Dr. Reinhard Geissbauer leads the Industrial Product Team and Supply Chain Management Services at PwC Management Consulting. He has more than 18 years of industrial and consulting experience with multinational industrial equipment manufacturers, transportation companies, and automotive suppliers.
I recently gave a talk at a conference on Industry 4.0 in Amberg, Germany. About 240 people attended the event, which focused on the status quo and future of Industry 4.0 in German industrial companies.
In the many interesting discussions I had with conference participants, I was once again astonished by how big a topic Industry 4.0 has become in the last few years.
Every single company I spoke with – from global players to small and medium-sized businesses – is recognizing the signs of the times. They all know they cannot remain competitive in the long run without developing a sensible strategy for Industry 4.0.
So what is the current status of Industry 4.0 in German industrial companies? In our recent survey, 20 percent of respondents stated that their supply chains are already highly digitized. By 2020, around 80 percent of industrial companies will have digitized their supply chains.
This is simply one development we can expect over the next five years. Another might be an advance in data collection. For example, a printing machine manufacturer could offer highly digitized printing machines that can transfer basic data about their condition, which would enable services such as predictive maintenance and emergency repairs.
Maturity framework guiding the digital enterprise development process
For our survey, we identified four stages of Industry 4.0 maturity. The first stage is the digital novice, characterized by digitized and automated sub-processes as well as a product and service portfolio that includes initial digital applications. A digital novice is capable of measuring and analyzing isolated data in order to improve quality and efficiency as well as to reduce costs.
The vertical integrator has mastered the vertical digitization and integration of processes and data flows within the company. Its digital product and service portfolio uses software and data as key differentiators.
Stage 3 in our model is called the horizontal collaborator – an industrial company that has managed to integrate its processes and data flows with customers and external partners. The product and service portfolio of a horizontal collaborator comprises integrated customer solutions across supply chain boundaries.
What characterizes a digital champion? A digital champion has not only created a fully digitized and integrated partner ecosystem with virtualized processes, but also offers innovative services that add value. Digital champions are masters of analyzing data in order to create new services. For example, forklift manufacturers would be digital champions when they record movement data from their trucks in order to show customers where they can improve capacity utilization or efficiency.
Three relatively easy first steps
But where to begin? What does it take to become a digital champion? I believe every industrial company can start taking its first steps towards the digital enterprise – today!
- Step one is all about measuring. Businesses should install sensors in manufacturing and focus on collecting data from as many machines as possible. For example, sensors can measure the vibration of a machine during the manufacturing process. The vibration will sound slightly different if a workpiece is not 100 percent correct. This gives manufacturers a chance to either remove the piece or have it checked more thoroughly, thereby improving quality.
- Step two is all about labeling. Every single raw material, part, or product needs to be labeled. A QR code can be used to transfer the data collected by the sensors.
- Step three is all about analyzing the data. The results provide the first indications about how to improve quality, increase efficiency, or cut production costs.
Data is at the core of Industry 4.0
The use and analysis of data is at the core of Industry 4.0, as illustrated in this final example: A tool manufacturer uses ball bearings in a variety of applications under various conditions. Should the ball bearing turn out to be faulty, pinpointing the underlying reasons after the fact can be difficult. To improve product quality, the tool manufacturer has to ask the right questions; to formulate the right questions, the manufacturer needs data on the use and load of ball bearings. How can it obtain this data? The solution: Sensors are anchored in the ball bearings to provide real-time data on component type and load for product development. As a result, the manufacturer is able to produce a range of specialized ball bearings while establishing a reputation as a maker of durable and reliable products.
Do you know of any examples that illustrate how to become a digital champion? I look forward to hearing your success stories and opinions.