For manufacturers at any point in their journey towards implementing a smart factory, the final session of the APPMA’s Digital Lunchtime Series with John Broadbent, director of Realise Potential, answered a lot of questions. The overarching message was clear. If we are to remain globally competitive, standing still is not an option, and the cost of not adopting Industry 4.0 will be very high.
the future factory.
Four years ago, John Broadbent founded Realise Potential specifically to target and educate manufacturing industry about Industry 4.0 and smart factories. His depth of experience in Industry 4.0 integration and implementation makes him one of the leading experts in Australia in this field, and thus eminently qualified to present on this important topic at the final session of the Australian Packaging and Processing Manufacturer’s Association (APPMA) Digital Lunchtime Series last Friday.
Broadbent set the context for the audience with a quick recap of the evolution of Industry 4.0, starting with Industry 1.0 in 1784 and the advent of steam power; Industry 2.0 marked by the advent of electricity in 1870, leading to mass production; and Industry 3.0 with the advent of automation, computers and electronics in the late 1960s. Industry 4.0 was a term coined in Germany in 2011, with the recognition that with the advent of cyber physical systems, the Internet of Things networks and cloud, we had embarked on the fourth industrial revolution.
So, with Industry 4.0 now ten years old, Broadbent set about shedding some light on where we’re at today. He cited work by the World Economic Forum in collaboration with McKinsey Consulting, which have formed a group known as the Global Lighthouse Network (GLN), comprised of 92 companies that have adopted Industry 4.0 in their operational environments, and have shared their results.
“What McKinsey's have found is that the gap between the 4IR frontrunners and the majority is widening rapidly,” Broadbent said, explaining that this was based on performance metrics from GLN companies broken down into growth, cost, and sustainability.
The interesting part, he said, is that no business has gone backwards, but the range of improvement that some of these businesses have experienced, such as having a 40% increase in factory output, 250% increase in productivity, a 97% decrease in Co2 emissions… is remarkable.
“The CEOs of these organisations have all expressed the positive impact of adopting industry 4.0 has made on their business,” he said. It’s notable that, as yet, there is not one Australian business in the GLN.
AUSTRALIAN CASE STUDY
One company that Broadbent feels should apply to join the GLN and would be a shining example of Industry 4.0 success, is the former Coca-Cola Amatil, now Coca-Cola EuroPacific Partners (CCEP), whose Packaging Services Division (PSD) transformed its manufacturing environment into a fully-fledged smart factory ten years ago.
Broadbent was involved in the project and he shared key insights.
The secret sauce of Industry 4.0 adoption is integration, according to Broadbent, who explained that a hub and spoke systems architecture is the way to implement the integration successfully.
The CCEP PSD division manufactures PET preforms for blowmoulding beverage bottles, as well as HDPE bottle closures. Previously, bottles and closures were supplied by external packaging manufacturers, and when the decision was taken to bring all the production in-house it was recognised that this would require full integration of a complex manufacturing landscape.The timeline was six months, and after a few false starts, and with three months to go, Broadbent’s team was brought in on the project.
The solution they were charged with designing had to communicate with ERP; support multiple ERP environments; communicate with all vendor packages (there are multiple international and local vendors); conform with CCEP IT standards; have a product development roadmap; and be reliable, scalable and extensible.
Broadbent ran through the detail of the integration, with the pivotal hub and spoke architecture enabling integration with a variety of data sources and connection with the company’s SAP systems.
He said what was unique in this integration was applying both vertical and horizontal connectivity to all the systems, so that the SAP MII became the hub, and was able to talk to all these systems, not only to share information with SAP, but share information between those systems along the internal manufacturing and supply chain.
“For us that was not only the 'aha' moment. But it was also the opportunity to provide an incredible amount of value to the business to have all those systems now sharing, if you like, a common pool of information.”
In summary, Brodbent said: “We had a holistic view so we could accommodate changed requirements, because it was designed to be adaptable and supported rapid deployment without compromising the overall design. We alleviated the need for ‘flat-file’ data movements, which created a fully deterministic and reliable system. And we created a system that collects detailed information, to ‘mine’ later.”
BUT WHAT WILL IT COST?
Broadbent said the most commonly asked question is 'what’s the cost?'. The real question should be 'what's the cost if I don't do it?'
“On this $60 million greenfield implementation, the smart factory integration was less than 2% of the overall capital cost,” he said, noting that this would be a typical cost for most integrations.
“This factory is effectively a smart factory in the sense that the whole factory floor can be run by five people, they're not fitters or electricians or instrumentation guys, they're actually highly trained plant floor technicians that can do pretty well everything that the business needs to do. They are highly paid technical people, but that means that the factory itself can run effectively without many people at all which keeps it, obviously, highly competitive.”
Broadbent went on to cite Deloitte research which shows that digital factory investments have led to an average increase of 10% in production output, 11% in capacity utilisation and 12% in labour productivity.” Doesn't matter how big your business is, [these figures] are not chump change.
“As I said before, we're a decade into Industry 4.0. and we know, based on the GLN results, and Deloitte research, that Industry 4.0 can provide some substantial returns on investment. All that's needed is the political will and the leadership and commitment at that level to make sure that the business is committed to its journey of digital transformation.
“It doesn't mean that you digitally transform the business all at once, but it does mean that you commit to doing the journey, and then you apply a strategy within your manufacturing area as to how you're going to do this so that you can leverage your manufacturing and also improve your bottom line profitability by improving the way that you do things and increasing the visibility and the velocity and the agility of your business to changing customer conditions.
“Be aware that there is a high cost of doing nothing,” he warned in closing. “I'm fully aware of organisations that are sitting on their hands thinking this is just a fad. In fact, I had a CEO of a food company tell me ‘I've never heard of [Industry 4.0], it sounds gimmicky. And this is 10 years after Industry 4.0 was first put forward by Germany.”
He closed by imploring the audience not to sit on their hands and do nothing, but rather to “have a look at what you can do in your business to start thinking about how you can become the supplier of preference by making sure that you've got your house in order and that you're implementing really good systems to become more efficient and more competitive”.
The chat room lit up with questions after his presentation, and Broadbent answered these with clarity and aplomb, drumming home his message that the leaders of Australia's manufacturing businesses need to step up and commit to digital transformation; that this is not an IT issue, it is both the domain of IT and OT in a business; and that most importantly, if we do not get on board the Industry 4.0 train soon, we will be left behind in the global marketplace.
