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Mass customization in manufacturing – enabling customer-centric value creation

Traditionally, manufacturing has been defined by supply chains geared towards maintaining production costs as low as possible, with ultimate emphasis placed on output and distribution. These supply chains have largely been both enabled and limited by the hardware systems at their core. As companies are beginning to introduce data-driven, software enabled supply chains, manufacturing will increase in efficiency and mass customization will follow suit. In terms of distribution, platforms and apps are becoming the preferred medium and should be grabbing the attention of material handling industry as well.

Frank Piller, Professor of Management and Scholar of Mass Customization & Open Innovation, shares his thoughts on the intersection of the Industrial Internet and mass customization.

“Manufacturing will really begin to drive business models,” says Piller, who has been leading the Technology and Innovation Management Group at RWTH Aachen University for a decade. Rather than regarding the Industrial Internet solely as an enabler of new business models, Piller sees the technological developments made possible by IIN and IIoT as “drivers of business models.” According to Piller, mass customization plays a pivotal role making this paradigm shift that manufacturing industries are already experiencing, more customer-centric.

“I see the question of manufacturing and the Industrial Internet being defined by two stems of debate; enabling operational excellence on a larger scale on one hand, and using Industrial Internet technologies to drive new business models on the other.” What mass customization makes possible via these two defining principals, is for manufacturing, supply chains and the business model inherent to them, to become more customer oriented. “The ultimate goal of mass customization is for manufacturers not only to become customer-centric, but more so customer-driven, to exploit the heterogeneity of customer demand,” says Piller.

According to Piller, manufacturers will often see the high variety of demand as a challenge, a cost driver and ultimately as a hindrance to maintaining a truly customer-centric manufacturing process. However, what mass customization does, notes Piller, is turns this assumption on its head.

“We should instead see high variety of demand as a profit driver, and do so by allowing for the input of each individual customer at the beginning of the value and supply chains. This doesn’t entail reinventing engineering to order process or craft customization, but doing this with an industrial efficiency that the latest Industrial Internet technologies make possible.”

For material handling, the integration of automated and semi-automated robots into production lines is a big driver for coping with higher degrees of variety, says Piller, who also sees mass customization as something already being utilized in material handling equipment. “A lot of material handling equipment is already engineered to order, meaning it’s highly modular and therefore can fit into existing plant layouts, as well as be integrated into planning and production. Deploying this in larger volumes is the next step.”

“A lot of material handling equipment is already engineered to order, meaning it’s highly modular and therefore can fit into existing plant layouts, as well as be integrated into planning and production. Deploying this in larger volumes is the next step.”

From prediction to action

Closely linked to the paradigm shift taking place in manufacturing are the opportunities that predictive analytics opens up. Piller sees these opportunities as something material handling companies should be taking advantage of and implementing in their systems. “As the basic premise of predictive analytics is that we must guess less, and know more, an implication for a material handling company could be making better forecasts of the incoming flow of material.”

A consumer goods company will traditionally do some market research or extrapolations of the first few weeks of sales, in order to see how sales will develop for the rest of the season. “Now they can get access to much more unstructured data from social media conversations or purchasing behavior in key stores, and thus better predict the operational planning necessary to meet the demand,” says Piller.

However, as with most new data related developments, predictive maintenance and analytics don’t come without potential pitfalls. Piller appropriately sums up the paradox surrounding predive analytics and maintenance, by stating, “the better we are with predictions, the worse we become in executing.

“Imagine a huge plant that has many material handling systems across the globe, and let’s say they are all assessed using predictive maintenance. The plant manager will then know ‘ok, in a weeks’ time, 20 out of my 1000 pieces of equipment will breakdown, and I only have 2 repair teams. How do I allocate them?’ Therefore, action as opposed to prediction is the ultimate goal.”

First an app, then a platform

Another significant development that will only increase the capacity of the Industrial Internet to create new customer-driven business models, is the emergence of the platform economy. However, according to Piller, traditional industries should not be looking to immediately develop a platform as the likes of Amazon and Uber have. For instance, the transportation and material handling industries would benefit by starting off with an app.

