The potential of the Internet of Things in the Manufacturing industry suggests that as machines and processes begin to govern themselves, every step of a product’s journey will be interconnected. No longer is manufacturing confined to the traditional production process of raw materials to the finished good. Every step from the research and development, production, route to market, consumption, and disposal of a product can and will produce data and insight in real time. Can this allow manufacturing to become an industry of innovation and profit? How are organizations envisioning making the most of this possibility, and in what all ways do they have planned?
Contributors
Download Podcast
Apple Podcast, Google Podcast, Spotify, Pandora, iHeartRadio, SoundCloud, TuneIn, and Stitcher. Find other syndication channels here or search CIO Talk Network podcast on any other app.
Summary
The Manufacturing industry has a world of untapped opportunity in the form of variability, performance, management, sustainability and safety, and all of this potential can soon be enabled through the Internet of Things. Manufacturing has long aimed to optimize their existing models, but they’ve never fully been able to achieve the real standardization and connectivity in their operations as they desire. IoT will help manufacturers more cheaply pursue a standardized approach that will automatically allow enterprises to execute and communicate in their plant networks around the globe. The goal is all about money and profit as attained through speed and inventory. So much information travels through the value chain that being able to connect systems easily and cheaply will mean manufacturers can be more profitable and more agile on the whole. But things are breaking down due to vendor and organizational differences. Not all parts of the value chain are equally motivated to take part in fully connecting because they lack a platform that will allow these IoT powered solutions to be knitted together, and the complexity of implementing it, especially for small, independent companies within the value chain, is too great to justify an ROI. One solution is an open architecture.
“The notion of open architecture is a way to build this platform so that there is full access, and then have access to technologies at the level that you need them at the time that you need them, and with the sophistication relative to the problem that you are trying to deal with.” The landscape and the IT and infrastructure challenges have to be addressed across all players. But most of all, manufacturing value chain players need to go about this transformation together to avoid the pitfalls of readiness, funding, cyber security and an ever changing IT landscape. Join a coalition and avoid boiling the ocean with constantly new infrastructure demands, because one company alone will not solve this.
Transcript
Sanjog Aul: Welcome listeners this is Sanjog Aul your host and the topic for today’s conversation, is making the most of the manufacturing value chain. And now with me is Jim Davis Vice Provost of IT and Chief Academic Technology Officer with UCLA, and then we have Jim Wetzel Technical Director in the Platform Center of Excellence with General Mills. And both of them are members of the Smart Manufacturing Leadership Coalition. Now as part of our series on Connected Manufacturing, we’ve talked a lot already about The Internet of Things and what it has the potential to do with manufacturing. Today we’ve invited both of you to join over what the manufacturing value chain, everything from production to the finished good and disposal, might actually resemble. We’ll share how data and connected devices will shake up the industry and what possibilities it suggests for the future. So, the idea of interconnecting a manufacturing value chain and working towards demand, visibility and planning is something manufacturers have already optimized within their existing models. But how can The Internet of Things elevate that connectivity?
Jim Wetzel: When I look at that I would suggest that maybe the manufacturers haven’t already optimized and that The Internet of Things really will elevate our connectivity through the concept of getting things more standardized and simpler and easier to do. So as we try to be more connected throughout the value chain, in the old model it was very expensive to do this. It was complicated and took a lot of technical expertise to do. In the new model as you move forward it not only potentially has a lot of additional value, but if we can do that in a much cheaper more standardized approach it will automatically change the ability to actually execute this across different enterprises within our plant networks across the globe.
Sanjog Aul: So Jim Davis what do you think about this interconnecting manufacturing value chain?
Jim Davis: Within the SMLC we actually have a concept which we call Seams and this is basically these places where informational material flows have come to some kind of stopper, breaker or inconsistency, and as we’ve examined these more and more, we see a lot of untapped opportunity, and that’s actually one of the things that will bring out the value chain. But untapped opportunity takes the form of performance, it takes the form of variability, management, it takes the form of innovations, sustainability, environment, safety and chain of custody. So there is a whole variety of things and there is a lot room and a lot of untapped opportunity yet.
