4 Dec 2018
Asian Businesses Urged to Embrace Smart Factories and AI Technology
With only 2% of businesses having embarked on the Industrie 4.0 reinvention process, delegates at this year's Industry of Things Asia expo couldn't help but confess themselves somewhat perplexed at the many opportunities still being lost.
Many businesses are just not ready to adopt new disruptive technologies. That, at least, is the verdict reached by Eric Schaeffer, the Senior Managing Director of Accenture, the global management consultancy.
Sharing the results of a recent survey of 500 Chief Executives from the world's industrialised nations with the assembled delegates at the 2018 Industry of Things Asia expo, he said: "While the good news is that nearly 80% of Chief Execs believe that AI-driven technologies have the power to transform the future of their businesses, only 16% had a clear vision as to how this challenge will be met. Even more strikingly, only 5% had committed the resources required to deliver on this vision, while only 2% had actually begun the process.
"Essentially, the adoption of new technologies means applying disruptive, internet thinking to industrial processes, some of which have been in place for decades. It also represents a shift in value for the product, with the mechanical now subservient to its embedded software and to the facilitatory digital solutions and services it has to integrate. In the very near future, we see the valuation of everyday products as being transformed, with 70% of a product's worth coming from digital and only 5% from mechanical. With new waves of technology continuing to flow, it's wrong to think of this process as Industrie 4.0. It's actually Industrie X.0."
While there may be some disagreement as to just how this transformation should be billed, there is a broad consensus that the benefits it will bring to the manufacturing sector will be huge. One particular evangelist was Dr Richard Soley, Chief Executive of The Object Management Group (OMG), a Massachusetts-headquartered technology standards consortium.
Sharing the forecasts of various specialist research groups, he said: "For its part, Cisco estimates that adopting Internet of Things technologies will increase private-sector profits by 21%, adding US$19 trillion to the global economy by 2020. Gartner, meanwhile, projects an increase in revenue of $300 billion over the same period, while GE sees it as a $32 trillion-dollar opportunity.
"While it may be some time before we reach a definitive figure, it's already clear that various factors are converging and driving the sector, most notably the fact that sensors, devices, processing power and storage are all now very cheap. This could mean that, by 2020, the planet's connected devices will outnumber its human population by a ratio of 7:1. Despite this, there a still a number of issues to be resolved, with delivering true interoperability and maintaining system security the two most frequently cited."
With China having more skin in this game than arguably any other nation, the presentation by Zhao Yu, Director of Strategic Cooperation for the A.Brain Group, a Tianjin-based specialist in the fields of smart manufacturing and cloud solutions, was one of the event's most widely-anticipated sessions. Giving an update on the technological readiness of the world's second-largest economy, he said: "Chinese manufacturing is in the process of transformation. Essentially, its manufacturing base has long been unbalanced, with huge gulfs between the tier-one cities and those lower down the pecking order. Domestically, there has also been a huge oversupply compared with actual consumption levels. On top of that, for 70-80% of SMEs and 20% of larger enterprises, quality and efficiency have been historically low, while costs have continued to rise.
"In order to tackle all these issues, in November last year the central government launched its Made in China 2025 initiative, a blueprint for the redevelopment of the country's industrial base over the next seven years. Ultimately, the aim is to shift the emphasis from 'manufactured in China' to 'created in China', while also reforming the required supply chains to more closely align them with the needs of the e-commerce sector and securing more international and domestic investment for the manufacturing sector.
"New technologies will also play their part in this transformation process. Their adoption will help eliminate waste, while reducing costs along the entire value chain and improving the overall business-management process. In order to help manage this transition, we have developed nine business models with a total of 158 items requiring evaluation on a five-point scale. This will help companies see where they are, where they need to be and how best to get there."
Stripping it back a little, P. W. Yeoh, Asia-Pacific Regional Director of Operations for Rockwell Automation, the Milwaukee-based industrial-automation giant, maintained his company had identified just four goals prior to initiating its own transformation. Outlining the designated priorities, he said: "With faster time to market, lower total cost of ownership, improved asset utilisation, and enhanced enterprise-risk management primarily in our sights, we now have a clearer insight into every plant's operations. By using real-time data, we have found it far easier to quickly make profitable decisions, while the use of consolidated analytics has allowed us to accurately pinpoint our best practices and then ensure they are widely adopted.
"Now, the results speak for themselves. We've lowered our inventory from 120 days to 82 days, while reducing our annual capital expenditure by 30%. We are faster to market, with lead times reduced by 50%, and on-time delivery increased from 80% to 98%. We've improved on-time-to-want availability from 82% to 98% and reduced the parts-defect rate by 50%. Basically, we have been able to double our productivity."
Steering attention to one particular sector, Esteban Remecz, Chief Information Officer of IOCHPE Maxion, a Brazil-based car-parts manufacturer, outlined the changes Industrie 4.0 was bringing to the automotive industry. Highlighting its particular challenges, he said: "Traditionally, it's always been a very labour-intensive industry. It is, after all, all about converting raw steel into highly-engineered components. As a consequence, industrial IoT transformation can only work when there is a genuinely collective effort. It's not just about upgrading technology – the management needs to change and the labour force needs to be retrained and persuaded to buy-in to the overall process.
"As a truly international business, we need to think globally, but take action locally. In order to deliver on that, we created our own digital transformation tool, which offers four optional scenarios depending on the level of automation readiness any given facility had achieved. This allowed us to work closely with Bosch, one of our partner companies, on the blueprint for transforming a conventional Turkish manufacturing facility into a smart factory. With this under our belt, our next priority is to integrate AR and VR systems into the overall production process."
Summarising the lessons learnt from his own company's digital transformation, Vivek Bhatia, South Asia Regional Director for Thyssenkrupp, the German industrial engineering and steel-production conglomerate, said: "Digitalisation is inevitable. If companies are to survive and prosper in the 21st century, they need to embrace new technology – and the sooner, the better. It's now easy to find and adopt implementation models. It's just a question of identifying the most relevant case study, following its best practice and generating customer value. At the end of the day, it's all about creating an ecosystem where everyone is able to provide data, input and solutions, allowing all parties to, ultimately, benefit.
"Above all, stay the course. While there may be obstacles and reverses along the way, it's a game-changing journey for any business. If you prepare for the long-haul and commit the requisite time, effort and resources, however, you are sure to get there."
Industry of Things World Asia 2018 took place from 15-17 July, 2018 at Singapore's Marina Bay Sands Congress Center.
Ronald Hee, Special Correspondent, Singapore