years ago. In addition to becoming more interactive, they're becoming more affordable.

Digital quality management: Kelly explained that this includes implementing digital documentation systems, using advanced algorithms, and implementing Big Data methods, such as semi-automated, root-cause analyses. 

Five ways digital thread captures value

Capturing value is critical for any manufacturer looking to use Industrie 4.0. Kelly highlighted five elements that are key in achieving this:

  • Analyze the entire digital thread
  • Focus efforts on a limited number of high-value applications
  • Leverage short-term workaround and long-term infrastructure solutions
  • Use the entire Industrie 4.0 ecosystem
  • Build organizational capability and adapt processes and culture.

"We have to move from IT transformation that involves projects that take 5 years and cost $500 million and work on smaller, more intensive projects," Kelly said.

The digital thread, which covers everything, including research and development, the supply chain, and customer service, allows information to freely travel from one end of the spectrum to the other and back again to improve operational efficiency and reduce potential errors in the chain.

"Successful companies are looking outside the four walls of the factory and across the entire digital thread to uncover two types of opportunities," Kelly said.

Kelly added that companies need to take pragmatic steps to leverage near-term solutions for Industrie 4.0. Manufacturers need to 1) take steps that will streamline operations while 2) setting the stage for more advanced methods of gathering data, such as predictive maintenance and throughput optimization. These steps, Kelly said, will go a long way in optimizing a manufacturer's return on investment (ROI).

All of this is about potential, and the future, while bright, remains uncertain. Kelly is optimistic. "There is a there there," he said, pointing to Industrie 4.0. "And there is a great deal of potential for the future."

Chris Vavra is production editor, Control Engineering, CFE Media, cvavra@cfemedia.com.

ONLINE extra

See additional stories from the SAP Manufacturing Industries Forum linked below.



Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
November 2018
2018 Product of the Year finalists, mild steel welding: finding the right filler, and new technique joins aluminum to steel.
October 2018
Tools vs. sensors, functional safety, compressor rental, an operational network of maintenance and safety
September 2018
2018 Engineering Leaders under 40, Women in Engineering, Six ways to reduce waste in manufacturing, and Four robot implementation challenges.
October 2018
2018 Product of the Year; Subsurface data methodologies; Digital twins; Well lifecycle data
August 2018
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
Summer 2018
Microgrids and universities, Steam traps and energy efficiency, Finding help with energy projects
October 2018
Complex upgrades for system integrators; Process control safety and compliance
November 2018
Analytics quantify processes, Fieldbus networking and IIoT, Choosing the right accelerometer

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
Design of Safe and Reliable Hydraulic Systems for Subsea Applications
This eGuide explains how the operation of hydraulic systems for subsea applications requires the user to consider additional aspects because of the unique conditions that apply to the setting
click me