- March 21, 2019
- ARC Advisory Group
By Bill Lydon, Editor, Automation.com
The digitalization revolution was on full display at the 2019 ARC conference, and it was clear throughout the event, that forward-thinking users are leading the way.
By Bill Lydon, Editor, Automation.com
The digitalization revolution was on full display at the 2019 ARC conference, and it was clear throughout the event, that forward-thinking users are leading the way. This was woven into the theme of this year’s sold-out conference, “Driving Digital Transformation in Industry and Cities” which took place February 4-7, 2019 in Orlando, Florida. The focus on digitalization was evident from the outset as the opening keynote presentations featured two companies who described their digitalization experiences.
thyssenkrupp North America
Nihar Satapathy, a Senior Vice president of Strategy, Markets & Development, provided insights from the thyssenkrupp digitalization experience. He first emphasized the realization that digital transformation is essential to remain a viable manufacturing organization. “If you don’t [digitally transform] you will be are at the risk of being outcompeted in the marketplace,” explained Satapathy, “There’s a big risk, for industrial companies especially, of being commoditized.”
The thyssenkrupp company has a background in a range of industries, including the production of elevators, with 26 North American manufacturing facilities and about $10.5 billion in sales in the region, and about 34,000 employees. “Our philosophy is we like to engineer solutions of tomorrow with our customers,” Satapathy described.
He further pointed out how the rapid pace of technology has led to drastic changes in several key areas:
- computing power is getting cheaper every single day
- low-cost mobile data transfer, you can transfer information for pennies
- the cost of sensors is down to pennies as well
- additive manufacturing changing the traditional manufacturing process
Satapathy emphasized that competition is changing across industries, citing the automotive industry, with new entrants leveraging technology - such as car sharing – which has then impacted the longer-standing automotive companies. These changes can and are having disruptive impacts on manufacturers and existing value chains that have\existed for decades. The key question, as Satapathy shared is, “How can we compete in this new environment?”
Satapathy shared more insights into the thyssenkrupp experience. “I would like to tell you that we had a broad strategy and came up with a grand plan,” Satapathy remembered, pointing out how they tried different things, found certain things worked, and try to stay one step ahead of everyone else. “At the end of the day we focused on customer value add, if you provide additional value to the customer somehow down the line you can find a way to monetize it.”
This experimentation led to several discoveries, as Satapathy shared, “You can digitalize your operations making them more efficient using some of these technologies that are now available, and these technologies are allowing you to have new business models that were previously not feasible.” He provided some examples:
- The company’s MAX offering is a real-time, cloud-based predictive maintenance solution. It leverages a machine learning Internet of Things (IoT) solution to increase elevator availability by reducing out-of-service situations through real-time diagnostics. MAX predicts maintenance issues before they occur and empowers elevator engineers by flagging the need to replace components and systems before the end of their lifecycle.
- In the stairlifts business, the company has created a fully digitized sales process using Microsoft's Mixed Reality technology for in-home applications. The salesperson using these technologies performs the site survey for installation, and can virtually show potential customers what the solution will look like with all the information digitized to be manufactured properly. These videos found here and here describe the process:
Satapathy described that in order to apply new technology investments, they had to think about the business holistically and use the customer’s point of view to analyze the entire value chain . In the case of stairlifts they worked to enhance the sales process, simplified on-site installation analysis, and collapsed order to delivery time. Satapathy shared that this had a marked effect for this sector, “This business was growing at low single digits and now is going to double in the next five years.”
thyssenkrupp Key Learnings:
- Digitalization is inevitable, it is coming it is happening whether you like it or not. It is better to embrace it sooner than waiting for some unintended consequences for your business.
- There are technologies available today and you just must find the relevant business cases and think of your business holistically in order to deliver more value.
- We realized early on we did not have the skill set and the resources in order to do it ourselves. We set up partnerships with key players in order to help us make that easy.
- Stay the course it is a tough journey and you will stumble along the way but it’s worth it in the end. The payoff is huge.
Praxair - How to get from hype to reality?
The other company to present their digital experience at ARC was Praxair. Praxair Digital’s Director, Larry Megan, described how the Praxair Digital team works to enable digital innovation across the enterprise, including Praxair’s manufacturing operations, supply chains, and business processes, as well as creating a greater external digital presence.
Megan particularly focused on the challenge of sorting out the hype from reality in digital transformation and what exactly to do about it. “It’s hard for any of us to sort out what is-what is hype and reality trying to understand a hundred different technologies from a hundred different vendors how do we sort out what’s real what’s not and how do we focus our time,” as Megan described, emphasizing that each company needed to decide what digitalization meant for them.
“Fundamentally, what we’re trying to do is use digital technologies to move the business forward,” Megan explained, but he also shared that technology alone would not be the answer. “Never start with technology, really feel and understand your external and internal customers.”
Megan went on to share several experimental projects that can help to learn and verify technologies, concepts, and ideas.
Know the path to value:
- Realtime Visibility - how new information can be used?
- Reduce Friction - within the organization, with customers, and with suppliers?
- Ecosystem Connectivity - who is our ecosystem, how can we create a platform from the IT world, APIs, how we can use technology to enable frictionless connected experiences?
Megan warned that the point of digitalization is lost without the entire organization in the loop. “Most technology projects, in our experience, don’t fail because the technologist could figure out a solution,” Megan observed, “It’s because we were not collectively able to manage the change that was required in the organization to be able to enable it.” Megan suggested effective digital transformation requires a digital culture which emphasizes these points:
- Investment initiative to change the company
- Leadership to identify and drive digital opportunities
- Communication of the success stories to energize the organization
- Focus on the job to be done, not the technology
- Build a foundation - new technology pilots are good but need infrastructure to scale
- Expand your ecosystem – established and upstart suppliers
- Avoid the big splash mentality - focus on the relentless pursuit of improvements
- Open Architectures – for example The Open Process Automation Forum initiative
The Common Thread of Digitalization
In both of these presentations, a common thread could be found showing that digitalization is changing manufacturing companies in multiple sectors. Both emphasized the need for companies to develop a strategy that embraces a broader scope than simply the manufacturing or process plant. Both presenters fervently expressed both the need and benefit to become a digital manufacturing organization, in order to grow and prosper.
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