IT FOR MANUFACTURING
Manufacturing CIOs as new "central forwards" play offense with DX strategies and tactics for more business-informed decisions.
The Russian-Ukrainian conflict is causing a series of transformations with a very high impact on Italian and European industrial companies. Italy's private economy (data from Sole 24 Ore, March 7th) is still missing 2.8 percentage points to recover the pre-crisis levels of 2021, a gap not far from those of France (-2.6%) and Germany (-2.5%), which shows Italy's ability to recover after a major crisis is greater than in the past. From the initial macro-economic picture and with the development of the crisis underway, the "manufacturing towing" factor emerges as critical in which the CIOs of the industry must, never before, play the center of the attack.
In order to understand the need for this "offensive game", Data Manager, together with the analysts of IDC Italy, has deepened the global trends based on the most recent reference to the research of the IDC Manufacturing Insights Team, drawing inspiration for a direct comparison with CIOs, CTOs, IT managers of Italian companies on the hot topics for the global manufacturing sector and in particular European ones such as:
The analysis of the situation starts from the considerations related to the "technological frontiers for the Italian manufacturing industry" that Lorenzo Veronesi (Associate Research Director, IDC Manufacturing Insights EMEA) has prepared exclusively for this special issue of Data Manager.
The mantra to start from - Veronesi explains - is today more than ever: "Invest now, invest better".
"In this context," Veronesi continues, "we have witnessed that companies that had in the past made more extensive progress in digital transformation and technology implementation have historically delivered better business performance than their 'non-digital' counterparts. This gap has particularly widened during 2019 - 2020, where companies that were already able to support more flexible and integrated business processes prior to the 2019 trade wars and pandemic have benefited from better business outcomes. This distributed working model has now become routine. IDC predicts that by 2023, 40% of G2000 companies will develop all new processes as remote-first projects, compared to the very limited number of remote-first processes in 2020. This is certainly of great importance for Italian companies: IDC's "Future of Work" research shows that about 80% of Italian manufacturing companies now see hybrid work as an essential element of their business model.
While this shows that business challenges should not be an excuse to slow down technology investments, it is also putting enormous pressure on technology leaders to actively help sustain business success by enabling cloud platforms for business process management that are secure, intuitive and relevant to end users."
IDC INDICATES THE IT TECHNOLOGY AREAS OF GREATEST RELEVANCE IN MANUFACTURING TODAY
To this end, we first asked IDC how technology can further contribute to the digital transformation of the manufacturing sector today.
Lorenzo Veronesi highlights the predictive factor for supply-chain optimization: "First of all, act on the ability to forecast demand. At a time of extreme volatility, companies need to help the ability of their planners to manage the complexity of inputs coming from the market. IDC estimates that by 2023, 50% of all forecasting in the global supply-chain will be automated using artificial intelligence, improving accuracy by 5 percentage points.
We then asked what areas companies should start investing in (if they haven't already) or risk finding themselves with an inadequate technology infrastructure in the coming years.
Veronesi reads as crucial the push in integration to and from the field: "Second, it will be necessary to invest more and more in factory solutions. Pandemic has highlighted the importance of the factory in delivering value to customers. In fact, as plants have been seen as essential elements, both as generators of value and innovation and as true "bottlenecks" in chains, they have become the primary targets for new smart manufacturing investments. To achieve this operational resilience, agility and efficiency, companies must synchronize the work of humans and machines. This means having the right data at the right time to make the most complete decision, shifting decision making from covering transactional elements (which can be automated) to reinventing the business (which can only be achieved by human information-based decisions). And, to increase the impact of data, it is essential to bring together automation systems that control by acting on physical processes.
IDC estimates that by 2027, 40% of organizations will use vision analysis in operations, moving beyond quality inspection and security use cases to those focused on productivity and safety. And by 2024, 40% of manufacturers will share data across their ecosystems (partners, customers, suppliers), thereby improving the OEE of factory operations by an average of 10%.
