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Connected Manufacturing Leaders Summit in Berlin - Day Two

• 03.02.20 •

Matti Jylhä • Senior Advisor, Founder Futurice Sweden

The second day kicked off with the focus on people, teams and organisations.

The consensus is that people continue to be at the heart of industrial companies, yet people, teams and organisations need to change. Significantly.

Some observations:

Let's start with the mindset change. As times change and companies shift from low tech to high tech, some flirting with the idea of becoming "software companies at heart", companies need to also reconsider what business they are in. Konecranes puts it well: We are not (anymore) an equipment manufacturer and servicing company. No. We are a material flow company. Ultimately we are lifting businesses. This is an important internal mindset change that should eventually change how customers perceive the output and value exchange with industrial companies, too.

Moving to yet another lower cost country for production is no longer the solution either. Most, if not all, repetitive tasks will be automated. Technology and tools play an increasingly central role on all levels of industrial companies and reaping the benefits requires a skilled workforce. Today and in the future, it is the skills rather than the minimal cost of the workforce that matters. The workforce needs to be trained. People need to up their skills systematically and continuously.

Further, increased requirement for personalisation, frequently changing production needs and advances in tech require agility and self-organising teams at all levels, especially "on the shop or factory floor".

Everyone from Intel to Swarovski are pushing new ways of working as well as the big picture understanding into the production teams. This is a significant and rewarding change. As the CB Insights State of Innovation Report 2018 shows, high performing companies innovate across the organisation.

Beyond the above, safety and working conditions are more important ever. In today's world, companies cannot have people working in dangerous or otherwise harsh environments. The zero accident policy is taken seriously.

The cultural change program by Swarovski, a manufacturer-retailer of precision optical instruments, related tools, and huge amount of crystal jewerly, includes the following dimension:

  • Leadership: alignment of principles, values and behaviors
  • Compensation: Performance management, multiskilled incentive program, early retirement options
  • CSR: Positive production program, schooling support for families with children, zero accident policy, overtime limitation
  • HR processes: people management system, people analytics, surveys
  • Learning and development: People development programs, global recruitment framework
  • Reward and recognition: Spirit award, manufacturing excellence award, long-service award
  • Talent attraction and engagement: Communication, Employee referral program, job fairs, partnership

OK. The rest of the event was spent with the following:

  1. The importance of data in increasing customer understanding
  2. The progress companies are making in predictive maintenance
  3. The opportunities of blockchain technology
  4. The groing importance of edge computing.

Quick notes on these discussions:

Increasing customer understanding through data

This is important. By sensoring and connecting equipment, as well as systematically collecting and analysing data, industrial companies have found a fantastic new way of getting to know their customers. For some industrial companies this has already been a true eye-opener. Never before have they had such visibility into how a customer really uses their products.

Companies are getting precise answers to questions like: What products and features are customers using? Which products are often used together? What is special or unexpected about customer behavior and product use? Is some customer behavior and product use wearing out the product faster than we planned? Could some usage patteerns pose a danger to the user? How long can the product still be used without maintenance? What parts need to be replaced soon?

The list of questions can be very long and most importantly, the opportunities are super exciting:

  • How should we improve our maintenance contracts?
  • How should we improve our current products?
  • What new product opportunities there might be?
  • What are the data-based customer segments?
  • How do customer needs differ?
  • What should we cross and up sell?
  • What sales and marketing activities will have the most potential?
  • How to guide our resellers?
  • Should we change pricing or incentives?
  • Are we confident enough to align better on customers goals and strategy, and move to as-a-service and outcome based business model?

Phew. You gotta love data!

Predictive maintenance

OK, next up was a roundtable discussion specifically on predictive maintenance.

The big gaps between companies when it comes to predictive maintenance of a) production lines and process, and b) products companies offer their customers was discussed. Probably not the complete truth, but in short I'd put it like this. Please correct if you feel I'm totally off:

Software and computing companies that are also involved in hardware manufacturing lead the way in predictive maintenance maturity. "We know when when our products are about to fail. We are mature in this sense." Advanced manufacturing companies are making good progress with predictive maintenance, too. Some are further than others, but most companies are working on it. There are great results that are, for example, enabling improvements in maintenance contracts and helping companies move towards as-a-service business models. But there are also struggles. For example: "We don't get enough failures to build reliable data sets."; or "Changes in the data are really slow towards failure"; or "Data sources a many and patterns surprising".

At the bottom of the maturity curve are the traditional low tech manufacturers. Within this segment, systems can still be quite simple, particularly old, but also very durable. New ideas are tested and innovation is happening, but the road ahead will be long and probably slow.

Blockchain

Yesss, then there was the exchange about blockchain. It was a panel discussion that briefly turned into a market square type dialog. In short, not many industrial companies are serious about blockchain at the moment. However, a couple of forward looking industrial executives saw a clear opportunity for blockchain to 1) authenticate aftermarket parts and consumables towards their customers, and 2) authenticate their supply chain.

I agree with the forward looking executives. An opportunity exist and we will hear more about this in future.

Edge computing

The final discussion at the closing cocktail reception was about edge computing. Not going into too much detail here, but industrial companies are interested in real-time product and process management enabled by powerful edge devices. We are lucky enough to be working on such such cases already.

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