Meeting customer expectations for cost competitive products without compromising on features is a big challenge for manufacturers anywhere in the world. A more evolved manufacturing ecosystem leading to Internet of Things (IoT) or Industry 4.0 at various levels is the latest way to face this challenge. This is more applicable to the automotive sector which is the prime mover for many technological advances.
Industry 4.0 is a new phase in manufacturing which has several facets including automation and data exchanges, cyber-physical systems, and cloud computing. This evolved form of manufacturing creates `smart or digital factories’.
In smart factories, machinery, storage systems and production are capable of exchanging information and giving instructions to one another, without human intervention. This helps to carry out complex tasks with minimum supervision and errors.
The Roland Berger’s `Digital Factories – ‘The Renaissance of the US Automotive Industry’ lists the advantages of having digital or smart factories. They include reduction in manufacturing cost; improved logistics efficiency; better visibility and control over inventories; predictive quality control; less complexity in production; and cost effective maintenance.
Digital factories are expected to reduce manufacturing costs by 10-20 percent from the pre-digital levels mainly owing to the use of advanced robotics and machinery, the development of self-optimizing systems and the use of virtual plants and products. Increased staff flexibility as job functions adapt to new requirements is another advantage. These will result in increased operational equipment efficiency (OEE), reduced machine idle time,quicker production ramp-up, shorter changeover time and improved process control loops.
Logistics-integrated supply chain and highly automated intra-plant logistics are expected to improve efficiency of the digital factories through smart storage and demand-driven supply of goods. This will cut logistics costs of the manufacturers by 10-20%. The customers also will benefit from the digital factory. Manufacturers can customise more easily when the customers configure their car online. The luxury car makers offer customisation now, but it takes months to deliver the end-product.
The digital factory of the future will give manufacturers better visibility and control over their current inventory levels and future inventory needs along with access to the inventory levels of their vendors. About 30-50 percent reduction in inventory costs is estimated.
Smart factory technology will allow manufacturers to monitor and even predict where and when quality issues may occur. In addition to this predictive quality control, real-time quality testing (if needed, at every production step) will reduce manufacturing defects and other quality-related costs.
New technologies will bring down the cost associated with manufacturing complexity. Advances such as smart robots, smart products and modularized production are designed to handle complex production processes efficiently. In this way digital factories will be designed to troubleshoot production problems and other issues as quickly as possible. Potential savings in this area are estimated at 60-70 percent.
In digital factories maintenance will be more efficient and cost-effective. Numerous technologies will work together to keep a plant in optimal working order, and reduce maintenance cost by 10-20 percent.
Three groups of players need to work together to create a digital factory. They are the providers of infrastructure like telcom along with the supporting structures and services including cloud computing or storage for big data;the technology companies that supply collaborating robots or remote maintenance systems; and the globally operating manufacturers and all the other major global OEMs that form the heart of Industry 4.0. The three groups can thus create a new industrial landscape to make better products, which are more tailored to suit individual requirements.
Industry 4.0 has highly intelligent connected systems that create a fully digital value chain. It is based on cyber physical production systems that integrate communications, IT, data and physical elements and these systems transform the traditional plants into smart factories. Cost pressure due to emission regulations, electrification, need for more capacity and changing consumer preference have made the atmosphere very favourable for digital factories.
Where India Stands
The global automotive giants that manufacture in India for the world have transformed the manufacturing environment here from Industry 1.0 and 2.0 to Industry 4.0 and beyond.By 2020, India is expected to become a major automobile manufacturing hub and the third largest market for automobiles in the world contributing approximately 25 percent of the gross domestic product (GDP). With this vision, the automotive industry is expanding and gearing up to step into the next level of industrial revolution, where the machines talk to other machines and also to products. Information is processed and distributed in real time enabling businesses to make quicker and smarter decisions.India needs to invest in the right infrastructure to adopt Industry 4.0 as the major manufacturers are taking concrete steps to set up smart factories.
Manufacturing is no longer the task of factory owners alone. Software companies have a larger role to play. Software firms like Tech Mahindra, and Siemens have been ramping up and establishing model smart factories as the manufacturing segment gears up for the next phase with connected devices powered by IoT and minimum human intervention.
Tech Mahindra has opened its first ‘factory-of-the-future’ centre. “Industries world-over are going through a massive transformation driven by the advances in newer technologies, especially things like IoT and Robotics,” L Ravichandran, President and Chief Operating Officer, Tech Mahindra, said.
Known as the factory of the future lab the centre focus is on areas of digital manufacturing, connected machines, additive manufacturing, robotics and automation, artificial intelligence and analytics, augmented and virtual reality. The lab demonstrates solutions and products built in association with leading software and hardware vendors to showcase industry 4.0 concepts central to the digital backbone of its clients.
Tech Mahindra is working with IBM at its newly- opened Watson IoT centre in Munich. A team of six developers and engineers are working within Watson IoT h.q., co-creating solutions and targeting the industry 4.0 for segments focussing on automotive, agriculture, farming and healthcare.
Technology firm Siemens which works closely with the automotive industry opened its first digital factory in Mumbai in 2016. The factory is the third globally, after one each in Germany and China, as the industrial conglomerate pitches smart facilities to small and medium scale enterprises in the country.
The German company hopes to use this digital factory as a showcase to sell a range of plant automation equipment and software to Indian manufacturing units, including those in the automotive sector. The machines rely on the IoT technology sensors fitted on them and the resulting data is used to improve and track their performance.
