INDUSTRY 4.0 FROM EQUIPMENT TO SERVICE KEYWORDS FOR THE FUTURE OF CO-OPERATION BETWEEN AUTOMATION AND STEEL MANUFACTURING

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1 MARCO OMETTO EXECUTIVE VICE PRESIDENT DANIELI AUTOMATION FUTURE STEEL FORUM WARSAW JUNE 2017 INDUSTRY 4.0 KEYWORDS FOR THE FUTURE OF CO-OPERATION BETWEEN AUTOMATION AND STEEL MANUFACTURING DANIELI / SINCE 1914 PASSION TO INNOVATE AND PERFORM IN THE METALS INDUSTRY

2 INFORMATION & COMMUNICATIONS TECHNOLOGY NUMBERS 50billion INTERCONNECTIONS 73% INVESTING COMPANIES 18billion MACHINE TO MACHINE 80-90% TOP PRIORITY TO DIGITALIZATION 14.2trillion$ POTENTIAL ECONOMICAL GROWTH 1.3zettabyte IP GENERATED TRAFFIC Industry % MONITORING TO PREDICT 25% INTERNAL KNOW-HOW

3 ARE WE READY FOR THE NEW NORMAL? Steel Demand Short-Range Outlook Source: WorldSteel Association

4 ARE WE READY FOR THE NEW NORMAL? Mtpy Installed overcapacity +30% WW2 Oil crisis Berlin Wall Soviet Union China NEW NORMAL What can we do to contribute to decrease risks connected with this demand disruption?

5 DANIELI DIGITAL STORY I 2 M Today Extended MES 3Q digital pulpit Sampling by robotic solution Automatic scrap classification Energy monitoring & control Business intelligence platform Quality compliance prediction EAF process fingerprint Process simulator Equipment-embedded condition monitoring

6 DIGI&MET HEADQUARTER New building inauguration October 2017

7 SIMPLIFYING METALS COMPLEXITY

8 ICT OPPORTUNITIES ICT opportunities Why not also in the industrial environment?

9 TODAY S NEW PRACTICAL NEEDS Right first time (lot size 1) Order promising (profitable to promise) Process repeatability RAISING THE BAR. AGAIN. Schedule optimization Automatic product certification Material usage optimization Plant performance measurement

10 BUSINESS CASES FROM OTHER INDUSTRIES Keith Holliday is building smarter top drives for the oil industry Rory Smith is connecting 1000 elevators a day to the cloud

11 DIGITALIZATION & METALS INDUSTRY: KEY FINDINGS 49% Lack of digital culture and training Unclear economic benefit of digital investments Lack of a clear digital operations vision and support / leadership from top management Business partners are not able to collaborate around digital solutions High financial investment requirements 29% 28% 39% 49% Expected benefits from digitalization over the next five years Expected ROI on Industry 4.0 investment Insufficient talent 23% Lack of digital standards, norms and certification Unresolved questions around data security and data privacy in connection with the use of external data Slow expansion of basic infrastructure technologies Concerns around loss of control over your company s intellectual property 9% 22% 20% 20% Source: PwC, Industry 4.0: Building the Digital Enterprise Metals Key Findings, 2016

12 IS SMART THE RIGHT WAY FOR INDUSTRY? 10-40% reduction of maintenance costs Productivity increase by 3-5% 20-50% reduction in time to market 30-50% reduction of total machine downtime Forecasting accuracy increased to 85+% Costs for quality reduced by 10-20% 45-55% increase of productivity in technical professions through automation of knowledge work Costs for inventory holding decreased by 20-50% SOURCE: McKinsey

13 THE SMART PLANT CONCEPT > Easy process behavior understanding > Easy maintenance behavior understanding > Easy energy & utilities behavior understanding > Easy scenario analysis and understanding

14 THE ROAD TO DIGITALIZATION

15 DIGITAL MATURITY ASSESSMENT Assess Design & implement Supply-chain integration Smart logistics Extended MES Measure Basic digital index Full-chain product traceability Gain insights Asset traceability Improve Energy monitoring & optimization Reliabilitycentered maintenance DIGITAL-READY PLANT SMART PLANT

16 SMART APPROACH DATA DRIVEN MACHINE LEARNING RULES DESIGN ONLINE PCS Q3INTELLIGENCE REPORTING AND ANALYSIS SUPPORT OPERATOR EXPERIENCE PROCESS DATA RESULTS

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18 SMART APPROACH DATA DRIVEN MACHINE LEARNING RULES DESIGN ONLINE PCS Q3INTELLIGENCE REPORTING AND ANALYSIS SUPPORT OPERATOR EXPERIENCE PROCESS DATA RESULTS

19 WHY SERVICES? NEW PRODUCTS & SERVICES > Pay-per-use > Software-based services OPERATIONAL > Data monetization EFFICIENCY > Asset utilization > Operational cost reduction > Worker productivity OUTCOME ECONOMY > Pay-per-outcome > New connected ecosystems > Platform-enabled marketplace AUTONOMOUS, PULL ECONOMY > Continuous demand-sensing > End-to-end automation > Resource optimization & waste reduction Source: WEF report on the Industrial Internet of Things, 2015

20 SERVITIZATION Data-driven Services Platform Data Sources Existing/New Products Q s -Manufacturing Supply-Chain Process Optimization Q s -Maintenance Predictive Maintenance Centralized Repository Smart Sensors Q s -Process Technological Process Optimization Q s -Energy Energy & Utility Consumption Optimization Big Data IIoT Analytics... Plant #1 Plant #N PROACTIVE EF FFICIENCY

21 THE THOUGHT OF SIMPLIFICATION WAS REPLACED BY THE THOUGHT OF COMPLEXITY the future of the world.requires science to make a third great advance, an advance that must be even greater than the nineteenth century conquest of problems of simplicity or the twentieth century victory over problem of disorganized complexity. Science must, over the next 50 years, learn to deal with these problems of organized complexity. announced in 1948 W. Weaver, "Science and Complexity", American Scientist, 36: 536 (1948)

22 MARCO OMETTO EXECUTIVE VICE PRESIDENT DANIELI AUTOMATION FUTURE STEEL FORUM WARSAW JUNE 2017 INDUSTRY 4.0 KEYWORDS FOR THE FUTURE OF CO-OPERATION BETWEEN AUTOMATION AND STEEL MANUFACTURING DANIELI / SINCE 1914 PASSION TO INNOVATE AND PERFORM IN THE METALS INDUSTRY