Platform thinking in manufacturing. A fresh alternative to Manufacturing Excellence

Transcription

1 Platform thinking in manufacturing A fresh alternative to Manufacturing Excellence

2 PLATFORM THINKING IN MANUFACTURING 1 Introduction Digitalization is presenting new opportunities for the manufacturing industry to achieve Manufacturing Excellence through the use of data. Unfortunately the lack of analytics capacity and capabilities within traditional organizational models is making it difficult for organizations to capitalize on these opportunities. The result is exponentiallyincreasing untapped data lakes, that are there for the taking. In this article we explore the application of 'platform thinking' in response to what we see as both an opportunity and a challenge. SITUATION The primary challenges for operational departments in the manufacturing industry appear to have remained unchanged in recent decades: Increasing the availability and reliability of equipment; Reducing manufacturing costs; Improving safety, performance and the environmental footprint. The developments in digitalization in recent years have resulted in a dazzling offering of interconnected smart devices and solutions that should be enabling organizations to measure, learn and optimize more than ever before. When it comes to digitalization, however, the manufacturing industry is notoriously slow to respond to developments, and ranks lowest in terms of maturity In a recent survey 45% of organizations in the sector rated themselves as digital beginners compared to other sectors according to MIT and CapGemini (1). Naturally, the tech industry is the frontrunner when it comes to digital transformation of their businesses and the products/services they deliver to the industry and consumers. A typical manufacturing organization may be slow in digitization of the process, but are already collecting vast amounts of real time process data. This data is usually only internally used for: Specific process optimization projects; Investigation of problem root causes; Generating reporting information. Developing analytical applications on the data is usually not perceived as core business. Lack of internal capability and time leads to the use of relatively simple methods in focused improvement and root causes initiatives (e.g. Lean Six Sigma events and spreadsheet analysis). The majority of the process data collected remains unused, leaving many improvement opportunities unseen. Source: (1) The Digital Advantage: How digital leaders outperform their peers in every industry.

3 CHALLENGE Balance focus on core business and digitization PLATFORM THINKING IN MANUFACTURING 2 VOICE OF THE BUSINESS VOICE OF THE INDUSTRY Deliver to promise SAFETY RISK P&L MARKET SIZE COST Integral Margin COMPLIANCE NEW CLIENTS PROFIT Shareholder value GROWTH WORKING CAPITAL? ROBOTICS DRONES ANALYTICS SMART DEVICES 3D PRINTING CLOUD ARTIFICIAL INTELLIGENCE UBERIZATION IoT CYBER SECURITY XPL MACHINE LEARNING Decentralized decisionmaking AUGMENTED REALITY BIG DATA The market offers many smart solutions to gain deeper insights in your process. So what is preventing manufacturing organizations to further digitalize? As we have seen one side of the problem is the internal capability and capacity to develop or select advanced solutions which are customized to your process and business. According to Walter Nijsen, World Wide Reliability Leader of Refineries & Packaging at Cargill: Digitalization should be done together with third parties: Cargill can become a digitalized organization, but not by ourselves. Another side of the problem is the fit of the solutions with the core business objectives. According to Walter: In digitalization one must be able to distinguish clearly what is truly critical for the business The offering of solutions is broad and ever increasing of which the majority is simply ignored by manufacturing leaders. Walter sketches the following example: Our suppliers are developing devices that would allow us to get real time information on the condition of motors; implementing these devices on all motors would lead to an investment of $150,000 per site. Currently we have expert mechanics measuring and assessing the condition in the field 4 times per year for not more than $40,000 delivering the same equipment uptime. The payback for these new solutions is not there yet. The key challenge appears to be finding the appropriate business model that allows the optimal use of digitization solutions whilst staying focused on the core business activities.

4 EXTERNAL PARTNERS PLATFORM THINKING IN MANUFACTURING 3 FRESH ALTERNATIVE A platform approach to achieving Manufacturing Excellence We have identified a potential response to the digitalization challenge which, as we have shown, is essentially an analytics capacity and capability problem. We believe that the solution lies in using the platform model, where manufacturing organizations The participating partners will now be enabled to provide the manufacturing organizations with insights, which are based on their specific performance. Rather than just offering a potential provide (parts of) their process related data to external partners. These partners are then allowed to develop customized analytics and monitoring tools on this platform. solution to a participating organization, the partners can now provide a sensible business case in addition. Company A Company B Company C Company D Process and equipment lay out Real time process data Maintenance history Data from other databases SOLUTIONS, BUSINESS CASES, ETC. Organizations share real time and historical process-related data Secure platform acts as a repository for all of this data Supplier X Supplier Y Expert Z Suppliers develop applications and tools to analyze (parts of the) available data This approach allows Manufacturing Excellence departments to focus on selection of relevant business cases and implementation of the improvements suggested by the external partners. External partners now can be more specific in their offering of solutions and by that increase their likelihood of increasing both sales as well as the customer satisfaction.