The Digital Factory is one of the nine divisions at Siemens. It aims to provide a comprehensive portfolio of hardware and software products which enable comprehensive integration of data from development, production and suppliers,the company claims. The complete digital representation of the entire physical value chain is its ultimate goal. The solution platform created for this is called ‘Digital Enterprise’.
Under this term the DE product portfolio smoothly connects major parts of the product and production life cycle. Powerful Product Lifecycle Management (PLM) software, for example, allows us to develop and optimize new products on an entirely virtual basis. In the real manufacturing world the Totally Integrated Automation (TIA) concept, which has proven its worth for about 20 years now, ensures the efficient interoperability of all automation components. The TIA Portal saves time and cost in engineering.
The German auto component manufacturer Bosch is set to implement smart manufacturing at all its 15 manufacturing centres in India. This is in line with its global strategy of embracing Industry 4.0 or connected industry that combines manufacturing with Internet of things and technology. The company has set a target to be among the state of the art companies by 2018 that aligns with smart manufacturing.
It is a lead supplier and user in its own manufacturing plants. This strategy enables Bosch to be an industry leader in this sector. The Group, focusses on offering software solutions with intuitive human machine interface (HMI) and user experience which results in full grade connectivity, final transparency and reduced complexity. In the space of logistics and production, Bosch India offers end-to-end monitoring and coordinating of inter-and-intra-logistic solutions. And, finally in the sphere of service and consulting, Bosch India offers consultation based on its experience of automation solution, lean production and logistics, as well as software solutions and services.
“At Bosch India, we expect the future to be driven by key trends such as digitization, growing energy needs, urbanization and better ecological solutions. With the largest development centre outside Germany, Bosch India is committed to offering connected smart manufacturing solutions,” Vijay Ratnaparkhe, Managing Director and President, Robert Bosch Engineering and Business Solution, said. While national initiatives, such as ‘Make in India’ and ‘Digital India,’ intend to build the brand and competitiveness of India’s core sectors, Ratnaparkhe said, “Digitization will improve India’s competitiveness while also helping businesses move faster to market.”
Bosch India’s strategy to realise Industry 4.0 is three pronged: Learning and transferring knowhow from the European counterparts;developing customized solutions for India; and leading the Industry 4.0 development globally and competing with the best in class.
Digital factories with the fusion of the real and virtual worlds of production ensure that man, machine and materials are interconnected. Machines will be conversing with machines, people will be able to talk to machines and vice versa. Manufacturing becomes highly individualised and resource optimised mass production. It is closer to consumers.
According to a report by Capegemini Consulting, smart factories can nearly double operating profit and margin for an average automotive OEM manufacturer. In the next five years, world over manufacturers expect smart factories to drive performance improvements that significantly exceed previous efforts: On-time-Delivery of the finished products is expected to accelerate by 13 times, while quality indicators are expected to improve at more than 12 times the rate of improvement since 1990. Capital expenditure and inventory are predicted to be rationalized at 12 times and material, logistics and transportation cost expected to be rationalised at 11 times the rate of improvement since 1990. Overall productivity and labour cost improvements are reported to accelerate at 7 times and 9 times the rate of growth since 1990, respectively
The report also states that the average overall productivity gains from smart factories and the average realized quality gain from smart factories so far for the automotive industry has been 19 percent.
Smart factories have the potential to add $500 billion to $1,500 billion annually to the global economy in the next five years. The report estimates that, in a conservative scenario, the added output to the economy from smart factories annually would reach a level of $500 billion in the next five years. It represents 0.7 percent of world’s annual GDP by 2015.
In an optimistic scenario where manufacturers accelerate their smart factory efforts and deploy or transform more than 50 percent of their plant base into smart factories, it would add up to $1,500 billion in eight surveyed geographies or two percent of world GDP. They can nearly double operating profit and margin, propelling an average automaker to top of the league.
As part of the ‘Make in India’ business initiative, the Indian government aims to advance industrialization and modernize production in the country. Connected manufacturing offers great opportunities to faster react to market requirements, reduce manufacturing downtimes, improve the efficiency of supply chains and increase productivity–factors which all can contribute to increase the competitiveness of the Indian industry over the long-term.
In its pursuit to foster best-in-class manufacturing infrastructure in India, the “Make in India” initiative is spearheading wider adoption of ‘Industry 4.0’.
Netscribes, a global market intelligence and content management firm, has assessed that the global smart factory or Industrial 4.0 market is expected to grow at a CAGR of 10.4 percent and will reach USD 74.80 billion by 2020.
At present, Europe has the largest smart factory market share, followed by APAC countries, and the US. Germany leads in the adoption of smart factories, followed by the US and Japan. Cloud computing, augmented reality, and 3D printing are the top three technologies for smart factory-related patents.
Although India scores high in the sheer size of its workforce, there are several challenges for the manufacturing companies to adapt the smart factories. Important among them is the requirement of a skilled workforce that is experienced and equipped to create and implement smart systems.
Equally crucial is the willingness of senior leadership, other stakeholders and investors to invest in new technologies. There is the need to address fears of security breaches that can take place anywhere along the entire value chain of manufacturing because it is open, interconnected and networked.
However, given the push that connected manufacturing is getting the world over, and the obvious and considerable advantages it promises to bring, corporate leaders across industries will be encouraged to embrace the factory of the future.
NB: Photos are representational; Courtesy: Bosch, GM.