Automation.com, May 2011
By Brian McDonald, Cisco Systems
In the new global business environment, manufacturers are facing some of the toughest operational and strategic challenges in recent memory. Any new investment must pay for itself either through operational savings or revenue growth.
By Brian McDonald, Cisco Systems
Introduction: The New World of Manufacturing
In the new global business environment, manufacturers are facing some of the toughest operational and strategic challenges in recent memory. Everything from surprise disruptions in global supply chains due to natural disasters, volatile geopolitical events in key natural resource regions, and rapidly shifting market dynamics are forcing executives to rethink basic strategies and question long-held beliefs.
In many ways, the new landscape of manufacturing reflects the culmination of trends that started years ago. As manufacturing has steadily globalized, customers have been gaining the upper hand and their expectations have been rising as a result. That means that all kinds of customers are demanding a lot more: more speed, better quality, faster delivery, and more personalized service.
Other pressures are coming from the rapid push of information technology into plants, assembly lines, and logistical networks, including wider deployments of automation technology and IP networks. One consequence of this has been more market velocity, as production and time-to-market cycles, aided by IT, continue to shrink; and greater volatility, as competitors wielding new technology emerge from anywhere in today’s “flat world.”
Complicating matters for every industry player is the continued ratcheting up of financial pressure. A still-uncertain economic climate and rising input costs means that manufacturers everywhere are grappling with shrinking operational budgets and cost-cutting mandates as they seek new ways to optimize the allocation of resources across regions. Any new investment must pay for itself either through operational savings or revenue growth.
Industrial Intelligence: How Manufacturers Seize a Sustainable Business Advantage
All of these forces are likely to intensify in the years ahead. But while the challenges are formidable, companies that learn to successfully navigate the new environment can reap outsized rewards. This conclusion was borne out in our review of top global manufacturing firms across key segments. The review looked at discrete manufacturers, including the aerospace leader Boeing, and process manufacturers, including the mining company Anglo Platinum.
These enterprises proved they can excel in some of the most highly competitive and volatile markets in the world. They are succeeding – and growing profitably – through a combination of factors, including a predisposition to innovate and a commitment to product and service quality. There is another ingredient, too, and that is the decision to employ key technologies that empower the enterprise with better integration, communications, and collaboration capabilities. We call these capabilities “industrial intelligence.”
Industrial intelligence is the enablement of enterprises to more intelligently and responsively manage industrial operations globally. Traditional industrial automation tools, including shop-floor systems running programmable logic controllers (PLCs) and supervisory control and data acquisition (SCADA) systems, are only part of what constitutes industrial intelligence. Today, industrial intelligence extends beyond plant floor systems, connecting production environments to the rest of the business, to suppliers, and to trusted partners in the broader industrial ecosystem.
In many deployments, industrial intelligence solutions use IP-networking and cloud-based services to “converge” industrial and enterprise networks and allow system-wide communication and collaboration. According to Cisco, a leading supplier of industrial intelligence solutions, what these systems offer is a more intelligent platform for innovations that:
- Connects devices to measure, monitor, and manage resources for greater efficiencies
- Connects people in less time and space
- Connects ideas to generate solutions to industrial, operational, environmental challenges
At the heart of industrial intelligence solutions are technologies that bring smart, secure wireless networks onto the factory floor. These IP networks work hand-in-hand with new Unified Communications solutions that converge voice, video, and data streams on a common platform, giving workers tremendous new collaboration and decision-making powers, whether they’re in the office or on the road.
Increasingly, industrial intelligence solutions are being accessed through the cloud. Manufacturers are finding that they can control costs and complexity by building private clouds in virtualized data centers that deliver manufacturing applications and services to users at a fraction of the cost.
When enabled by industrial intelligence and cloud-delivered solutions, engineers can troubleshoot problems in factories a continent away. Managers can monitor industrial processes spanning dozens of plants and make instant adjustments to optimize product flows and boost asset utilization. More intelligent IP networks result in supply chains that are leaner and more flexible because companies and suppliers can synchronize production and logistics over a secure, shared network. What’s more, the new networks are self-monitoring and self-correcting, which translates into higher availability and lower support costs.
