Industry IoT Taking Digitalization Mainstream. Roger Hart, R&D Manager Siemens Industry, Inc.

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1 Industry IoT Taking Digitalization Mainstream Roger Hart, R&D Manager Siemens Industry, Inc.

2 It s Not Science Fiction Pop quiz: Who is this man? A B C D Luke Skywalker Clark Kent Tony Stark The new director of NASA

3 Lessons from Early Adopters

4 Digitalization changes everything

5 New Business Models From book store to e-book From record store to streaming From Yellow Pages to apps From taxi to ride sharing

6 It s Not Just For Start-ups Revenue Growth CAGR of 25% or more EBIT Growth CAGR of 25% or more Digital Natives Incumbents embracing digital Traditional Incumbents 36% 10% 5% 25% 11% 3% Digital natives are growing fast. But incumbents embracing digital are pulling away from the pack. Source: How digital reinventors are pulling away from the pack, McKinsey Quarterly, October 2017.

7 Make-or-break Time Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year Pierre Nanterme CEO Accenture

8 Five Key Benefits Speed Flexibility Quality Efficiency Security

9 Mainstream Progress Lags Digitalization Topic Rate of application Mobile and real-time performance management 14% Predictive maintenance 17% Digital factory logistics, supply chain, warehousing 10% Smart shop floor, prod. control, dig. factory design 10% Augmented reality for training 13% Autonomous robots and assistance systems 8% Source: Time to Accelerate in the Race Toward Industry 4.0, Boston Consulting Group, May 2016.

10 Strategy, Vision, Execution 1 A well-defined strategy and action plan exists for achieving our digital vision. Front Runners 3% 25% Followers Slow Movers 77% 2 The digital strategy and vision are well communicated to the whole organization. 3% 28% 76% 3 Our organizations digital vision is pragmatic and can easily be translated into concrete projects and initiatives. 3% 31% 70% Source: The Digital Culture Challenge, Cap Gemini study, July 2017.

11 Transforming the Mainstream But how do we leverage this changing digital landscape? 5) : UN Conference on Trade and Development: FDI inward flow ; 2015: UNCTAD Global Investment Trends Monitor No.22 6) Cisco: The Internet of Everything (2013)

12 The Digital Twin A proven strategy Virtual product Digital Twin Product Design, simulation, and verification of Mechanics and multi-physics Electronics Software

13 Product design Simulate the physical behavior Simcenter

14 The Most Holistic Digital Twin Digital Twin Product Digital Twin Production Virtual product Verification Specification Virtual production

15 Production engineering Simulate production through fast and efficient engineering and commissioning TIA Portal Digital Twin SIMATIC of SIMATIC S S7-1500

16 Production engineering Fast and efficient engineering and commissioning TIA Portal Digital Twin SIMATIC of SIMATIC S S7-1500

17 The Most Holistic Digital Twin Digital Twin Product Digital Twin Production Virtual product Verification Specification Virtual production Real production Automation

18 The Most Holistic Digital Twin Digital Twin Product Digital Twin Production Virtual product Verification Specification Virtual production Validation Commissioning Real production Automation Manufacturing Operations Management Totally Integrated Automation

19 Continuous improvement with the Digital Twin Product Digital Twin Digital Twin Production Digital Twin Performance Virtual product Verification Specification Virtual production Validation Commissioning Real production Automation Real product

20 Digital Twin MindSphere feed back insights to continuously optimize product and production Digital Twin of the product Digital Twin of the production Digital Twin of the performance

21 Callaway masters product complexity Speed Flexibility Efficiency Cycle times reduced from 2-3 years to months. Golf club performance simulated before building physical prototype. Within 2 years, 50% increase in market share and 40% in gross margin. Page 21

22 Maserati digitalizes core processes Speed Flexibility Efficiency Reduced development time by 30% from 30 months to 16 Individualized 3x more cars mass produced production 205 configuration options Page 22

23 Digitalizing Electric Motor Mfg. Production of electrical motors 60 machine tools ~ 1.5 million parts per year From small to large scale manufacturing ~ 600,000 servo motors and spindles

24 Digitalization / automation for competitive mfg. 6 Annual 4 Productivity Increase 2 Increasing efficiency Lean production and Lean administration Traditional productivity measures Digitalization Flexible Automation with robotics Target range

25 Digitalization - Measuring the Benefits Transparency through digitalization and generating benefit Availability Utilization Output in parts / time Today Goal Technical Interrupt Organizational standstill Failure free standstill Production

26 Digitalization as Productivity Lever FY16 FY15/16 FY16/17 FY17/18 FY18/19 FY20 KPI Lever CAD/CAM/CNC process chain Plant utilization 70% Efficiency in production planning and controlling Optimizing plant availability Integrated tool management Preventive service Plant utilization 90% 30% productivity Quality and process reliability 20% increase

27 Digitalization in Action

28 Digitalization changes everything

29 Contact Information Roger Hart Title Siemens Lebanon, Ohio USA