“Of course, managers think that ‘we will become a platform,’ but this requires a big mental shift in companies, a shift towards openness. However, I think that traditional industries should first acknowledge the possibilities an app introduces to their business. In a connected world, an app can be a piece of equipment and shouldn’t be limited to the notion of a smart-phone app,” Piller notes.

Becoming a platform-based industry certainly doesn’t happen overnight. What Uber or Amazon managed to do on a consumer level, would be extremely difficult to successfully execute in the industrial world, simply because of the level of openness it requires. For Piller, more companies need to recognize the benefits of an app.

“Established B2B companies are very conservative when it comes to putting their data in a platform, so even if a platform is created by an established player, filling it with meaningful data is a question on its own. Therefore, in terms of market entry, being an app on a platform has a lot of advantages. My advice would be to learn how to become the preferred app, like the Angry Birds of material handling.”

Experimenting for future solutions

Piller is confident that companies experimenting even with more left-field utilizations of the Industrial Internet will ultimately drive innovation, and do so in a customer oriented way.

“Take the Amazon Dash Button, a solution which costs the consumer $4.99. At that price point, even a small established company can start experimenting by asking, for example, ‘what could we do, if we managed to increase the connectivity between equipment that allows you to monitor actions and actives?’”

The issue some managers and CIOs face is making sense of the “huge pile of possible things to do, and sometimes they end up doing nothing,” says Piller. “Therefore, I think it’s always better to start experimenting and testing assumptions in order to get real feedback, instead of making huge PowerPoints.”

Professor Frank Piller will share his thoughts in depth at the 2nd annual Internet of Manufacturing, scheduled to take place in Munich from February 7 to 8, 2017.

Internet of Manufacturing is a strategic conference that gathers together stakeholders from a variety of industries and who play an active role in developing the Industrial Internet.

Among the conference’s keynote speakers who will share their experiences in realizing and capitalizing on IoT are Ernst Stöckl-Pukall, Head of Division – Digitization, Industrie 4.0, German Federal Ministry of Economic Affairs and Energy, Thomas Hahn, Chief Software Expert at the Research and Technology Center of Siemens, Juha Pankakoski, CDO at Konecranes and many more.

To find out more about the agenda and speakers of Internet of Manufacturing, visit http://www.internetofbusiness.net/manufacturing/speakers/

Frank T. Piller works as Professor of Technology & Innovation Management at the Business School of RWTH Aachen University, Germany

Image credit: chombosan / Shutterstock.com

Interview w/ Frank Piller

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Making the shift from smart factories to living services

The Industrial Internet of Things (IIoT) is transforming the way manufacturers approach matters such as resource allocation, production processes and the workforce. In time, companies will gain even more benefits from the highly automated, end-to-end production integration of intelligent products and services made possible by the IIoT. Edy Liongosari, chief research scientist and managing director at Accenture Labs, talks about critical trends and uncovers advantages that have yet to be widely discussed.  

Operational safety and efficiency are two of the most clear-cut advantages the IIoT brings from the outset. Edy Liongosari believes those are the obvious ones because the return on investment of such initiatives is much simpler to calculate and measure. “When we talk about new products and services, however, the business cases are typically built with a lot of assumptions. Therefore, the confidence on those business cases is lower. But that’s exactly where the big opportunities are.”

Liongosari says that safety and efficiency are just part of the first of four waves of IIoT adoption. The next wave – which he believes has greater transformational impact – consists of the creation of smart products and smart services. “It’s vital to consider how you are going to be able to use the physical products that you have and to think about the product as a way – as a channel if you will – to sell and deliver what we call living services,” he shares.

Living services are contextually aware digital services designed to anticipate and respond to customer needs in real-time through the channel that you have. Liongosari mentions one example that emerged from the IOT Solutions World Congress in 2016: Bigbelly is a connected trash bin that knows exactly when to compact waste and when to unload it. He also cites Claas, the German agricultural machinery manufacturer that has partnered with the free field mapping service 365FarmNet. Together the two use their respective fields of expertise to bring about precision farming, in turn driving the future of agriculture.