Sanjog Aul: Now having everything connected in one seamless value chain is the idealized state that manufacturers have been working towards for some time. But why is this the dream? What end goal do you think our manufacturers have in mind otherwise?
Jim Wetzel: Well this is very easy for us. It’s about speed and it’s about inventory. So you think about the value chain and the speed of information that’s needed to go from the farm to the fork or from the beginning of your idea to the commercialized product: that’s all about money and profit. So if we can have that connected chain, that value chain form beginning to end all connected there working on all cylinders, it’s about being more profitable. The second part of that is also being more nimble and so as your demand changes, being able to respond to that demand, being more agile, that’s the dream. We just haven’t necessarily connected our systems in such a way to allow us to achieve that dream.
Sanjog: Where is the value chain currently breaking? How are certain components within this value chain either not providing full insight into processes, slowing the processes or driving up costs, and what aspects can IoT handle and cover that?
Jim Davis: We use the term agile terms, agility and demand, dynamic performance over and over again, so this is really just some terminology related to what Jim was saying. The answer to the question though of what we call the untapped opportunity goes back to the Seams, and the Seams exist as a result of having to cross companies, the Seams exist as a result of vendors and vendor products, they exist as a result of organizational differences, they exist as a result of just the material or operations that are needed to move whatever is going forward from a manufacturing stand point. But as Jim was saying, we’ve done a number of studies across multiple companies, multiple industries, multiple value chains and the pattern shows up relatively stable. This demand for minimal inventory, it’s really working with the chain of custody making dynamic adjustments, it’s being able to forecast and control the premium, control premium cost like freight and having to move things around at last minute, locking down on the commitments and remedying defects in much better ways. But the Seams are what’s blocking these kinds of things from happening.
“This demand for minimal inventory, it’s really working with the chain of custody making dynamic adjustments, it’s being able to forecast and control the premium, control premium cost like freight and having to move things around at last minute, locking down on the commitments and remedying defects in much better ways.”
Sanjog: Do you think there are any solutions which you can say are predictable in this regard or this is still going to be a utopia that put in IoT and everything will be good?
Jim Wetzel: No I don’t think IoT alone will solve this, it’s an enabler but it won’t solve this, where on the smart manufacturing side we think the key to this success is actually having a platform that actually allows these solutions to be knitted together, so we talk about Seams. The other thing we need to talk about is the platform to enable this future state. So I’ll give you a quick example, if you have a company that they’re best in class on optimizing inventory and they have statistical methods to do that, they might be really good at that application but that application needs to be knitted into your ecosystem of manufacturing or your entire value chain. So how does that one solution provider knit together the rest of your value chain? They can’t; they’re good at what they do. So what we’re trying to really go after in smart manufacturing is instead create a platform that allows these applications to play in so that you can continue to have your Internet of Things, you can continue to have your application specialties for people that really have specific knowledge on particular areas. But the challenge is to make it successful in a manufacturing value chain is to knit all these things together and figure out how they can communicate and collaborate together.
“I don’t think IoT alone will solve this…We think the key to this success is actually having a platform that actually allows these solutions to be knitted together…the challenge is to make it successful in a manufacturing value chain is to knit all these things together and figure out how they can communicate and collaborate together.”
Jim Davis: The idea of the platform really also does depend on return on investment, and one of the things that we’re seeing when one looks at this from a value chain perspective is that the return on investment when you look at it as an independent company is actually much, much more difficult to justify because it’s comprehensive; it requires multiple players at the same time. We’re seeing that the Information Technology that needs to be deployed before you can even add any values to the value chain is actually very expensive, so the platform goes toward cutting that infrastructure cost. Within the US much of the manufacturing base is older, and there is a significant install base on IT and that what’s already there. It actually is quite sizable. We estimated it around $60 billion. So we are in a retrofit situation. And then one other thing I think Jim was eluding to is the platform drives down risks. There is risk with trying to develop these models, build up the skills sets and so forth. The platform actually drives this risk down so that it’s manageable for small, medium and large companies.