Ultimately, manufacturing companies' strategy should continue to focus on understanding - or redefining - why and how their products and services contribute to society, while generating long-term value for shareholders. Italian companies are ready to embrace a positive contribution to a sustainable economy, with more than 30 percent prioritizing initiatives aimed at sustainability and "green" business. This is clearly a trend of global significance. IDC predicts that driven by the growing demand for environmental responsibility in manufacturing ecosystems, by 2025 40% of G2000 manufacturers will use traceability technologies to mitigate risk and increase transparency."
DATA MANAGER TO THE ITALIAN CIO: WHAT ACTIONS WILL BE MOST STRATEGIC IN PRACTICE?
We've seen with IDC how important and what investments in technology are to gain market share and introduce new business models. However, it's important to avoid jumping on the first "technology bandwagon" that passes by, and rather prioritize those investments that are actively required to meet the needs of the customer base.
From the picture gathered by polling IT leaders in the Italian manufacturing sector, Data Manager sees them as never before intent on delivering more informed business decisions by developing cost-effective ICT strategies and tactics to support their digital transformation (DX) strategies.
CIOs explained that they will need to engage relevant stakeholders and professionals as early as possible to gather the right input and ensure that the transformation is in line with business requirements. Obviously, having a clear strategy for remote working and underlining it with appropriate digital technology, management rules, security and control processes will be essential. But even more so, standardizing the collection and delivery of operational information will be in order to create a foundation for future initiatives such as creating an employee empowerment and retraining strategy that reflects the needs of the organization over a 2 to 4 year horizon.
Three "key objectives" highlighted to us as emerging and priorities today.
1/3 BECOME MORE "DATA DRIVEN!"
Data driven organizations understand that data is only a strategic asset if it is analyzed to the fullest extent. It is yes the "new oil" but only if it can be refined to form the basis for making informed decisions about product innovation, dynamic pricing, market expansion and supply chain optimization. This today, among the CIOs interviewed in the industry really seems to be the main challenge.
Organizations are expected to experience data growth of 30-40% per year, which creates greater responsibility for data protection and increases the burden of data management. This distracts from the task of analysis, which is what makes data so valuable in the first place. "Dark data" - data that is collected and stored, but not analyzed or monetized - is the dark secret of many organizations. Data remains dark due to a lack of resources for data analysis, or there may be too much data to analyze.
Organizations are increasingly looking to increase revenue by mining their data to quickly show insights and provide value. In the past, one option was to use open-source data analytics platforms to analyze data using on-premises infrastructure. Another option was to leverage the compute, storage and analytics services of public cloud providers. The reality is that public clouds and on-premises data centers each have their pros and cons for a particular organization.
Rather than deciding between on-premises or cloud, more companies are taking a new approach increasingly made up of that hybrid cloud, which allows them to place data and workloads where it makes the most sense. Taking it a step further, manufacturing organizations can achieve the holy grail of the hybrid cloud with applications and data that can be moved, managed and protected seamlessly between locations to provide the best of both worlds.
Data analytics platforms that leverage artificial intelligence and machine learning can help organizations derive insights from their large-scale data to help build deeper customer relationships, run more efficient operations and leverage new innovations.
2/3 DIFFERENTIATE DIGITAL VALUE!
Manufacturing CIOs tell themselves, year after year, that they are increasingly "OT focused" and explain how many of today's legacy systems that exist in plants around the world still need to take full advantage of digital platforms like the cloud to leverage data and generate predictive business insights.
On the positive side, however, they also warn how digital transformation in manufacturing is being accelerated not only by the development of digital platforms and cloud technologies, but also by other factors. Technology-related factors include low-cost sensors and other aspects of the Internet of Things, such as the continued improvement of network connectivity, the exponential growth of computing power and data storage, open systems, the growth of APIs and the arrival of Edge, AI and machine learning projects.
They explain how a far from marginal aspect is that of the human factor in the future of work, especially "on board the machine". In fact, the manufacturing worker model has reached an inflection point. Workers who have spent decades with manufacturing equipment, control and process systems are reaching retirement and are being replaced by younger, less skilled workers with better digital technology skills.
Many of the legacy manufacturing systems still in use contain traditional HMI/SCADA interface systems that rely on a deep understanding of processes. These are not likely to be suitable for the new generation of digitally savvy workers.
