Point of view How to succeed with Industrial IoT in Manufacturing

Transcription

1 How to succeed with Industrial IoT in Manufacturing Six key factors to consider 1

2 Introduction IoT (Internet of Things) connects physical machines and equipment in the factory to the digital world of Cloud, Data Analytics and Artificial Intelligence. It enables you to collect more data, analyse the information quickly and make better business decisions. Forward thinking manufacturers already know they need to bring their Information Technology closer to their Operational Technology that controls their machines and equipment. Traditionally, these technologies were managed by separate departments in relative isolation. Leaders, like food and beverage giant Lion, have merged the teams to create a single integrated technology function to leverage synergies. The next step is to harness the capability of technology to optimise the business and drive innovation. Industry 4.0 (originally an initiative of the German Government) is setting the standard for creating the Smart Factory and Supply Chain of the future using Industrial IoT, Analytics, Cloud Computing and Cyber-physical systems. Industry 4.0 also considers business model innovation and new revenue streams through leveraging the deluge of IoT data. This is often called servitisation of the industry. The importance of Industry 4.0 and the Industrial Internet of Things (IIoT) is well understood, but how do you start implementing these concepts and maximise your chances of successfully creating value? Critical success factors This whitepaper describes six critical success factors organisations need to consider in order to leverage IIoT technologies successfully in their digital transformation initiatives. Business value End to end Security Capability uplift IIoT critical success factors Operating model changes Strategic alignment Business process focus 2

3 1 Business Value Early discussions around IIoT were focused on the (cool) technology and what it could do. This is not surprising, as the most vocal IIoT supporters were hardware and software vendors. Only in the last months have conversations started to include business benefits from investments in IIoT technologies. The benefits IIoT can create depends on the industry and the specific organisation, but can be clustered into six broad categories: IoT is not only about improving what you are already doing. Most value lies in exploring new opportunities and revenue potentials. The business value from IoT needs to be assessed to justify the necessary investment. We use value-driven methods and validation techniques to reduce risks and to assess what actually is required from solution perspective. Veronika Brandt, Head of IoT Business Consulting Bosch SI Business model innovation Business model innovation focuses on creating new products and services to generate additional revenue streams. Machines with IIoT sensors can create Big Data, but analytics can help extract actionable information and transform Big Data into Smart Data. Smart Data can support decision making or be used to trigger action automatically, and this value can be monetised. One of the most popular use cases is predictive maintenance of factory assets. If the organisation servicing the assets is able to predict equipment failure, this creates additional value for the asset operator and can be offered as an additional paid service. Customer experience Customer experience is not a new concept, but IIoT can help make products and services more attractive. This could, for example, mean that parts are faster to find in a warehouse using tags and an indoor navigation system to lead the warehouse staff directly to the required location. A Smart Product can determine when it needs servicing and inform its owner, preventing breakdowns, for example, of a truck transporting critical spare parts in the middle of nowhere. The data generated by Smart Products can also be used to improve the service experience in the after-sales market, by learning about customer usage and preferences that can trigger product improvements. Operational excellence In the manufacturing process, IIoT technologies can not only be used to achieve higher process efficiencies, but also improve product quality. Closely monitoring the manufacturing process, as well as the product itself as it travels through the factory, is enabled by sensors and actuators, allowing the real-time control of the production system. While control systems have monitored factories for decades, it is now possible to make those systems more intelligent by feeding IIoT and business data into smart algorithms. In supply chain operations, sensors and IIoT devices can track and trace products on their way from the factory to the customer, anywhere in the world. Environmental stewardship While lower cost and higher revenue were, in the past, the only measurement of success for a manufacturer, organisations are now being measured on Corporate Social Responsibility. This means the environmental impact of the production process and the products in use are areas of value creation. Examples of value include energy savings, resulting in a lower carbon footprint, as well as the monitoring of air, soil and water quality. IIoT can help by monitoring the environment, triggering alerts and even shut down operations if required. 3

