At the turn of the 21st century, the world seemed to be dividing along technological lines. On the one side were bits: the fast, flexible elements of digital information, flashing at the speed of light across rapidly expanding communication networks and enabling thrilling new virtual worlds of communication, commerce and entertainment.
On the other side were atoms, the traditional building blocks of the old economies. Atoms were slow and difficult to handle, it required effort to shape them into useful products and machines, but the techniques required to do that work were mature and well understood. The main challenge, it seemed, was finding cheaper, easier ways to do that work.
Of course, the separation between the digital and physical economies was always a false one. The digital world is firmly rooted in the physical. Even the smartest smartphones and supercomputers rely on mining equipment to pull their constituent materials from the ground, machines to shape their components and ships, trucks and aircraft to reach customers.
And the companies that build those machines have used digital data for as long as it has been available: equipping their production lines with robots and automated machinery, designing and analyzing products using smart computer systems and scheduling production with sophisticated planning systems.
Today, however, the maturity and uptake of digital technologies in manufacturing is accelerating dramatically, precipitating a change significant enough to earn its own title: the fourth industrial revolution, or Industry 4.0.
It’s a revolution built not on one idea, but many. Consultancy McKinsey & Company highlights four major disruptions: a significant rise in data volumes, computational power and connectivity; the emergence of sophisticated data analytics capabilities; new forms of human-machine interaction and improvements in the way digital instructions are transferred to the physical world.
Internet of things
The connectivity part of Industry 4.0 has its own buzz-phrase: The internet of things, or IoT. The term refers to the ability of once “dumb” devices, from light bulbs to machine tools, to communicate across digital networks, transmitting information on their own state, and reacting to instructions from computers and other connected devices.
For manufacturers, IoT technologies offer a host of potential benefits: monitoring the health of machines on the factory floor, tracking the location of products as they move through the supply chain, or delivering new insights into the reliability and performance of products once they are in customers’ hands. Consultancy A.T. Kearney forecasts that by 2020 IoT devices will outnumber “traditional” connected devices by two to one, helping to improve global productivity by almost two trillion dollars.
Business customers want the same level of speed and flexibility as consumer supply chains.
Data alone isn’t enough to deliver better products or more reliable, efficient processes. Companies also need the ability to transform that data into useful information. That’s where analytics come into play. A range of new techniques has evolved to take advantage of the ability of powerful computer systems to rapidly crunch huge quantities of data.
In manufacturing applications, from mining to semiconductors, companies are using advanced statistical methods and machine-learning algorithms to reveal hidden relationships between inputs, such as process temperatures, pressures and raw material composition, and outputs, like quality and yield. They are using these insights to fine-tune their processes, squeezing extra performance out of their operations.
Data analysis capabilities are also helping manufacturers extend their offerings through “servitization” – businesses built on the ongoing support of products once they are in customers’ hands. Caterpillar, the world’s largest maker of mining and construction equipment, has established a dedicated analytics and innovation unit, and invested in several technology startups. A key goal of its efforts is the development of predictive analytics that will help its customers squeeze more value out of their equipment, for example by detecting wear and damage in components, allowing machines to work for longer between maintenance overhauls while reducing the occurrence of breakdowns in the field.
Digital information is already making its way to the factory floor, on touchscreen machine control interfaces and tablet computers. The latest systems can fine-tune the information presented to staff based on its context. Diagnostic systems for maintenance technicians can provide step-by-step instructions for testing a faulty machine, for instance, and automatically recommend additional tests or mitigating actions based on the results.
U.S. aircraft maker Boeing has piloted the use of augmented reality glasses and voice commands to guide workers assembling complex wiring harnesses. The project, developed with software company Upskill (formerly APX Labs), cut harness assembly time by 25 percent while reducing the errors. The company is now exploring opportunities to roll out similar technologies in other production areas.
Advanced digital technologies are also changing the way companies think about machines. In part, that’s because machines are becoming more capable, allowing them to take on more work that once required human input. In the mining sector, Rio Tinto has introduced a fleet of 69 driverless trucks at three iron ore mines in Pilbara, Western Australia. The vehicles move millions of tons of ore every year, working 24 hours a day under the supervision of a team of controllers working more than 1,000 kilometers away in Perth. The company is also using driverless trains and automated drilling machines.