A universal standard

In a manufacturing setting, thanks to the convergence of Operational Technology and Information Technology, manufacturing equipment is increasingly connected with larger enterprise systems – from manufacturing execution systems, production management, logistics and enterprise resource planning systems – to allow manufacturers to plan, monitor and adjust their production in real-time.

Liongosari, however, is of the opinion that a universal standard to allow equipment from multiple vendors to communicate and collaborate will not become the norm, at least not in the short term. “It’s primarily because of the diversity of the use cases, environmental conditions, and laws and regulations that fall under the IIoT. For example, the diversity of IIoT infrastructure requirements such as energy consumption, computing and bandwidth availability, mobility and security makes it very hard to have just one sole industry standard,” he explains. However, there are plenty of efforts to make specific IIoT standards to interoperate – to the extent it can be reasonably done – through a variety of testbeds.

“You can see the borders between various industries slowly disappearing because a lot of newcomers are coming to your game very, very quickly. The possibility is really big.”

Critical trends

According to Liongosari, there are four key trends impacting the IIoT. The first deals with automation and artificial intelligence (AI). Our ability to automate or augment work processes using machine intelligence can now be done at the unprecedented scale and precision through the use of AI techniques.

In an automotive manufacturing plant, for example, cameras can be used to learn and detect refined defects in a product. Rather than wait for a batch run to be completed before defects are found, those can be detected in real-time. “Sometimes you don’t realize the presence of small defects until much later on, resulting in a significant loss of work,” he explains, adding that in many cases, existing surveillance cameras can be repurposed for defect prevention in quality assurance by embedding some intelligence in them. “This is what we call the next generation of automation.”

The second key trend is about human and machine interaction. “The industrial workforce itself is changing significantly,” he says. A human workforce is augmented with wearable computing capabilities to significantly increase their efficiency as well as agility, allowing them to take on new tasks at the speed like never before. In addition, collaborative robots – or cobots – that have been used for hospitality and concierge services, are now being expanded to perform simple and repetitive tasks on the factory floor, such as those in Amazon’s warehouses.

The third comprises platforms and ecosystems. “One critical element of smart products is their ability to sense, configure, and respond based on the needs of the customers,” states Liongosari. “It’s not just selling your products and services but the ability to turn the product itself into a platform – just like in Android or iOS – to allow others to build upon it and use it to build a set of rich and interconnected living services provided by a lush ecosystem of business partners.”

The last key trend is cybersecurity, which is rising in importance due to vulnerabilities to attacks, espionage and data breaches brought about by increased connectivity and data sharing. Liongosari brings up the denial of service attack by a Mirai-based botnet that affected IoT devices in September 2016 as a reminder of the importance of cybersecurity in this highly interconnected world.

“In addition to security, privacy and data ethics are increasingly critical especially given the vast amount of customers’ and employees’ data that companies now have access to. In some cases, the concept of data ownership in an organization is being seriously questioned as ownership implies that the organization can do whatever it wants with the data,” says Liongosari.

The use of such data is highly dependent on many factors beyond data privacy laws and regulations. For example, organizations need to factor in the original intention of data when it was provided or captured, ethical interpretation of the analyzed data, and how the results are being used and shared ethically. “How are you going to interpret data uniformly across different countries, laws, interpretations and usages? The meaning of data ownership may change or the term may completely disappear.”

Seizing the opportunity

In order for manufacturers to chart a path of growth through the IIoT, Liongosari offers sound advice. “You can start small in a sense that you can focus on operational efficiency – that there is a specific return on investment that you drive toward. But at the same time, you need to think big because the opportunity is a considerable one,” he says.

“You can see the borders between various industries slowly disappearing because a lot of newcomers are coming to your game very, very quickly. The possibility is really big.” To seize the opportunities of the Industrial Internet of Things, Liongosari sums it up with this mantra: “Start small, think big, and iterate fast.”