4 Worker health and safety In manufacturing facilities, health and safety risks for workers are commonplace. Managing the risks effectively avoids the human tragedy and financial loss associated with accidents. IIoT sensors can be used to monitor the immediate environment around a worker, but also measure a person s vitals, such as heart-rate, fatigue or stress. Knowing where an employee is located, together with health data, defined operational limits and data analytics can help detect risks and issues in the work environment. Compliance improvements Compliance is often achieved by regular inspections of assets and workplaces. In many cases manual inspections can be replaced by IIoT technologies. For fixed assets in a manufacturing plant, this can be achieved through sensors, but also through autonomous vehicles with sensors, cameras, microphones and other technology needed to perform inspections. In larger facilities, drones can inspect the outside areas. The inspectors, responsible for the compliance of the factory, can use IIoT systems to increase the inspection frequency and therefore detect compliance issues early on. IoT is not an IT phenomenon; it s a disruptive force that will run through every major industry, including manufacturing and logistics. The only way to plan for that disruption is to test out the technology now and see what strategic changes it engenders - not just in technology, but in business models, customer engagement and business operations. Richard Soley, Executive Director of the Industrial Internet Consortium The Internet of Things will transform business processes into IoT-enabled business processes, where things and humans collaborate. We will witness an increased autonomy of smart things that will be able to navigate their own ways through our factories, distribution centres and supply chains, analysing context-sensitive multiple data points to drive highly individualised business processes. Michael Rosemann Executive Director Corporate Engagement, QUT 2 3 Strategic alignment Some organisations have set up digital innovation labs without clear strategic direction or technology roadmaps, hence producing Proof of Concepts (PoCs) that don t have value for the business and/or are not supported by their technology functions. For IIoT to have a positive impact on the organisation, it needs to be aligned with overall business and technology strategy. The business strategy provides guidance on goals and objectives, while the technology strategy identifies constraints around technology choices. The best way to ensure strategic alignment is to create an IoT strategy that on one side considers existing strategies, but also drives changes to those strategies. For example, if IIoT provides a new way to ensure health and safety of factory worker, the HR strategy should consider this. Strategic alignment is key, but not a one-way street. Business process focus With the rise of the IIoT platforms, the discussion around IIoT is dominated by data analytics, Machine Learning and Artificial Intelligence (AI). Although business processes are not a sexy topic, they are still core of any organisation and define how the business operating model is structured. An emerging focus in the manufacturing industry is the integration of IIoT solutions into business processes. McKinsey recently published a report that calls out the missing integration of IoT solutions into existing business work flows, as the top IoT capability gap. 1 IIoT software vendors may say that their products integrate with business systems, but simply passing data to a business system is not the same as creating an end-to-end business process. Organisations will have an increased number of smart things in their factory, increased levels of automation and more complex supply-chains. The expectation is to make everything work together effectively in a way that is dramatically better than today

