Rob Van Egmond

Generating Value (as Well as Savings) from Manufacturing Investment

Making the right changes in manufacturing to add value means ensuring that the right data is available to people so they can make better decisions, better designs, and run their operations better.

Rob Van Egmond is chief executive officer of Dassault Systèmes' Quintiq, which provides supply chain planning and optimization software for production planning, transportation planning, and employee scheduling. Quintiq's solutions are designed to allow organizations to overcome the difficulty of planning the utilization of employees, resources, and processes with multiple rules and constraints.

IndustryWeek spoke with Rob at Manufacturing in the Age of Experience, where he presented a live demonstration of the 3DEXPERIENCE platform. He was also a speaker on a Learning Expedition panel exploring how Tangshan Steel exploits the power of value streams end-to-end from ideation through manufacturing to consumers. We asked him about how companies are using digital continuity to help develop new business processes that increase the value of their manufacturing operations.

Question 1. Most companies would probably say that while manufacturing most definitely has value, they struggle with being able to justify investments that would help them transform their manufacturing operations in order to improve efficiencies, generate new revenues, and so on. Why is there such a disconnect, and how can companies do better in building their business cases for investment?

Rob Van Egmond: Over the last few years, a lot of companies have invested significantly in IT projects, mainly to get transaction systems under control. Yet there has been relatively little value generated. So, many companies are now hesitant to make a digital transformation — because in the past it has not always brought value. That is why I think focusing on making digital transformation in the areas that actually do provide value is very important.

My belief is that making the right changes in manufacturing will generate value. And it's not about recording transactions and recording finances; it's about better decision-making processes. It's about making the right data available to people so they can make better decisions, better designs, and run their operations better. So if you look at building a business case for investment, it should look at what actually influences your bottom line and your top line. Those are mostly the decisions your people make — whether they are design decisions, supply chain decisions, or manufacturing operations decisions. And you need to figure out how to make those decisions better.

A lot of that has to do with optimization, but it's also very much about digital continuity — making sure that when somebody designs a piece of equipment, for instance, that you actually know what the consequences of that are during production. Equally, you need certainty that, if something is changed in the design, we will actually see that change in the production phase and make the required adjustments in the supply chain. You need to have updated working instructions — and ensure that all of the parts that you order from suppliers as well as all of the working instructions that you provide to your employees when they do the execution reflect the design change that you've made.

Question 2. How do you define “digital continuity” and what role does technology and analytics play?

RV: When we speak of digital continuity, we use a term called the 3DEXPERIENCE Twin. We have, in our platform, a model of the world that functions as a digital copy of what is happening in the actual world — both from a design perspective and an execution perspective. In our view, digital continuity means making sure that the digital twin captures everything that happens in your operations. It has a full replication of the design of what you're creating and of the actual items being created—and you can follow every process through that digital model as it happens. Having this digital replication of the world means you can guarantee digital continuity. So, if a design or a manufacturing process needs to be changed, we can follow how that design changes as it goes through the manufacturing process, the execution, and finally through the sign-off — completely digitally — so we can actually backtrack it.

So our platform has that complete copy of the world as a 3DEXPERIENCE twin. It collects all the real-time execution capabilities, and then by maintaining that completely duplicate twin, we can start performing analytics on both the real-world operation and the effects of design and design changes on that operation. When we make a design change, we can analyze based on historical data and available market data how making this change will significantly increase the purchasing of parts — if, for instance, it involves switching out a mass-produced part for one that is unique and may require additional purchasing components. So, your supply chain, your in-bound logistics, may increase in complexity because all of a sudden you'll have to source a single part from a single provider. By having digital continuity from the design all the way to execution and back, we can predict the effects of choices people make early on in the design process — prior to them actually becoming cost factors once the production of the item starts.

Question 3. Where do you think manufacturing is today in terms of achieving digital continuity, and are there industries, geographies or companies that are ahead of the curve and why? What are they doing differently than the rest?

RV: I think that there are large discrepancies as to the implementation of digital continuity across industries. In industries such as aircraft and car manufacturing, they are making relatively good progress on getting to where most designs are captured digitally. But in some cases we still see that a manual transformation process is needed to go, for instance, from an engineering bill of materials to a manufacturing bill of materials. We also see companies, more in the process industries, that have some digital lab management but are not completely using the digital lab data to transform that model of what the product looks like into a manufacturing process — and into an operational process with clear knowledge of the type of products that are going to be sold in the future and the type of parts that have to be purchased to ensure that those new products can be manufactured.

Right now, we see a lot of siloed organizations in the process industries where data is basically pushed from one end of the production process, or from the supply chain process, only when it's over and is not discussed prior to that. So I think that, while a number of industries are getting closer to achieving full digital continuity, we also see a lot of companies that want to make steps and changes but are struggling with the fact that they need to change their organization. They need to change their way of working to be much more focused on product rather than process and finance.

Question 4. What are some of the cool things forward-thinking companies are doing today to increase the value of their manufacturing operations?

RV: One of the cool things that we see companies doing is transforming themselves to actually increase the value they add—it's what we call value metrics. More and more companies, in my view, are functioning in a more loosely collected collaboration rather than a sequential step of operations. Customers are demanding significantly more configurability, changeability and personalization — which means that companies, to be able to add value, need to be much more adaptive. So instead of having long-term contracts with suppliers to provide a single piece of product, they need to be able to respond to changes in demand. They need to be able to deliver to their consumers individualized products. And you cannot do that if, on your supply side, you have long-term fixed, regular delivery type contracts.

So it's becoming much more of a network of manufacturing companies, loosely connected, that digitally establish a relationship by seeing that they can deliver value to another company. But they also see that they may need only a temporary supply agreement to obtain a certain part because they've just been asked to produce a customized product. These companies then need a digital platform in which they can start exchanging not only supply and demand, but also the underlying data, with these different companies to facilitate that value network.

Question 5. You’re known as something of a futurist. Are you optimistic about the future of manufacturing? Why or why not?

RV: I am very optimistic about the future of manufacturing for those that adapt to the changing world. What we need to realize in manufacturing is that things are changing right now maybe faster than they have since the Industrial Revolution. With the advent of the internet and mobile access, younger generations are accustomed to the idea that anything they ask for, anything they want, can be created individually to their specifications. And that creates challenges but also great opportunities for manufacturers.

So I believe that manufacturing has a great future for those who are able to distinguish themselves from everybody else by being reactive to customers' needs — and by using supply chains and suppliers not as a means of cutting costs, but as a means of providing more customer responsiveness. Manufacturing organizations that change themselves from traditional linear producing companies to more of a natural-based type organization that responds both to the demands of their customers and to the demands of their suppliers have a great future.

Question 6. What is the significance of selecting China as the site of Dassault's "Manufacturing in the Age of Experience" conference? What is going on there, and how does it contrast with trends in U.S. manufacturing?

RV: China is preparing itself to transition from being a low-cost, high-volume producer to a true value-add manufacturing producer. And as I mentioned earlier, I believe that the future of manufacturing is in those that are not only able to adapt their company but also their day-to-day operations to the demands of customers. I think that right now China — more than any other country — is aware of the fact that they need to change the way they add value to manufacturing. Everyone knows that manufacturing of the future will involve technology, but I think the Chinese know that, beyond adding technology, you have to make sure that you provide relevant value to your consumers. So, China is a great place to have this discussion.

To learn more about the future of manufacturing, register for Dassault Systemes' free webinar featuring “Keys to Success for Manufacturing in the Experience Economy” — now available on demand here on IndustryWeek.com

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