Manufacturers Get Smarter for Industry 4.0

By Saj Kumar, Vice President – Internet of Things, SAP

Saj Kumar, Vice President – Internet of Things, SAP

Imagine a factory floor with no operators in sight, machines receiving orders, automated guided vehicles (AGVs) moving products from one machine to the next, machines performing self-diagnosis and predicting failures and finally delivering a unique, customized product based on one’s specifications. This is the future of manufacturing!

The world of manufacturing is making a quantum leap with robots, self-organizing production, augmented reality and 3D printing. At the heart of this change is Data – data from all these machines to drive outcomes – mass customization, predictive maintenance, products-to-services.

In smart factories where processes are fully digitized and connected, manufacturers can build and deliver orders more quickly. Customers are also able to personalize their purchases from a manufacturer with smart factory capabilities. This type of connected manufacturer, often referred to as Industry 4.0 or the fourth industrial revolution, is underway.

The Connected Smart Factory

Audi, Harley Davidson, and Siemens are among the smart factory leaders that are changing the business of manufacturing. A smart factory is defined by its level of connectedness, which can be separated into five categories.

The first level is intra-company vertical integration where a company’s business systems connect to the shop floor systems. A large number of automobile makers have been producing cars with this level of connectedness for years. Instead of having separated systems for manufacturing planning, execution, tracking, and tracing, these processes are connected and integrated with corporate business systems to improve key metrics such as customer delivery, quality and costs.

The second level is machine-to-machine connectedness where intelligent machines self-diagnose and self-correct. In these smart factories, machines have built-in sensors or RFID chips that allow them to ‘talk’ to each other and adjust work flows. For instance, if a downstream machine detects a problem and needs to slow down, this machine can inform the upstream machine and change the conveyor speed to slow down the line. Germany based STILL is a leading provider of intra-logistical solutions and their new CubeXX solution is another example of autonomous machines. In a world of increasingly flexible internal logistics, CubeXX is the solution for many future requirements.

E-Commerce integration, or direct integration of online configurations, is the third level of connectedness. This type of smart factory caters to the consumer, providing personalized, highly configurable products that are managed from order entry to the shop floor.

The fourth level of connectedness is manufacturing collaboration, which supports collaboration with suppliers, contract manufacturing, design partners, Original Equipment Manufacturers (OEMs) and customers. Design partners can work on prototypes and test designs with real time integration to shop floor systems and adjust parameters to improve quality and reduce time-to-market. With the advent of 3D printing, this gives design partners the ability to do rapid prototyping. Enterprises can communicate with partners in real time to inform, analyze and act.

The final level of connectedness is when machines on the factory floor are connected to a machine cloud that enables remote monitoring, predictive maintenance and quality management. In these environments, owners, operators and manufacturers of machines and equipment can manage their assets at remote sites, while having visibility into performance and usage. Predictive maintenance and service solutions allow equipment manufacturers and operators of machinery and assets to monitor machine health remotely, predict failures and proactively maintain assets.

Harley Davidson Regroups with Digitized Operations

A Smart Factory is not limited to automation of a single production facility. It incorporates integration across core functions - from production, materials sourcing, supply chain and warehousing to sale of the final product. This high level of integration and visibility across business processes will enable greater operational efficiency, responsive manufacturing and improved product design.

Visionary companies like Harley-Davidson Inc. are at the forefront of Industry 4.0 innovation with its use of end-to-end digital engineering. In Harley-Davidson’s new manufacturing facility, every machine is a connected device and every variable is continuously measured and analyzed. Equipment provides performance data that the manufacturing system uses to anticipate maintenance issues before machines break, minimizing workflow interruptions. Harley-Davidson can tell to the nearest tenth of a second how long it takes to install every component on a motorcycle and the system alerts floor managers about issues at the individual component level. The company can even measure the temperature, humidity and the RPMs of the ventilation fans in the buildings. All this data is analyzed continuously to identify factors that will improve efficiency and throughput.

The eCommerce integration lets customers personalize their bikes by choosing paint colors, frame designs and gas tank sizes. Dealers connect online to the Harley-Davidson manufacturing process and customers place their customized orders immediately at purchase.

Harley-Davidson has experienced incredible improvements since moving to a smart factory. The company reduced its operating costs by $200 million at one plant alone and saw an efficiency in its production line.

The single biggest change is the speed of order fulfillment. Harley-Davidson moved from a fixed 21-day production schedule for new orders down to only six hours. Customers, employees and investors have noticed the positive impact of building a smart factory. The changes are reflected in the stock price for Harley-Davidson, which has made significant gains since adopting the smart factory model in 2009.

Make Way for Industry 4.0

The number of companies that have adopted Smart Factory technology is growing but manufacturers are still hesitant. Some claim they have invested too much in existing machinery that will still work for many years. They have also raised fears of security breaches and are pushing for more standardization. Many industry initiatives are underway to build stronger cohesion.

For manufacturers who are dragging their feet, they are only delaying the inevitable. Smart factories are coming and will be prevalent in the future. A Mckinsey Report reveals that companies expect Industry 4.0 to increase revenues by 23% and productivity by 26% and many are preparing for changes to their business model. For those who don’t believe in the force of smart factories and work to achieve connectedness, they will be left behind as new, smarter, more agile competitors enter the marketplace.