As HMI/SCADA systems have evolved, the new systems focus on the user experience and now provide centralized visualization and improved situational awareness to operators in a manufacturing environment.
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HMI/SCADA systems are now being leveraged as a foundation for integration and connection to historian and other data platforms to enable predictive analytics. The way digital transformation works in a manufacturing plant is to capture industrial data through HMI/SCADA systems, further integrate it with data attributes from other systems to add context, add it to the data platform or historian, and then use the analytics for predictive business insights and predictions.
Such solutions create a democratization of tools across the manufacturing plant, improved operational performance, reduced operational costs, transformed employee mindsets and a culture of continuous improvement.
To drive digital transformation in manufacturing, digital leaders are now focusing on operation control that brings scalable sets of solutions that are cybersecure first, based on industry standards, and support the entire asset and operations lifecycle capabilities such as engineering, HMI/SCADA, supervisory control, analytics, AI/ML, augmented reality, Manufacturing Execution Systems (MES), asset performance, maintenance and condition management.
However, for IT in manufacturing, it is need as much as ever to build a software layer that integrates all the data and converts the collected data into business insights, specific to the business powered by that manufacturing process, this is also a critical and important differentiator especially in the current environment.
3/3 5G TO BE COMPETITIVE BUT TO MAXIMIZE ROI MUST BE converged, NOT a technology island!
The manufacturing industry has a history of embracing innovations designed to improve efficiency, quality and worker safety. Consider the impact Henry Ford had by bringing the assembly line to automotive manufacturing, creating efficiencies never before seen. Today, manufacturing companies are using newer, more advanced tools like robotics, machine learning and artificial intelligence to achieve similar goals.
But they still need to push these innovations further to stay ahead of the competition. One of the most promising innovations for manufacturers is 5G private network services. The main driver of 5G adoption is to improve quality control monitoring throughout the manufacturing process. More than half of respondents say increased machine productivity will drive 5G adoption, and more than 90 percent believe it is critical to the future of their business.
In addition, the vast majority of CIOs surveyed told us that the speed of 5G deployment will have a positive impact on their ability to compete globally.
But, we asked, why do manufacturing companies need 5G to be competitive? 5G-enabled factories experience productivity gains of several percentage points, including up to 50 percent in assembly time, more than appreciable increases in asset life and truly impressive gains in defect detection, according to the CIOs surveyed.
In addition to 5G, manufacturing companies are increasingly implementing AI-driven tools to increase efficiency and quality on their assembly lines. For example, some automotive companies using AI technologies in their manufacturing processes estimate efficiency gains of up to 15%, a significant improvement in an industry where thin margins are heavily dependent on efficiency.
These AI tools are made possible, in part, by connecting sensors and cameras for near-real-time, closed-loop reactions. Because AI is designed to be a continuous learning function based on data from these sensors, cameras, and objects, reliable wireless connectivity is critical to enable rapid reconfiguration of assembly lines for pattern changes, making it a compelling use case for 5G private network services.
Unfortunately, most assembly lines today rely on wired connectivity to provide reliable speed and low latency, so any product changes that require reconfiguration and rewiring can be costly and time-consuming. This reconfiguration creates a loss of productivity, causing downtime and increased costs, impacting profitability. What is needed is a form of "wireless fiber" connectivity.
Here's a widely held belief across the industry: nearly all manufacturing CIOs expect 5G wireless to lead to increased machine and workforce productivity that translates into cost savings. This productivity will come from people and machines working better together, as efficiency gains will often be tied to how you connect and communicate. And for the convergence of Information Technology (IT) and Operational Technology (OT) to be successful, 5G must converge with existing access options, integrate with existing IT and OT networks, and operate with advanced automation capabilities.
But, as several CIOs have reminded us, machines don't work alone. People are needed to interact with and maintain complex technologies. OT must be able to connect to a private network quickly and securely from anywhere through a variety of devices, some of which might use Wi-Fi. Wireless connectivity should therefore offer both cellular (4G/5G) and Wi-Fi working together seamlessly. In addition, the 5G private network should not only integrate with an existing Wi-Fi network, but with all relevant data networks used by the business. In other words, no technology islands.
