What does it mean for manufacturers to have unlimited computing power? Sanjay Ravi, managing director, Worldwide Discrete Manufacturing at Microsoft (IW500/16), says manufacturers will not simply be using big data to become more efficient but to transform themselves into connected businesses that can offer customers a whole new range of services.
Take Miele, the German manufacturer of high-end appliances and commercial equipment with annual sales of $3.4 billion. Miele is using Microsoft’s Azure Internet of Things platform to showcase how technology can help customers cook better meals. WIth this concept, consumers can browse recipes on Miele’s website and then download the cooking instructions to their oven and to their smartphone or tablet.
“This assistance system incorporates temperature charts, times and the machine’s special features, such as adding steam, to create the optimum roasting, cooking or baking results,” said Dr. Eduard Sailer, executive director of Technical Affairs at Miele.
Manufacturers traditionally have used software “systems of record” such as MES and ERP to collect and manage data, Ravi told IndustryWeek at the recent Hannover Messe industrial trade fair. More recently, manufacturers have begun to use “systems of engagement” to take advantage of social media and other data to facilitate collaboration and communication.
“With Industry 4.0, we are entering the era of systems of intelligence,” says Ravi. Manufacturers will take advantage of unlimited computing power in the cloud and rich data platforms to develop new business models. Microsoft’s booth at Hannover Messe showcased several examples of what the software giant calls a transformation borne of combining machines and physical processes with vast amounts of data and real-time analytical systems.
KUKA AG demonstrated its Intelligent Industrial Work Assistant, a long title for one of the new breed of collaborative robots. Using Kinect hardware, IoT services and the OPC-UA communication standard, KUKA and Microsoft have enabled a machine that can work alongside humans without posing any danger. There are safe torque sensors in every axis of the robot. The robot can take on tasks that were too delicate for previous robots, such as the demonstration at Hannover Messe of threading a tube into a small hole in the back of a dishwasher. Data from the robot is streamed to the cloud where workers can monitor its progress. Data is also used to spot supply chain issues and monitor quality.
ThyssenKrupp Elevator sells and maintains elevators in 150 countries. The $6.8 billion German firm maintains more than 1.1 million elevators, and these service contracts provide its largest revenue stream. In order to improve service and its bottom line, the company worked with Microsoft and CGI to implement a system where the elevators’ sensors provide a constant stream of performance data. The company can take this data and both spot imminent problems and develop insights into when maintenance is needed. The aim is to find problems before they occur, develop a more accurate picture of maintenance requirements and reduce the cost of maintenance while improving reliability.
“I call it the ‘virtual troubleshooter,’” says Rory Smith, director of strategic development for the Americas at ThyssenKrupp Elevator. “When the elevator reports that it has a problem, it sends out an error code and the three or four most probable causes of that error code. In effect, our field technician is being coached by this expert citizen.”
Developing New Service Businesses
The automotive industry illustrates the Industry 4.0 change, says Ravi, of manufacturers evolving from just selling manufactured products to developing relationship-based services. In the past, he says, an automaker’s top priority was to manufacture a vehicle which had high quality and high performance. Those priorities still exist, he says, but what will lead a manufacturer to win the market in the future is “the connectivity and connected experiences that they can deliver to the consumer.” That will become even more the case, he says, with the introduction of autonomous cars and more shared driving services.
Ravi references Carlos Ghosn, CEO of Nissan Motor Co.(IW 1000/ 39), who in July 2014 told the Foreign Correspondents Club of Japan that “demand is growing for in-car communications that meet or exceed the high expectations of the digital generation. Our vehicles must be as connected as the smartphones and tablets that this generation depends upon day in and day out.”
The adoption of new IoT business models may occur at a much quicker pace than previous IT transformations. One reason is that the new systems can operate on top of existing IT software. “We have actually brought production capabilities into the market in months,” Ravi says. “You can get the initial successes fast.”
The other reason is that this connectivity is being driven more than ever by consumer expectations. For example, Ravi noted that about 20% of vehicles today have connected capabilities. But in another 4 to 5 years, that will grow to 80%. Consumers will expect the information, entertainment and convenience these services provide. “The market is changing,” says Ravi. “Manufacturers don’t have an option.”
Ravi, who has spent 20 years in the manufacturing supply chain, says the transformation of the manufacturing value chain can occur not just for big global firms but at all levels. As an example, he posited a pump manufacturer who sells to a company that produces water management systems for water purification plants.
“The water purification plant is the end user but the pump manufacturer is the one who has all the intelligence that is in the sensors in the pumps, such as when the pumps are going to have problems or the filters need to be changed,” Ravi explains. “In that business model, it gives the pump manufacturer the opportunity to say, ‘Instead of selling pumps, I am going to get into the business of managing fluids.’ They can develop a relationship with the water purification company directly. ‘I will throw in my pumps but I would like to get into a service agreement with you. I will manage the pumps and do the replacements. You don’t have to worry about waiting for problems to happen.’ It is a very different business model and it is already happening today.”