5 PLATFORM THINKING IN MANUFACTURING 4 Walter Nijsen adds to the platform idea: The value add that I see for my business is the opportunity to have our data benchmarked against different peers in the market. Such insights are very hard for us to get otherwise. The value created by an external platform is far larger than any in-house database can create In fact these insights can be built as applications on top of the platform in cases where participating companies allow their data to be used for these purposes. The real strength of working together on an external platform is that it is relatively easy to add other types partners you work with in order to reinforce the ecosystem as a whole. For example, risk management departments of insurers could be given access in order to use aggregated data from different companies to better tailor their offerings. Once the initial interaction (sharing process data with suppliers) has drawn a sufficient number of partners to the platform, it will become relatively easy to develop many new value-adding services based on the interactions with those partners. LinkedIn is an example of an organization that used this strategy in the past. After it had attracted a large number of users who built their business profiles by adding vast amounts of data, LinkedIn started to offer recruitment and headhunting services using that data. The value that LinkedIn was able to create as an external platform is far larger than any individual recruiting agency could create based on its own in-house database. This is equally true for a Manufacturing Excellence ecosystem. In the long term, we would expect that using the platform approach will mean that manufacturers and their suppliers can increasingly go from selling products to delivering integrated solutions. An example of this approach can already be seen in healthcare, where Philips uses its HealthSuite platform to add services and insights to the hospital equipment it sells, transforming a product into an integrated solution.

6 HOW WOULD THIS WORK The Manufacturing Excellence platform PLATFORM THINKING IN MANUFACTURING 5 When first embarking on the construction of a platform, it makes sense to follow an organic strategy to keep the extent of data sharing under control and to avoid high upfront investments: 1. The first step is to find a suitable trusted third party that will manage the data on a secure, external digital platform. Examples of emerging platforms are Predix from GE and Sinalytics from Siemens. While generally still in their infancy, their development is expected to be rapid; 2. Once the platform provider is selected, the first interactions need to be established on the platform with one or more external partners. It is often helpful to map the current ecosystem of the manufacturing organization. The selection criteria for suitable first interactions could include whether: A good partnership is already established with the external expert; The data to be shared is not highly sensitive; The potential for valuable improvements is high; The interaction is easily scalable to other external partners or peers. The selected partners can then view, monitor and analyze the combined data from the equipment and processes directly on the platform (based on what your organization allows them to see). They can then leverage their expertise on the relevant equipment or process to make sense of the data; EXAMPLE OF A MANUFACTURING ECOSYSTEM Legend: Existing interactions Valuable new interactions

7 PLATFORM THINKING IN MANUFACTURING 6 3. Based on the shared data, insights can provided by the partners on the platform on equipment / process performance issues, risks and improvement opportunities. The partners can then also offer or suggest products and services that are supported by business cases tailored to your specific business and processes; 4. A proper decision-making process needs to be put in place to respond to data-driven proposals to repair, maintain or improve your processes; 5. Partners can monitor the equipment / process improvements they have put in place. Also they can provide the maintenance and operations teams with timely feedback on how to efficiently maintain and run the (upgraded) processes. The Manufacturing Excellence department, on the other hand, needs to select projects and monitor the end-to-end value added by the partners on the platform. AN EXAMPLE OF DATA SHARING IN HEALTH SCIENCE Philips has developed its HealthSuite platform to include partnerships with third parties, which enables them to improve the primary processes of a care provider. An example is the recent partnership of Philips with the care provider Cordaan. The goal of this partnership is to combine the new smart technology with personal care which enables Cordaan to act preventively and efficiently to provide the care the patient needs. A patient can decide to use the HealthSuite platform to share data with Cordaan. By doing so a better picture of the patient s condition is provided and in turn will allow for more informed decision making. Predictive analytics can help to make sense of data whilst optimizing the delivery of care. For patients with dementia this means, for example, that a personal blueprint can be created from the sensors and smart algorithms. Small changes in the behavior of a patient can indicate risks upon which the healthcare provider can act. Because more information is available, it has a direct influence on the core function of Cordaan. Source:

8 FIVE STEPS to getting started with a platform PLATFORM THINKING IN MANUFACTURING 7 STEP 1 INFRASTRUCTURE STEP 2 DATA STEP 3 INFORMATION STEP 4 DECISION STEP 5 MONITORING Establish a secure environment for data sharing Establish data sharing interactions with selected supplier Data-driven proposals and business cases provided by supplier Evaluate proposals, decide actions to be taken, implement Monitor first improvements implemented Once your basic platform is functioning, it can then be scaled up efficiently by: Extending the platform reach: Starting from one pilot site, expand to connect all sites on the platform; Starting from a small group of selected partners, expand to include all your partners; Since it is an external platform, it can also be used by other companies. This allows maintenance providers to compare / benchmark data on the same equipment from different customers; Extending the platform functionality: As well as the data and analytics functions of the platform, participants can develop additional functionalities analysis applications to provide additional insights using the existing data. An example of such an application is the industrial Predix platform from General Electric. POTENTIAL SCOPE FOR PLATFORM EXPANSION Number of peer organizations on platform Expand reach of platform Number of sites reflected in data shared Failure monitoring Equipment efficiency & effectiveness Predictive analytics Overall process performance Combine multiple other data sources within the organization Number of suppliers on platform Expand functionality of platform

9 MAIN BARRIERS and how to overcome them PLATFORM THINKING IN MANUFACTURING 8 While the advantages of a Manufacturing Excellence platform may appear evident, a number of critical barriers must be overcome before the benefits can be reaped: BARRIERS Security of shared data Shift in organization structure and mindset of Manufacturing- Excellence-related departments Suppliers may focus too much on the benefits to themselves instead of what is best for the organization (risk of suboptimal solutions) External comparability of the data shared Various data structures are difficult to compare due to differences in underlying topologies/hierarchies HOW TO OVERCOME IT? Select a third party with a proven track record in managing platforms and securing data Set up internal policies to determine what information may be shared with whom Establish strict contracts with external partners Establish internal controls to monitor if the data is used appropriately Start small e.g. sharing all pump-related data with a few trusted suppliers Define selection criteria for the evaluation of offers from suppliers, and related internal review structure Communicate clearly with suppliers about the type of offers/business cases that have a chance of being selected Set up (contractual) incentive structure for solutions with high end-to-end benefit Select peers on the platform with similar processes/systems and maturity to increase likelihood of having comparable data Establish industry-wide standards to enable (partial) convergence of data across companies in the same domain. Examples from healthcare (HL7 standard) and construction (BIM data standard PAS1192) show this is feasible. However, it will require policy-makers to drive such standards In the short term, establish and provide conversion definitions to (partially) compare the data from different sources In the long term, consider establishing an organization-wide common definition of how business data in the databases should be structured to allow for proper comparison The widespread adoption of cloud technology was initially hampered by similar barriers, notably in the area of security concerns. As cloud security standards were enhanced and companies got access to fact-based insights into the actual risks, many companies began to adopt and are now using a cloud-unless approach to their IT sourcing.

10 PLATFORM THINKING IN MANUFACTURING 9 SHOULD I GET STARTED? The decision about whether and when to start building your platform depends on several factors. An effective platform requires the participation of a critical mass of organizations of sufficient size and scale. In addition, your organization should have the capability and mindset to work in close collaboration with a variety of partners: Founding partners: Peers (similar maturity) that use similar equipment/suppliers, plus your most innovative trusted suppliers and external partners; Tech partners: Look at your current data historian providers, and include them on your platform. Ensure that the technology architecture is focused on using open technology standards to avoid lock-in; Independent third party: Confidentiality, security and trust are key elements for any platform, and particularly B2B platforms. Neutral third parties should be involved as custodians to ensure the integrity of the platform. We have found that platform approaches outperform silo approaches in virtually every sector where they are applied. With the increasing focus of the manufacturing industry on strong strategic partnerships with suppliers and networked communities, we believe that it is very likely that such platforms will become widespread in the short to medium terms? Industry 4.0 is just around the corner, what will you do?

11 Authors Ricardo Tulkens Partner, Strategy, Customer & Operations KPMG Tel: +31 (0) Sander Klous Partner, MCI Big Data KPMG Tel: +31 (0) Jochem Pasman Senior Manager, CIO Advisory KPMG Tel: +31 (0) Mikel Boute Manager, Strategy, Customer & Operations KPMG Tel: +31 (0) KPMG Advisory N.V., registered with the trade register in the Netherlands under number , a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The name KPMG and logo are registered trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.