It's situation that also emerges from the IDC Worldwide Private LTE/5G Infrastructure Forecast, 2022-2026 report summarized as follows by Patrick Filkins (IDC, research manager, IoT and Telecom Network Infrastructure): "The growing demand for dedicated or private wireless solutions that offer greater security, performance and reliability continues to come to the forefront as current and future applications, particularly those in the manufacturing sector, demand more from their network and edge infrastructures." Filkins adds a prediction: "While private LTE/5G infrastructure continues to see more interest, the reality is that 5G itself continues to evolve, and will evolve for the next few years. As such, many organizations are expected to invest in private 5G in the coming years as progress is made in 5G standards, general spectrum availability and device readiness."
The CIOs we interviewed agreed, believing almost unanimously that adding 5G to the network must first and foremost be simple and intuitive to use with advanced automation capabilities to mitigate complexities. A converged, integrated private network using advanced automation can be the missing catalyst that elevates efficiency and industrial productivity to the next level, creating real revenue growth.
A DIRECT TESTIMONY ON THE SEVEN MOST CRITICAL QUESTIONS FOR AN ITALIAN CIO MANUFACTURING TODAY
Among the CIOs enlisted by Data Manager as protagonists to drop the trends in the "attack schemes" in their respective project realities, we had the opportunity to face in detail with Marco Lenori, IT Manager at Valli Zabban S.p.a, some of the most critical issues for the success on the goals to be achieved in the active roadmaps in an Italian company that, founded in 1928, is today leader in Italy and worldwide in the transformation of bitumen through its three sectors: Road Technologies, Waterproofing Systems and Rubber Technologies. Here's how Lenori told us about the IT manufacturing issues experienced by Valli Zabban S.p.a. between the headquarters in Calenzano (Florence) and the production plants in Bologna, Trecastelli (Ancona) and Arezzo.
What are the key trends in ICT for your manufacturing company?
"Continuous communication between company sectors, using new communication tools in synergy with the ERP system, allows to reduce the time to market, offering products configured on customers' requests, and the rapid execution of orders. Another aspect on which we are focused is the valorization of company information, in order to quickly determine the actual cost of our products, in a market characterized by strong price volatility, both of raw materials and of the finished product."
Where is your company in its digital transformation (DX) journey and how are you preparing for the future?
"Valli Zabban has been pursuing innovation in its production processes for some time by investing in 4.0 technologies. The goal is to make the flow of company information transparent and continuous, transferring customer needs and market trends to our research laboratories, which in turn apply the formulations studied to the production lines. To this end, we rely on MES systems and interconnection with every business sector."
What business decision makers do you think are most necessary to involve to accelerate DX?
"In our experience, the Controller or Management Control Manager, thanks to his visibility on targets and actual results, is complementary to the ICT manager in identifying processes to reform or improve according to company policies."
What do you see as best practices and benchmarks for "key technologies" for innovation accelerators such as AR/VR, cognitive/AI, robotics, 3D printing, blockchain and IoT?
"The technologies we believe in are essentially advanced manufacturing systems and robotics, precisely because of their ability to make the manufacturing process streamlined and easily configurable."
What does resilience mean in your post-pandemic business environment?
"The key to continuing to operate for the foreseeable future is knowing the market, and internal processes, in order to constantly monitor direct and indirect costs of production, what product to offer, at what margin."
What is the impact of DX on the workforce today, and how do you foresee it in the future?
"The continuous sharing of business information offered by digital technologies makes work more interesting at every level, as it increases everyone's awareness in the process in which they participate, conversely it requires a culture of change, which becomes a must."
How does sustainability affect manufacturing players today, and what additional opportunities do you see beyond the requirements everyone is facing?
"We operate in a market that is strongly characterized by a focus on sustainability, both in our product and in the production process and materials used. The technology in this allows for early detection of material and energy waste, and tracking of the supply chain. This is only possible through a clear operational organization, which indirectly constantly improves the production process."