April 1, 2020

The Connected Factory (Part 1/3)

As the platform economy continues to propel the digital transformation across all industries, existing value chains are reaching their limits. With product orientation increasingly being replaced by service orientation, and with more and more manufacturers turning into operators, the principle of ‘ship and forget’ no longer seems an appropriate approach. Instead, manufacturers/operators find themselves exchanging all kinds of data and information not just with their partners, but also with their customers, who are all integrated in the company’s value chain. As factories become increasingly connected, they become smarter and smarter.
Ralf Keuper

Photo credits: IDSA / Lutz Kampert

IDS Launching Coalition is entering the next phase 

The IDS Launching Coalition is a dedicated driver of this development. The IDS Launching Coalition is an association of thirty-one IDSA member organizations setting itself the goal of developing IDS-based products and services in various domains to enter the market by September 2020. These products and services will enable companies to make data available to other companies upon payment of a fee – and without losing control and sovereignty over their data. Furthermore, the products and services will facilitate secure exchange of data between companies. Good data quality, as well as system interoperability (even across different industries), will be ensured by an internationally approved standard: the IDS Connector, the central technical component of IDS.

Secure data exchange will be the central precondition of any IoT application – and, therefore, also of the connected factory. Before we take a closer look at the distinctive features of the connected factory, let’s go back in time for a moment …

A quick look back in history

In 1985, Michael Porter and Victor Millar published an article named How Information Gives You Competitive Advantage, describing the phenomenon of information and data increasingly penetrating companies’ value chains. Back in those days, the commercial and industrial internet were still far away. Nevertheless, Porter and Millar stated a growing importance of information and data in multiple industries – such as logistics, where companies were facing a lot of different information in the form of delivery dates, freight rates, production plans, and so on. Customer service had to cope with information regarding service requirements, on-site customer care, timely order of spare parts, etc.; and production had to get to grips with information on quality inspection data used to optimize product design and manufacturing processes, and much more.

Factories in times of Industry 4.0 = connected factories

In the era of Industry 4.0, factories as we know them will turn into smart factories, allowing manufacturers to adapt production in order to meet the needs of mass customization (i.e. batch-size-one production). Thereby, it will be possible for manufacturers to switch production programs virtually in real time (i.e. without a considerable amount of setup time) by means of ‘plug and work’ (i.e. build-to-order production).

Great progress has been made in this area of Industry 4.0 in recent years – mainly with the help of 3D printing and robotics. One example is Wilo Smart Factory, a digitalized production facility operated by Wilo, a worldwide leading manufacturer of industrial pump systems located in Dortmund. Another example is SmartFactoryOWL, an Industry 4.0 research and demonstration factory located in the city of Lemgo, which is run by Fraunhofer IOSB-INA and Ostwestfalen-Lippe University of Applied Sciences. ‘SmartFactoryOWL is not just about customized production and how we are going to manufacture goods in the future; it is also about heavily involving the customer in the product creation process, and about developing data-driven business models,’ says Prof. Jürgen Jasperneite of Fraunhofer IOSB-INA. ‘To meet the customer’s needs, appropriate communication infrastructures are required, including a consistent data foundation.’ The researchers from Dortmund aim to achieve this by combining Product Lifecycle Management (PLM) and Application Lifecycle Management (ALM) solutions.

Production steered by smart objects 

In the connected factory, each object to be processed carries the information required for processing with it. At certain checkpoints in the production and material flow process, the smart object identifies itself against the respective machine with the help RFID, OCR, or barcode technology. Only after this identification is it allowed to send the information it carries to the machine, or receive new information from the machine. For all these objects and machines to speak the same language, standards are required. An example of such a standard is OPC UA (OPC Unified Architecture), allowing to connect production control and other functions with enterprise IT systems. OPC UA thereby has the potential to be used as a communication layer in Industry 4.0 application scenarios on a broad scale.

The connected factory, integrated in cross-company value networks

Already today, predictive maintenance allows analyzing and evaluating machine data with regard to deviations and irregularities; if a wearing part is found to be defective and needs to be exchanged, the order process is triggered automatically, reducing machine downtime to a minimum. This process includes several parties – the customer (i.e. the manufacturer operating the machine), the part manufacturer (with its on-site customer service), the wholesaler delivering the part, and the banks involved in the financial transaction. What used to be a simple value chain has turned into a complex value network, in which the flow of information is not linear anymore (i.e. from the part manufacturer to the wholesaler to the customer), but where information flows back (e.g. from the customer to the wholesaler). This results in a closed loop, with the automation pyramid adapting to the increasing magnitude of connectedness occurring in connected factories in times of Industry 4.0. As a consequence, data does not have to pass one stage at a time, but can be sent directly to where it is required – without the need for being processedat some intermediate level.

Today, consumers want to be directly involved in the product creation process. They want the product they ordered to be at their disposal right away. It is expected that consumers will increasingly take advantage of 3D printing technology in order to produce what they need themselves. When ordering capital goods and equipment, manufacturers’ procurement departments demand more or less the same customer experience consumers have become used to when ordering articles online (e.g. via Amazon.com). This trend is being denoted with terms such as ‘industrial consumerism’ or ‘amazonification; in view of coronavirus turbulence and its consequences for business, it seems very likely that it will sustain.

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Author: Ralf Keuper
With his blog bankstil, Ralf Keuper is one of Germany's top 10 bloggers in the FinTech sector.

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