In summary, manufacturers are focusing on a set of key priorities that drive competitive advantage in the evolving global industrial marketplace including:
- Operations Excellence: Securing real-time access through converged IT, control and wireless networks, to enhance plant efficiency, throughput, safety, physical security and return on assets
- Customer Intimacy: Creating a differentiated customer experience to grow revenue and gain competitive advantage
- Continuous Innovation: Reducing time to market, increase product pipeline success rate, and improve new product vitality while reducing R&D costs with enhanced collaboration between customers, engineering, manufacturing, sales and channels
- Supply Chain Agility: Providing one source of truth across the manufacturing enterprise chain of supply and production with secure, real-time, multi-tier visibility that enables root-cause responsiveness
Manufacturers that embrace and deploy industrial intelligence (and the IT solutions behind it) are creating value for the enterprise and the customers they serve. These manufacturers achieved tangible improvements across a range of operational, financial and strategic areas, seizing a clear and sustainable business advantage as a result. Among the business improvements realized:
- Reduced time to market: A major pharmaceutical company now launches products 4-6 weeks faster due to more effective collaboration among productive development teams
- Optimized R&D: This same company says that higher R&D productivity is saving $2-3M per project
- Improved labor productivity: A global automaker deployed a unified communications solution that boosted labor productivity by 18% and eliminated tens of thousands of unproductive hours per year
- Reduced travel costs: A global electronics manufacturer saved $1M per month by deploying a digital-media collaboration platform that helped minimize business travel
- Increased system availability: Another global automaker deployed standardized network architecture across dozens of factories, speeding support response time and reducing downtime by 95%.
- Higher production efficiency: A leading tire maker deployed a wireless network with real-time location and automated WIP tracking capabilities to cut component tire losses by 20%.
- Accelerated business processes: A major industrial products company streamlined idea evaluation cycles with collaboration platform and can now run “lean workout” process in half the time
"Standardizing processes allows you to pool capacities across your manufacturing plants. This can give you flexibility and better responsiveness to changing marketplace demands.” – Roy Wildeman, lead manufacturing analyst, Forrester Research
Unlike discrete manufacturing, the products of process manufacturers are undifferentiated, like oil, natural gas and salt. Process manufacturers include companies in the oil and gas, chemicals, food and beverage, mining and metals, and utilities industries.
Anglo Platinum Gains End-to-End Production Visibility, Cuts TCO to Half Industry Average
South Africa-based Anglo Platinum is the world's largest primary producer of platinum, with a 38% share of global output. The company’s end-to-end production process moves materials from underground and open-cast mines to concentrators, smelters and refineries. Because these facilities (and their industrial control systems) were spread over remote regions and lacked standard network protocols, the sites were isolated – both from each other and from Anglo’s corporate business network. As a result, the company had difficulty optimizing the overall production process and maintaining high asset utilization and output. And without centralized network management capabilities, Anglo faced chronic downtime, security, and maintenance cost issues.
Anglo overcame these challenges when it teamed with Cisco and began rolling out a standard multi-layered network architecture linking each facility and process-control system to the corporate network.
Ethernet-to-the-Factory technology was crucial to integrating Anglo’s plant and business systems. Managers now have a secure, dashboard view of production at any location, accelerating decision-making and cutting overall system maintenance costs. “Anglo Platinum’s cost of ownership fell to one-half the industry average after the Cisco EttF deployment,” said Theo van Staden, the company’s head of infrastructure. “Now we can ensure the availability of systems and support from a central location and have comprehensive visibility and reporting.”
Conclusion: Winning with Industrial Intelligence
Fast-evolving global markets, unpredictable supply chain disruptions, and tough new budget realities are forcing manufacturers and transportation agencies alike to become leaner, more agile and better able to rapidly re-allocate resources on an international scale. It is a severely challenging environment that demands new strategies and tools to stay competitive and deliver value to customers and citizens.
By standardizing on IP-based network architectures and solutions, companies have successfully “converged” operational and management networks, creating opportunities for improving efficiency, reliability, security and safety. Companies adopting Industrial Intelligence solutions proved that the technology can power new platforms for collaboration, which in turn fuels innovation and accelerates time to market. These organizations have gained a clear, sustainable business advantage and are setting the standard for what it takes to win in a globalized, just-in-time world.
Brian McDonald has over 10 years experience at Cisco Systems. He is currently the Senior Industry Marketing Manager at Cisco Systems for the worldwide manufacturing industry. Brian has over 20 years experience in high-tech industry marketing at Hewlett-Packard, Compaq Computer and Iomega. He has also served as Vice President of Marketing at Micron PC and New Edge Networks. He has an undergraduate degree in Computer Science and Statistics at Brigham Young University (1985) and an MBA in Marketing and Strategic Management from The Wharton School of the University of Pennsylvania (1991).
Anglo Platinum’s architecture included Cisco Wide-Area Application System (WAAS), Cisco Borderless Network Architecture, and Cisco Ethernet-to-the-Factory (EttF) solutions
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