Manufacturing Industry Surfs Digital Wave At Last

Five years ago, terms like ‘smart factory’ or ‘Industry 4.0’ or ‘Industrial Internet’were unheard off. But these are quite common today especially when the discussion veers towards digital transformation. Digitisation in manufacturing is driven by new demands from the business and customers. It is enabled by technologies like IoT and IIoT (Industrial Internet of Things). Yes, the manufacturing industry is at last embracing technology like never before.

Sangram Kadam, AVP and Head – Oracle and Manufacturing IBU (India and South Asia), KPIT Technologies said, "BFSI has always been the first to adopt new technology. For the first time, we are seeing non-BFSI companies, predominantly manufacturing, CPG (Consumer Packaged Goods), and logistic companies -- moving ahead in technology adoption. This is primarily due to IoT, sensors and digital. We are seeing a lot of traction in the manufacturing industry especially for discreet (manufacturing), process, and subsets such as life sciences or CPG or logistic companies. On the automotive side, we see transportation and logistics companies adopting digital. The third area is in assets."

Kadam says most Indian companies start their digitisation journey with asset utilisation. This includes asset performance, asset monitoring, and asset diagnostics. All these are driven by IoT.

Kadam cites an example of one of his customers but declines to name them. A leading global textile machinery manufacturer wanted to monitor how customers were using their machines. They also wanted to predict the failure of the machines well in advance. If a machine were to break down, then the turnaround time to restore it to working condition is 3 - 4 days. And if that were to happen, then work on the shop floor would come to a halt for an entire week. Earlier, his customer could predict the failure of the machine only two hours in advance. They requested KPIT to devise a model wherein the failure could be predicted two days in advance, to minimize downtime on the shop floor.

KPIT fitted sensors on the textile manufacturing machines and used its IoT platform to collect data from these machines, some of which are very old.

“The old machines did not have the capability to collect data on usage parameters. Few machines can be retrofitted with advanced sensors,” said Kadam.

Thanks to smart algorithms on the KPIT IoT platform, machine failure can now be predicted two days in advance. KPIT has set a target to increase this to three days. This will now reduce downtime on the shop floor, and manufacturing output will not be severely impacted, like before.

Kadam says the supply chain (both in-bound and out-bound) is also leveraging digital, leading to the Digital Supply Chain.

According to IDC Manufacturing Insights, by the end of 2020, 50 per cent of manufacturers (worldwide) will derive business value from the integration of supply chain, plant operations, and product and service life-cycle management.

“People want to monitor or track the utilization and performance. They look for a meaningful outcome,” said Kadam.

To elaborate, he gives us the example of a company that transports cement. Cement has to be stored under certain conditions while it is being transported, to prevent it from solidifying or getting spoilt. Naturally, the cement manufacturing company would want to track the status of its cement even as it is being transported.

Sensors mounted on the cement mixer trucks can continuously relay data to the manufacturer. This includes data about moisture, temperature, and other critical parameters. Telematics, IoT and Human Machine Interfaces (HMI) are enabling this kind of digitisation in the transportation industry.

Kadam cites another customer example, this one a global automotive and industrial lubricants manufacturer. The company wanted to monitor the transfer of lubricants and chemicals from one location to another. The goal was to make the journey risk-free for the driver, the vehicle, the raw material being transported and for the people on the roads.

KPIT built a Journey Risk Management (JRM) solution for this company. It employs telematics technologies. High-end sensors were installed on each vehicle and data was collected on the cloud. The health of the vehicle's engine is also monitored. The sensors relay data to KPIT's command centre. Cameras are mounted on the vehicle, so its surroundings, as well as the driver, are observed.

The vehicle is fitted with a panic button and, if pressed, it sends a distress signal to the police and emergency response units. The exact location of the vehicle is also transmitted.

CHALLENGES & DRIVERS

We asked Kadam what is slowing or inhibiting the adoption of digital in the manufacturing sector and he said the biggest challenge was lack of education and awareness.

“People use the word 'digital' quite liberally and do not understand what it means to become digital,” he says.

Legacy or old machines is also an inhibitor. According to an IDC prediction, by 2018 only 30 per cent of manufacturers investing in digital transformation will be able to maximise the outcome; the rest will be held back by outdated business models and technology.

Many of the machines used in India today are old. The organisations that own them are not ready to retrofit old machines with sensors, fearing their performance will be degraded or the machines would be damaged. Businesses want to hold on to legacy infrastructure as they made huge investments. The price of high-end sensors is high and is also a deterrent.

However, due to pressure from competition and rising expectations from customers, manufacturing companies are gradually increasing investments in digital. IDC predicts that by 2019, 75 per cent of large manufacturers (worldwide) will update their operations and operating models with IoT and analytics-based situational awareness to mitigate risk and speed time to market. The Government of India's 'Make in India' initiative is also attracting MNC manufacturing companies to India, and local players have to digitise to face the competition. A prominent example is mobile phone manufacturing. 

“The biggest driver is compliance and regulation. It is easier to comply through digitisation," said Kadam.

The other driver is the competition from the start-up ecosystem. The incumbents are challenged by disruptors and are forced to change their business model. Instead of just selling a product, the model has now become service-oriented. From selling tyres it has now become tyre as a service. CEOs in India also understand that without digital, their businesses will become obsolete,” said Kadam.

IDC predicts that by 2018, 60 per cent of large manufacturers will bring in new revenue from information-based products and services, while embedded intelligence will drive the highest profitability levels.

However, to surf the digital wave and enjoy lucrative opportunities, manufacturers will need to adapt their supply chains, assembly lines and operating models for digital technologies. Their customers will need to upgrade equipment and get rid of legacy infrastructure and outmoded equipment.