“We’re seeing that the Information Technology that needs to be deployed before you can even add any values to the value chain is actually very expensive, so the platform goes toward cutting that infrastructure cost.”
Sanjog Aul: Do you think there is equal motivation for all parties who would then say okay we’re going to collaborate and invest and jointly or mutually benefit from this transformation? Do you think there are any obvious stumbling blocks which we’ll have to get over before this dream would become a reality?
Jim Wetzel: Well a few key words there are “equally” and “motivated”. I think across the value chain people are motivated. I’m not so sure it’s equal. It’s not equal in their ability to invest, it’s not equal in the ability to get involved from an education or technology stand point, and so when we’ve taken a look at this, there is such a large variety in scale from a small player to a large player, their capability to adapt to and stay current with technology. So really to drive this smart value chain, this concept of Internet of Things and truly make it happen, we’ve got to address the landscape across all players. And so how do you get that small guy that may or may not be sophisticated with an Excel spreadsheet or a fax machine or the large person that has electronic data exchange and has fully networked everything and all of their systems are just looking for a standard to connect to? And how do you make that ecosystem work? That is really the challenge, and so as you think about these point solutions or these small areas, they’re really kind of crying out for a way to connect and collaborate and invest towards the whole thing being connected, and I think that’s fundamentally what our challenge is.
“I think across the value chain people are motivated. I’m not so sure it’s equal. It’s not equal in their ability to invest, it’s not equal in the ability to get involved from an education or technology stand point.”
Sanjog: How should manufacturing value chain players go about funding this endeavor incrementally? Where do you think they should start putting their dollars, time and effort?
Jim Davis: The SMLC has examined that question pretty in-depth and with the basis that Jim just talked about. But one of the things that we’ve come around to is the idea of open architecture. And for this kind of technology to be accessible to the small and medium companies or companies that really have not had the opportunity or the chance to invest in these kinds of technologies and then cover the full gamut for those companies that have invested heavily. The notion of open architecture is a way to build this platform so that there is full access and then have access to technologies at the level that you need them at the time that you need them, and with the sophistication relative to the problem that you are trying to deal with.
“The notion of open architecture is a way to build this platform so that there is full access and then have access to technologies at the level that you need them at the time that you need them, and with the sophistication relative to the problem that you are trying to deal with.”
So we do believe that open architecture is a way to proceed and allow for these dollars to be invested in the right place at the right time relative to where companies are. Another aspect of open architecture to us is not only access but it’s also the exposure of data through applications and various tools and how they are best used and so forth. We believe that providing access at an appropriate level to that kind of data, which is not the IP or not the proprietary kind of data relative to the company, will also help the industry in a significant way and will make those dollars that the companies need to invest to take this on go much, much further.
Jim Wetzel: In terms of how should manufacturing value chain players go on funding this endeavor, I would say, don’t do it alone. This problem is too big for any one company to solve. That’s why we’d suggest getting involved in a coalition. We’d also suggest getting involved in our coalition, the Smart Manufacturing Leadership Coalition. But you can’t do this alone. The problems are too big. We need to be able to connect a broad spectrum of solutions to actually achieve this vision. So funding it incrementally or doing it 100 percent on your own will not be successful.
“Don’t do it alone. This problem is too big for any one company to solve.”
Sanjog: One of the challenges of having everything connected is that there are many moving parts and it’s tough to identify an architecture stable enough to keep it all networked together. So is an IoT manufacturing solution equipped for something like this?
Jim Wetzel: Well, you just hit on one of the hardest issues that we’ve got here at General Mills and we probably also have across the industry. Getting that architecture appropriate for networking this together for this IoT solution to actually work is the million dollar challenge. That’s what we are trying to solve with our smart manufacturing platform. But it absolutely is the problem of the day. It is moving all the time. Things do keep advancing. Technology keeps changing. And so how do you do that? I think you heard from Jim Davis earlier in the session that we think that the answer is around open systems. And how we have that open architecture connected. But this is really the fundamentally big challenge for us.