Edy Liongosari works as chief research scientist and managing director at Accenture Labs

Image credit: Zapp2Photo / Shutterstock.com

Interview w/ Edy Liongosari

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The most read articles of Industrial Internet Now in 2016

The past year has further matured the solutions in the field of the Industrial Internet, and also sparked a great deal of thought-provoking discussion and articles. Some of the most discussed topics this year include IT/OT convergence, change management in digitalization, and the future of manufacturing. Below are the five most read articles of Industrial Internet Now in 2016.

5. Semantic interoperability opens doors to the digitalized world

Dr. Richard Soley, the Executive Director of the Industrial Internet Consortium, expressed his skepticism towards a universal IoT standard, stating “I’ll be glad to be the first one to say that there will never be a single universal standard”. According to his view, instead of aiming for a universal standard, achieving interoperability is a much more important issue to tackle.

http://industrialinternetnow.com/semantic-interoperability-opens-doors-to-the-digitalized-world/

4. Building an insight-driven business

Having huge amounts of information is one thing, harnessing data to create new business models is another, stated Alun Jones, Data Scientist at Konecranes. In his article, Jones discussed about utilizing machine learning, understanding security issues and improving operational efficiency as steps in building an insight-driven business.

http://industrialinternetnow.com/building-an-insight-driven-business/

3. Managing change in the connected workplace

Alexander Reay, Chief Digital Officer at Sodash and President of the Nordic IT Association, explored the role an organization’s structure and culture play in maximizing IoT’s potential for businesses. He also focused on the leadership issues that need to be addressed during this transformation.

http://industrialinternetnow.com/managing-change-in-the-connected-workplace/

2. Five steps to digital innovation

First you need to map and prioritize the needs of your organization. Technology comes in second. But what came next? Marko Yli-Pietilä, the Business Development Director and Managing Consultant at Midagon, walked us through the five stages of successful digital innovation.

http://industrialinternetnow.com/five-steps-to-digital-innovation/

1. Future manufacturing moves from global to hyperlocal

Economies of scale are diminishing and the threshold for manufacturing products are getting lower. In the future, we might end up with small production facilities producing limited batches of products for highly specified markets. The most read article of Industrial Internet Now in 2016 shared the thoughts of Risto Linturi, Executive Catalyst and Chairman of the Board at Sovelto, who believes that the ways in which we manufacture will change drastically in the future.

http://industrialinternetnow.com/future-manufacturing-moves-from-global-to-hyperlocal/

Image credit: Eugenio Marongiu / Shutterstock.com

by Industrial Internet Now

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A wider view gives more accurate results

Taking a step back and analyzing processes from a larger perspective might take you to surprising places, such as a dinner table in a Chinese household, says Petri Asikainen, Director, Product Development at Konecranes. According to Asikainen, to get the most out of your production processes, having a wide view of the process in hand is crucial. By seeing the processes as a whole, monitoring them as widely as is possible and by adjusting the production facilities’ metrics accordingly, noticeable boosts can be gained in the total output.

Industrial monitoring is going through big changes. From the variety of ways in which equipment in an industrial setting can be monitored, to the new possibilities in remote monitoring and -operation, operators in facilities have gained new ways to operate efficiently. A great example of this can be found in the context of waste processing.

“We were asked to optimize the operating activities in a certain waste management facility. We noticed that once we installed a Remote Operating Station for the crane operators in the power plant’s main operating room, suddenly the old local operating room over the waste bunker wasn’t the number one choice for working anymore,” Asikainen says.

Having all the personnel operate the plant from one location allows for better communication between the operators in charge of different parts of the facility. It also offers noticeable savings for companies, as there’s no need to build additional local operating rooms just to be physically present for the operation of the cranes anymore.

Monitoring everything there is to be monitored

In many industrial operations, the crane is in the center of the production process. This unique position allows for the possibility to gain deep insight of the production process.

