Delegates at roundtable discussions hosted by The Economist and DXC Technology in Stockholm

Feedback on Early Steps towards End-to-end Manufacturing and Industry 4.0

Key takeaways from roundtable discussions hosted by The Economist and DXC Technology in Stockholm and Amsterdam “Digital Transformation in Manufacturing: Connecting Theory to Practice”.

Digital transformation is a strategic priority for the manufacturing industry, yet many grapple with the practical realities of taking the first step in a vast, interconnected and end-to-end exercise. DXC Technology teamed up with the Economist Intelligence Unit to host two roundtable discussions respectively in Stockholm and the Netherlands, with the aim of helping delegates explore early, incremental steps.

Discussion at both events was channeled into exploring how to make incremental steps in a sustainable fashion. In a Q&A session with BVEx editor Helen Beckett, Martin Rainer and Wolfgang Lucny, DXC’s manufacturing industry experts and event facilitators recall the highlights and takeaways of the knowledge sharing event.

Key themes that surfaced throughout the discussions revolved around:

  • the need to resolve ambiguous data ownership
  • the emergence of cross-disciplinary teams in manufacturing
  • dealing with a new generation of digital silos.

BVEx: How have manufacturers progressed in the past year?

Initiation is still extremely difficult for manufacturing and digital readiness is still largely underestimated
Martin Rainer: Almost every company present at the two workshops had initiated a serious digital strategy, headed by the CIO or CDO and with a commitment to invest. Clearly it’s a step forward from one year ago when delegates at a similar event were investigating Smart Connected Manufacturing in quite a conceptual way. Delegates in Stockholm and Amsterdam were interested in delivering actual results, assembling business cases and seeking use cases.

There was a high level of sophistication in the businesses of attending delegates within their existing operating model and processes and users; but there is only a certain speed at which they can proceed with digitisation. Initiation is still extremely difficult for manufacturing and digital readiness is still largely underestimated. I recommend companies do their homework: harmonize your processes and existing systems, clean up data, and define an enterprise-wide information and data model.

BVEx: How digitally ready are manufacturers?

MR: Many companies addressing digital transformation have started small with pilots and partners on projects that address operational efficiency. A few others are investigating higher level considerations [such as value ecosystems and lifecycle management for smart products to tap into new revenue streams and enhance customer experience]. The remainder are doing bits and pieces in one-off initiatives that are owned by different business units. The starting points are different for different subsectors; this is the industry with the highest number of sub sectors and the broadest variety of business.

We also witnessed a shift [in attending delegates] from personnel in traditional IT and tech roles to digital roles and a parallel shift in discussion from IT focus to business focus. Overall in our delegate cohort, there was an upgrade in seniority and this speaks to the fact that digital ownership is moving up closer to boardroom. I met one CIO who owned it all – the digital element plus traditional IT – a scenario I would recommend. 

Pete Swabey, The Economist Intelligence Unit EMEA Editorial Director, moderating roundtable discussion in Amsterdam.

Pete Swabey, The Economist Intelligence Unit EMEA Editorial Director, moderating roundtable discussion in Amsterdam. 

BVEx: Is Industry 4.0 a revolution or evolution?

MR: Companies that are disrupting in the manufacturing sector typically are the big hitters in the auto sector, such as Daimler and Tesla; there’s no evidence that the rest are adopting this approach or acting with the same urgency. They are preferring an evolutionary approach of incremental steps driven by quality and efficiency goals. Existing processes and models are being enriched by digital technology and tools, and opportunities to analyse data.

The revolutionary/evolutionary lens can be used to review the 3 layers of Industry 4.0.  First, vertical integration of factory machines, robots and data to streamline operations and achieve a higher output at lower cost with the ultimate objective to produce customized products at the cost of mass produced products. This is definitely an evolutionary and incremental stage. The second layer of smart products and lifecycle management is more revolutionary and disruptive. However, while companies are pushing it out, they are not sure if there is a genuine demand yet from their client base for all the functionality offered by a smart product.

It is at the third layer of horizontal ecosystems and disruptive platforms, which enables all players in the value network to connect, that the potential for revolution is greatest. Here, there is certainly a lot of start-up activity. DXC is part of the initiative Start-up Autobahn together with Daimler, Porsche, BASF, ZF and Murata to validate various manufacturing use cases with start-ups like Kreatize, Reflekt or TruePhysics.

BVEx: What role are digital platforms and as-a-service playing?

Wolfgang Lucny:  Manufacturers are looking for discrete returns or proof points to support the business case on the whiteboard. As-a-service deployments of platform, software and infrastructure are already mature in the IT world and are now emerging in the manufacturing space. Their opex consumption model (instead of capex) enables customers to tap quickly into functionality and services without having to build capabilities and knowledge by themselves. This is clearly a very efficient way to overcome the increasing skills shortage and to deliver results within a few weeks to prove the underlying business case.

Nevertheless, this approach still calls for a holistic vision behind it, otherwise manufacturers are going to end up with small islands of automation and connectivity. We are seeing digital platforms emerging that address this – such as VFK (Virtual Fort Knox) in Germany – which provide an open and secure platform for data sharing between parties in the value chain. 

Smart Connected Manufacturing use cases discussed in a workshop in Stockholm.

Smart Connected Manufacturing use cases discussed in a workshop in Stockholm.

BVEx: What is delegate feedback on smart products offered as-a-service?