Fully automated “lights-out” factories are still rare, but they are becoming an ambition for a growing number of manufacturers. In Japan, robot maker FANUC already uses its own robots to build versions of themselves without direct human assistance. Camera maker Canon is investing more than $100 million to fully automate its own Japanese factories by 2018, a move designed to cut production costs by up to 20 percent.
Machines are becoming more flexible, too, as companies such as Siemens seek to build a “digital factory” that can reconfigure itself rapidly to meet changes in customer demand. Robots and computer-controlled machine tools can be programmed to make different parts every cycle, for example, reducing batch sizes and easing the introduction of new product variants or improvements.
One of the most radical ways that the digital and physical worlds are merging is 3D printing – or additive layer manufacturing – a process that allows complex shapes to be produced by fusing materials, including liquid polymers and powdered metals, into precise shapes. Once reserved for prototype parts due to its high costs and relatively slow speed, the technology has advanced to the point where it is increasingly being used in serial production.
CFM LEAP aircraft engines, produced by a collaboration between GE and Snecma, will each use 19 3D-printed fuel nozzles. GE says the technology offers a host of advantages, including a 25-percent weight reduction, a reduction in components per nozzle from 18 to one, and improved durability in service thanks to an intricate arrangement of cooling channels and reinforcements enabled by the manufacturing technique. By 2020, GE Aviation says it will have manufactured more than 100,000 parts using 3D printing techniques.
Elsewhere in the aerospace sector Airbus is also adopting additive layer manufacturing techniques in a number of areas, such as producing engine pylon components for the A320neo developmental aircraft.
Together, the widespread adoption of these trends is expected to deliver a significant boost to the manufacturing sector. BCG, a consultancy, expects Industry 4.0 to increase manufacturing sector revenues in Germany by €30 billion ($32 billion) a year, for example, equivalent to 1 percent of the country’s GDP. The same analysis suggests that manufacturing productivity, excluding the cost of raw materials, could rise by 15 to 25 percent. Industry 4.0 is also a huge opportunity for the engineering companies that make the components, software and machines these new approaches require. BCG suggests that German industry will need to invest around €250 billion ($270 billion) over the next ten years to reap the promised benefits.
The potential of these new opportunities is so great that many of the world’s biggest engineering companies have made digital and Industry 4.0 a central part of their business strategies. Engineering giant GE, for example, now describes itself as a “digital industrial company.” The company has appointed a Chief Digital Officer in each of its businesses, while its IoT and analytics arm GE Digital achieved $5 billion in revenues in 2015, and is targeting $15 billion by 2020.
Similarly, alongside its traditional focus on electrification, Siemens has made automation and “digitalization” the central pillars of its strategy for the next five years. The German company is partnering with 3D-printing specialist Stratasys, for example, to develop software and hard tools that allow additive manufacturing to be more easily integrated into larger production systems.
The impact of digital technologies will inevitably touch companies’ logistics processes, too. 3D printing and other flexible manufacturing techniques encourage companies to move towards the on-demand manufacture of products and components, and those objects need to reach their end customers as quickly as possible.
That has implications for network footprints, encouraging companies to move certain production applications closer to their customers, perhaps turning inventory-holding locations into production sites. It is also driving up demand for fast delivery services.
“Business-to-business customers increasingly want the same level of speed and flexibility they have become used to in consumer supply chains,” says Reg Kenney, President, DHL Engineering and Manufacturing. “That’s driving up the use of air freight and express services in engineering supply chains.”
Significant challenges remain, however. The very nature of digital disruption makes it hard for engineering and manufacturing companies to decide where to invest time, energy and money. To reap the full benefits of Industry 4.0 requires seamless data connections right across the manufacturing supply chain, but the digital revolution is happening so fast, efforts are being focused on small, isolated areas.
“When we talk to our engineering and manufacturing customers, many of them say they are still grappling with the implications of big data and digitization,” says Kenney. “Many companies are only making use of a small fraction of the data they hold now, and there are issues of data quality, and of finding enough people with the analytical skills needed to make these systems work.”
There are more pragmatic problems, too, such as deciding how ownership and access to data is shared across the supply chain. Should data on the performance of a production machine belong to the company that runs it, for example, or the OEM that built and maintains it? Making better use of data that spans complex supply chains is an area of particular interest for DHL, says Kenney, and the company is launching an Analytics Lab, based in Singapore, to explore opportunities to help customers make better decisions based on complex data analytics. — Jonathan Ward
Published: February 2017
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