“The entire material flow in the facility might be dependent on the crane, and this gives us plenty of opportunities to create different types of insights for customer’s needs. One example, found in the context of the paper industry, is that we can better identify where reject appears. This is valuable information for the manufacturer, and if it can help to improve the material efficiency of the manufacturers process by half a percent – it might already cover the cost of the crane data gathering capability and analysis work with extremely short pay-back time,” Asikainen explains.

The cranes’ movement patterns can also be tracked in the production facilities, so that the biggest bottle necks can be found. This tracking also helps map the actual material flow. If a load is moved from one place to another several times back and forth, the whole process slows down.

“Existing manufacturing facilities continuously face the need to respond to the global race for lowering costs and improving efficiency. A thorough analysis of the material flow can help improve production. Through it, we can find out what kind of crane setup would suit the client’s process, a result which is based on the actual measured data. When one is considering rebuilding an existing facility, this kind of efficiency analysis is a good tool to define the profitable targets to invest in.”

As to why Asikainen ended up practically monitoring how a household dines, he uses it as an example of how processes can be optimized in various, wider ways.

“We discovered that the loaders used in the waste facilities in China were continuously moving heavier loads compared to their European counterparts. One reason for this was that the households use a large amount of oil in cooking. The residue ends up in the trash and then to the waste processing facilities. This has an effect on the raw material, making it finer and increasing its energy density,” Asikainen explains.

This has a direct effect on how the whole process is set up and the crane is optimized. When the operators have a better view on the type of waste coming in to the facility, the effect that the differences in waste have on the energy output can be taken into account better.

Benefits of monitoring

When asked about the benefits the increased monitoring brings for companies, Asikainen brings up the similarities between lift trucks and cars. Both have similar concerns, such as tire leaks. For both, leaks can be monitored and fixed faster through monitoring. Early reaction to low tire pressure decreases extensive wearing and improves safety.

The operability of cranes develops in similar trends as cars – functionalities which 15 years ago could have been sold only to extreme needs, are now common even in the most value-focused cranes.

“Snag prevention is an example of this. It automatically stops crane movement if a hook, a sling or a load accidentally gets caught on something. Having real-time information on both the environment in which the crane is operating as well as the loads that they are moving, has made it possible to halt the crane if something gets caught in the way”, Asikainen says.

Hook centering is also an effective technology to improve efficiency and safety. If you lift a load and the hook isn’t centered, the load starts to swing as it’s lifted off the ground. The hook centering positions the crane above the hook, eliminating a possible human error. The hook is where it is supposed to be before lifting the load.

Maintenance by demand

Another way in which the increased monitoring can be utilized by companies is by making maintenance more effective. When you have sensors measuring thousands of points of data, you can efficiently both prevent halts as well as optimize maintenances routes.

“With the increased amount of information, technicians can focus their attention to issues needing extra care. The crew can also receive info on which manuals, tools and parts they must have with them beforehand,” Asikainen says.

All in all, maximizing the improvement through monitoring is dependent on two things – both the gathered data and the insights. Through having both, companies can achieve a more holistic view of their process, one which is based more on the actualities of the operating environment, and not just on subjective, professional guesses. This makes the whole manufacturing process more reliable and transparent.

Petri Asikainen works as Director, Product Development at Konecranes.

Interview w/ Petri Asikainen

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2017 will be about data ownership and security

Whether it’s the sensors or it’s the platforms people are using, the Industrial Internet market has become much more mature overall in 2016. Good examples of monetization have emerged, demonstrating that organizations have begun leveraging capabilities and competencies and turning these opportunities into something that could positively affect their bottom line. Juha Pankakoski, Chief Digital Officer at Konecranes, assesses the key developments of the past twelve months and looks ahead to the themes and possible breakthroughs of 2017.

Companies that have been in this area for quite some time are now starting to leverage value from the data that has been collected. It’s one of the things we assumed to happen already a couple of years ago, but are only now seeing to realize. Once you have proper quality data to mine for information, you notice that there are several additional layers of value that you can start generating by aggregating information from multiple sources.