Sanjog: When we talk about architecture, would you think that there is light at the end of the tunnel, or will this become a boil-the-ocean problem which never sees day light?
Jim Davis: I think the problem as you say has the potential to be one of boiling the ocean and not getting anywhere. But I also think it’s possible to contain it or confine it. So there is a light at the end of the tunnel. One of the ways we believe a good way to do this is to always turn to the practitioners and build against the actual problem set where the practitioner needs are and what the manufacturing needs are. If we stay within that space, then I think one can build towards solutions that have near term benefits and then set up for the longer term benefits as well.
Sanjog: What about looking at all of this from an operational stand point? Does operational performance within a connected manufacturing value chain vary depending on the degree of supply and demand integration, and if yes, to what extent?
Jim Wetzel: Yes, it really does. What I talked about before is that you think about your manufacturing value chain and all your cost tends to be your inventory, whether it’s raw materials or work in process or in finished product inventory. And so the varying degrees of the demand signals and the supply signals that you have really are going to drive a lot of it. So when I look at the topic, it’s really about the cycle time. What is the cycle time of your process from supply and demand? Is it in days? Is it in minutes? And it depends on what business you are in. For us it’s in days. And how tightly integrated that supply and demand signal are truly will drive your performance of your value chain.
Sanjog: What are some of the pitfalls that would hinder the value chain players who are participating from reaching the ideal state? And I’m assuming ideal stage for them as a group, as well as individually?
Jim Davis: I think there are several. One is in our discussions we do use the term Internet of Things, but we also recognize that it’s about the network layer and the integrated devise layer. But it doesn’t really get at the context or the objectives. And so one of the things that we considered to be a pitfall as well as an opportunity is kind of what I was saying before. You want to go after this from a business objective, a real metric, something that you really want to accomplish. So that’s one big thing we would recommend.
“You want to go after this from a business objective, a real metric, something that you really want to accomplish.”
The second one is one that Jim mentioned earlier. There is a matter of readiness. So you don’t want to go into too sophisticated level of a technology when you are not ready for it. And in fact we find over and over again some relatively simple kinds of technologies actually produce really significant benefit. There is a matter of risk so staying simple works in favor of risk. And then another area which is very big and perhaps is the cyber security/cyber attack space because we are talking about web based technologies. But all this do need to be taken into consideration and can become pitfalls.
Jim Wetzel: The only other item I would add would be data accuracy. So you think about reaching this idea of state where we are fully connected. Do we actually believe the information that’s been transferred over the pipe and that we are acting on because in this perfect world in its future state we are going to act on information in the speed that we get it; what if it’s wrong? I’m now going to respond to a signal off of a sensor that’s connected through IoT. It’s connected into my manufacturing value chain that’s telling the wrong information. So, how do we balance the technology with the people in the process? We need to solve that.
“How do we balance the technology with the people in the process? We need to solve that.”
Sanjog: This is a very interesting thing that you mentioned because basically whenever you have a new disruption or when you introduce something that is in this case a digitally powered enterprise, do you think it is actually going to in some cases introduce some cases introduce some new challenges?
Jim Wetzel: Yeah, it absolutely will. We are going to have to behave differently because the things we didn’t know before we are now going to know. So it’s going to solve old problems and it’s going to create some new problems, whether it’s data accuracy, whether it be a focus on business analytics that we’ve never had before, whether it be insight into our process, whether it be value stream mapping and actually trying to streamline some of our processes that we weren’t able to streamline before. Having a connected digital enterprise gives us the opportunity to go after some of those things. It is actually quite exciting, but at the same time introduces new challenges.
“We are going to have to behave differently because the things we didn’t know before we are now going to know. So it’s going to solve old problems and it’s going to create new problems.”
Sanjog: Do you have a preference as to which member of the value chain should take the lead during this evolution?