5 The impact of IoT is economy and society wide. It crosses business, industry domain, community and technology boundaries. Our ability to collaborate across these domains and create eco-systems, will determine our capacity to meet the future needs and be successful with digital transformations. Frank Zeichner, CEO, IoT Alliance Australia Technology innovation requires an organization to build up new skills. If a new technology, like IoT, has impact on business models and operations, the need for a capability up-lift is not limited to the technology function, but extends to the business as well. Therefore, a skill up-lift of the organization is a key factor for successfully introducing IoT. Alan MacCormack, Adjunct Professor, Harvard Business School Traditional IT concepts such as identity, authentication, authorization, trusted communication, and software/ firmware updates must be adapted to the particular challenges within the manufacturing vertical in order to succeed. Trustworthiness extends the security concept to safety, reliability, privacy and resilience. Sven Schrecker, Chief Architect IoT Security Solutions at Intel Operating model changes Many IoT industry participants talk about IT/OT convergence, meaning that the management of business systems and factory automation technologies will converge. IT/OT convergence does not only mean a convergence of technologies, but also that you can optimise collaboration between your office floor and your factory floor. In many cases, this will lead to changes in the business operating model and will require new capabilities in your organisation to manage. Another aspect is the creation of value networks, which are purpose-built partner eco-systems with the customer in the middle. The ETH Zurich and Bosch SI developed the concept of an IoT Business Model Builder that describes how the idea of business model innovation as part of Industry 4.0 can be implemented. The concept of value networks leads to an Extended Enterprise and is necessary because end-to-end IIoT solutions are even more complex than separate IT and OT solutions were in the past, and requires a very close collaboration between the value network stakeholders. Capability uplift With changes to the technology landscape and operating model, employees need to learn new skills as their roles will change. It is important that people understand IIoT and Industry 4.0 concepts from both a business and technology perspective, establishing a common language in order to minimise the risk for misunderstanding. For the next level of detailed understanding of IIoT, focused capability uplift programs need to be developed. In these programs, active participation of the partner eco-system (value network) should be considered. A common learning experience can improve and drive the day-to-day collaboration. Consider some roles in a manufacturing company, and what skill gaps IIoT can create that can be closed through learning. A COO can get new insights into the operation of the business, but they need to understand what the new data is and how to incorporate it into their decision making. The CTO will be flooded with new technologies and needs to select the ones relevant for the business. They need to learn about functionalities provided by IIoT gateways, Low Power WAN, sensor boards and IoT platforms. A maintenance technician needs to understand why predictive maintenance is important, and how IIoT and data analytics enable them to be more pro-active with maintenance inspection activities. End-to-end security Hacking of self-driving cars gets a lot of media attention and illustrates the security concerns around IIoT. Smart Factories are also at risk, and although technology product vendors are quick to provide security patches, it shows that in the automation space, security is often not built into the design of a production system. One of the reasons is certainly that those solutions were closed systems for decades and hence safe from intruders. Previously, manipulating machines in a factory required physical access to the facility, but by linking assets to the Internet and deploying IIoT capabilities, facilities are now exposed to new virtual security risks. New approaches for cyber-physical systems are being developed that include authentication and encryption capabilities built into hardware, real-time analytics of network traffic and using IIoT gateways as protective shields for factory equipment, similar to what firewalls achieve in IT networks. With the convergence of IT and OT, security-by-design is becoming a key decision criterion for technology choices. 2 iot-lab.ch/wp-content/uploads/2015/10/whitepaper_iot-business-model- Builder.pdf 5

6 Industry 4.0 is a journey how can DXC help? Industrial IoT is not single solution that is implemented by one big project. It is a journey along a maturity curve and needs to be strategically planned, considering the critical success factors described previously. DXC can help organisations along the journey with our deep industry insights and technology expertise. We leverage capabilities and experiences from around the globe to customise our solutions to the needs of our clients. The following outlines some of our relevant service offerings around Industrial IoT and Industry 4.0, from defining Industry 4.0 vision and strategies, building IoT Proof of Value (PoV) products, through to defining a digital transformation roadmap for your manufacturing operations. I4.0 Vision Workshop I4.0 Strategy IIoT Architecture I4.0 Proof Of Value (POV) IIoT Platform Design & Implementation I4.0 Operating Model I4.0 Factory Transformation Roadmap IIoT-enabled Enterprise Asset Management IIoT Analytics IoT 101 Workshops I4.0 Security Assessment Edge Networks & Computing About the Author Learn more at manufacturing Peter Klement is Chief Technologist for Manufacturing within DXC Digital Transformation Consulting, with a focus on Industry 4.0 and Industrial IoT. His mission is to help organisations to strategically transform their business with the help of digital technologies like IoT, Data Analytics and Cloud. Peter looks at new technologies from a business benefit perspective and how it can enable operating model optimisation and business model innovation. pklement@dxc.com About DXC Technology DXC Technology (DXC: NYSE) is the world s leading independent, end-to-end IT services company, serving nearly 6,000 private and public-sector clients from a diverse array of industries across 70 countries. The company s technology independence, global talent and extensive partner network deliver transformative digital offerings and solutions that help clients harness the power of innovation to thrive on change. DXC Technology is recognized among the best corporate citizens globally. For more information, visit DXC Technology Company. All rights reserved. MD_8134a-18. May 2018