WL: A delegate company in pulp, paper and packaging sector from Finland has had multiple approaches from suppliers that make up his production line. Suppliers such as ABB and AtlasCopco wish to offer their products such as robots and compressed air as a service instead. The advantage is that the delegate no longer has to maintain compressed air machine or factory floor robots.

The downside for the delegate is that each new as-a-service acquired element introduces another set of remote connections into the factory network – and these are also being introduced in a discrete way. Each supplier requires a connection to deliver their predictive/data analysis offer, but for the IT chief, this means more points of entry and potential vulnerabilities in network security.

From a business point of view, too, these services may be digital but they are also siloed and bespoke, and currently fail to provide the desired end-to-end view. It’s piecemeal and not as efficient as could be. 

BVEx: How are delegates incorporating smart products?

WL: A manufacturer delegate of white label electrical goods had a challenge in not knowing their customers from the outset beginning with the product sale [and therefore was not immediately able to exploit the opportunity of smart products to analyse of consumer behaviour]. In his business, the first time contact is made with the customer when the customer calls the service centre due to an issue with the product. Product registration is necessary to gain an overview of customers – but it is not presently common a behaviour of consumer to register at point of purchase.

This was recognised as a missed opportunity and there was a realisation that they would need to work closer with their marketing department in order to capitalize on the opportunity and create a compelling incentive for users to register. Otherwise they are blind to how the product is used; functionality is enhanced and released simply because competitors do so, without knowing if this is what consumers need or use. 

BVEx: How are manufacturers exploring horizontal value networks and ecosystems?

WL: Typically, the sentiment towards the proposition of these early value networks, ecosystem and as-a-service is enthusiastic, but tempered by sensible risk mitigation: “Yes I’m going digital but within my factory boundaries and I still want my private cloud and infrastructure in my factory” is one way the manufacturers are seeking to control data ownership and privacy.

A second approach to preserve data privacy is to engage in more research activities and join initiatives such as IDS (Industrial Data Space) in order to work collectively to agree on an industry standard. But there’s no consensus as yet. Establishing standards and data exchange between suppliers and customers through a platform or marketplace (such as VFK) will help significantly on the journey to Industry 4.0 as it will overcome the missing trust issue. And trust between the partners in an ecosystems is mandatory for the ecosystem to work.

Martin Rainer, DXC Technology Manufacturing Industry Leader, event co-host and speaker in Amsterdam and Stockholm.

Martin Rainer, DXC Technology Manufacturing Industry Leader, event co-host and speaker in Amsterdam and Stockholm.

BVEx: How are companies organising differently in response to Industry 4.0?

MR: There was evidence from the delegate lists that companies are attending with up to five representatives from different departments. This points to internal discussions taking place across departments and silos about how to address the smart connected manufacturing opportunity and to realise the benefits of Industry 4.0. Heads of production attended alongside heads of IoT, and there was greater diversity of job titles than the previous year.

A discussion about how to ensure that the digital transformation topic is taken seriously and progressed prompted spirited debate about whether this should be centrally driven by a chief digital officer not allied to any particular business unit or handled by the business units themselves. More mature participants tended to have this more central staffing function, but ultimately P&L owners made the decision about how much to invest, take on board and implement. One reason why it’s not accelerating.

One stand-out manufacturing giant did not follow this model but instead had IT embedded in every business function. IT teams are deployed in every single business unit, which assures a cohesive response and no silo synching. When it comes to digital transformation, IT is part of that digital initiative.

BVEx: What are the main challenges of early steps in Smart Connected Manufacturing?

WL: A big concern in the community was around who owns the data generated by smart devices being deployed on the factory floor or within a building.  At Stockholm there was a discussion about data ownership as well as data privacy and this was in response to discussions about improving operational efficiency through data analytics.  Questions were asked along the lines of: “How much data do I have to transfer across the network?” and “A lot of the data contains my IP: If I allow my engineering or 3D design data to travel across the value chain, how can I protect data assets?”

In another instance, a delegate in the energy sector was unable to create a smart building use case because of lack of clarity about who owned data in their commercial offices, which were managed by a third party and owned by yet another investment company. It wasn’t even clear who owned the data within the building!

These kind of fundamental issues concerning data ownership and protection are surfacing everywhere as manufacturers begin their journey toward Industry 4.0 and a more connected way of doing things.

To learn about DXC’s position on Smart Connected Manufacturing, visit www.bvex.com/manufacturing

Helen Beckett

Author: Helen Beckett

Helen Beckett is the Community Manager of the Business Value Exchange. She has been a writer and editor for over 20 years and takes a particular interest in the challenges facing the CIO in today’s business climate.

Martin Rainer

Author: Martin Rainer

Martin Rainer is DXC Technology’s Manufacturing Industry Leader and General Manager for the North & Central Europe Region. A visionary pioneer in industrial digitalization, Martin leads DXC’s regional organisation that helps manufacturing clients address the deep transformation needs required in today’s digital economy. Martin’s expertise comes from many years of experience in the business and technology transformation areas working with the largest global companies in several countries in Europe.

Martin and his team are leading Smart Connected Manufacturing, DXC’s powerful vision for the future of manufacturing in the era of the Fourth Industrial revolution.

Wolfgang Lucny

Author: Wolfgang Lucny

Wolfgang Lucny is DXC Technology’s Global Account Executive and Manufacturing Innovation Leader. Wolfgang’s focus is on driving digital transformation in the EMEA manufacturing industry, defining relevant partner ecosystems and technology solutions, and shaping DXC’s Smart Connected Manufacturing strategy.