Jim Davis: The one thing I would say though is that we are finding that collaboration is actually a working word here. I know collaboration is used a lot. But in this particular case a real collaboration is essential. And we are talking about the collaboration of among practitioners, vendors, suppliers, platform providers and universities. If those don’t come together in a good way, this doesn’t work very well. If they come together in a good way, it can work extremely well.
Sanjog: So, Jim Davis said something interesting where there is no protagonist leading the charge and everybody is a collaborator. So, Jim Wetzel, do you think that could create an issue with accountability?
Jim Wetzel: Yeah, it certainly does. I would suggest that the folks taking the lead on this are, in our case we’d use the word supply chain, but I would say they are manufacturing value chain leaders. I would not have my IT people or my engineering staff be leading this effort. They are clearly the people that can do it, they are clearly the people that can architect it, but I think the people that need to lead it are the people that need to use it. That would be our supply chain and value chain leaders and to get them to champion the cause is what really needs to happen. So I think about people, process and technology, and just having the technologist sit there and say we are going to craft a better world isn’t what’s going to drive it. It’s going to be the value chain leaders who want to truly transform manufacturing.
“Just having the technologist sit there and say we are going to craft a better world isn’t what’s going to drive it. It’s going to be the value chain leaders who want to truly transform manufacturing.”
Jim Davis: I just want to clarify, we use the term industry driven, and when things finally have to reach a decision, we always say it’s got to be the practitioners or industry driven. I was previously just trying to emphasize not trying to defend but emphasize for this to work though you need to have this collaboration relationship for this to come together and be responsive to this industry driven decision making.
Sanjog: So both of you in a way mentioned that people who own the assets are the ones who should lead this or should be having better control on the profit pool. If that’s the case then what type of education needs to be imparted or be embraced by this folks who own the assets so that they are not totally depending on folks who are going to be putting the technology there?
Jim Wetzel: Well I would say the biggest issue is they don’t know it’s possible. So as you have leaders who are trying to be thought leaders and trying to shift the paradigm and really trying to have a value chain that’s performing completely different than what we have today, but how do they know what’s possible? They can clearly lead stuff, but they don’t know what’s possible. So I think the education side is to kind of give them a glimpse of what technology can do, what people can do and let them envision what the future can look like. If all they see is what’s been done in the past, it’s very hard to envision a different future. So I think in education and a learning session is to really show them what’s possible.
Sanjog: What would you think would be the best strategy for ways people or businesses should be taking on the people from the domain expertise as well as the technology leadership to make this a success? How should they hire people and how should they build an organizational structure?
Jim Davis: We’ve done a number of studies across companies, and we’d ask the question, “are you aware of smart manufacturing, and if you’re aware, what have you done about it?” By and large, we see that a large percentage is not aware of smart manufacturing and it comes out to be in the 85 percent range, so that goes to the awareness leadership point that Jim Wetzel was making. For the 15 percent of those that are aware, what we hear is either they’ve taken the technology on, and of those that have done something the benefits reported have been significant, in fact tremendous. The others that have not, it’s always been, “my company doesn’t see the vision” or some leader in the company has seen the vision but thinks that it costs too much. So I do believe that the starting point for this is just exactly what Jim Wetzel said, is that there does need to be a vision painted and the leadership needs to buy into this, and then the other pieces can begin to fall together. Jim and I can talk at length about the other areas of how do you bring the IT skills together with the operational skills and so forth. But if you’re not starting with that leadership piece, it does not get off the ground.
“There does need to be a vision painted and the leadership needs to buy into this, and then the other pieces can begin to fall together.”
Jim Wetzel: My final thoughts really are around as we try to envision a different place for manufacturing and a value chain that’s fully connected. It’s an aspirational vision. It’s hopefully not a boil-the-ocean strategy, but with the technology as it moves so fast in such a short, short time, as we’ve got Internet of Things now, as we’ve got a lot of technologies that we can only hope for are now commercially available, this actually is possible to happen, and so I guess I would leave your audience, with a thought that we can do this. It’s not just aspirational; the time is now but it’s going to take us all of us working together to make a manufacturing value chain that we all envision to be highly successful.