Connectivity and intelligent machines are somewhat breaking the boundaries of traditional industries. On a number of fronts where automation has already been set up, for example, the speed at which it is possible to gain insight from machines is increasing at a significant pace. Some of the very successful cases have come from industries where assets are quite remote and not that easily accessible, such as the vessels or oil rigs. New solutions now allow remote support teams to better understand what is happening in the field and help local teams using different augmented reality and virtual reality (VR) devices. This is definitely something that is proving to be exciting.

The industry that is really providing excellent opportunities for others is the automotive industry, with connected vehicles and automated driving becoming more and more commonplace. Companies with billions of dollars in revenue are developing all these capabilities and putting them in place, making them more cost efficient at the same time. These solutions are then deployed in many other areas and industries where automation or “sensing” is required.

Lessons from hackathons

From our perspective, all the hacks we have organized have taught us something. In the case of the recent Maritime Hack, we encountered practical challenges associated in combining open and closed data. We found out that it is still much more challenging today than perhaps expected to get all the parties inside the port to share data with each other, despite sharing the same customer and the same objective. There are practical restrictions – legislative, contractual, but also artificial – and still quite a number of concerns in the open data sphere. This isn’t entirely unexpected, but it’s still somewhat disappointing because it’s by combining those different data streams and different actors which is required to arrive at additional value. There’s still some way to go before net openness can be achieved.

Remember that hackathons aren’t hacks as such. They deliver varying results based on the input, expectations and preparation that companies have put into those sessions. Some companies we know have had very limited success and varying results from the event. You take a risk when going into an event like this that doesn’t have a definite, specific outcome in mind. When you go in to meet new companies and new people with new capabilities, you can either be pleasantly surprised or find out that a company’s capabilities may not be exactly what you are looking for at that point in time.

As for possible breakthroughs in 2017, one of the things we will see is VR or enhanced reality-devices being used in field service operatives’ day-to-day industrial work.

Themes of 2017

2016 was the year of analytics. Data ownership and security will be very appropriate themes for 2017. Security is an underlying topic that can’t be avoided. We are already seeing connected devices that are being used for unintended purposes, such as DDoS attacks. We are also seeing several other areas where connected cars have been manipulated from a distance. It’s an unfortunate fact that every new machine or item that is connected or “smart” in one way or another is subject to hackers coming in, breaching security restrictions, and using them for unintended purposes. In an industrial environment, such situations can be hazardous.

Preparedness for this is not a straightforward or easy thing to do as it requires that you have security built into your architecture from the very beginning. Companies should either redesign their solutions or build additional layers of security into their solutions, so if something does happen, the machines can be safely ramped down to avoid an adverse effect.

In terms of business opportunities, the big potential is in data and the sharing of data. Going back to the hack itself, it is expected that we’ll see more and more collaboration between parties in terms of sharing data and information across customers and customer premises. The sharing of data and of knowledge – be it between the machines themselves or between the databases that contains the information – will then be used to generate new business cases. Interoperability and communication between machines and processes is something that will greatly profile 2017.

Further progress

As for possible breakthroughs in 2017, one of the things we will see is VR or enhanced reality-devices being used in field service operatives’ day-to-day industrial work. These devices will allow the user to get support from the back office and from the applications that can deliver additional data, information or material related to the job in hand. In this area, we will see many interesting developments. There are many solutions in the pipeline, and I would be a bit disappointed if we didn’t see several viable applications that can truly be used in an industrial environment.

We may also see some interesting announcements from large software companies on how they plan to develop and combine their IoT offering with more traditional software packages or cloud services as bundles. Whether its software or machinery, I see companies building on what they already have in their portfolio to provide a platform to develop their capabilities to the next level.

Juha Pankakoski works as Chief Digital Officer at Konecranes

Image credit: yavuzunlu / Shutterstock.com

Juha Pankakoski
Juha Pankakoski works as CDO at Konecranes

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