Creating Business Value By Building Digital Manufacturing Ecosystems

14th May 2020

Authors: Tosin Famusudo, Axel Bindel, David Stewart

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Creating business value by building digital manufacturing ecosystems

Introduction The recent disruptions caused by the COVID-19 pandemic have resulted in a rapid increase in the adoption of remote working and the use of digital tools. For example, we have seen an increase in remote collaboration via video conferencing, digital team collaboration tools and animated work instructions which can be shared easily online (e.g. 3D PDFs). This has highlighted the necessity to embrace digital tools – a trend which is not new, but has been accelerated by these external events.

The recent experience of manufacturers illustrates that the need for these new technologies has been dictated by the business working environment (i.e. the need to keep workers safe and work from home where possible), and business goals (e.g. to ensure business continuity during the disruption). The successful implementation depends on clear leadership, company culture adapted to digital and remote working, and appropriate processes and technologies to be effectively utilised in the new context.

General business goals which can be supported by digital tools from our experience in supporting manufacturing businesses include the following:

• Increase resilience of businessoperations

• Increase cooperation and collaborationinternally and across the supply chain

• Reduce time to launch a new product• Increase efficiency in manufacturing

engineering• Increase quality and reduce

opportunity for failures• Increase innovation activities

This report aims to describe the high-level trends in the application and spread of digital technologies and HSSMI’s concept of “orchestration” which leads to the establishment of a successful digital ecosystem. As an example of such an ecosystem, the use case of digital twins, i.e. the digital mirroring of the physicalworld, is described and its businessbenefits explained. The report concludeswith a strategy on how businesses cansuccessfully implement a digital strategywhich is driven by creating business value.

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Creating business value by building digital manufacturing ecosystems

Trends in Digital Tools & Data Management

In order to understand the general trends in digital tools and digital transformations, we analysed three high-level aspects.

Physical storage - What are the trends in data storage? We have seen here a significant move from on-site servers to virtual and cloud based data storage. This trend has accelerated over the last 10 years and now 94% of enterprises use the cloud to store their data (Source: Flexera)

According to Right Scale’s annual State of the Cloud Report for 2019, 91% of businesses used public cloud and 72% used a private one. Most enterprises utilise a combination of both options – 69% selected a hybrid cloud solution. It is anticipated that 83% of enterprise workloads will be in the cloud by 2020. (Source: Forbes)

The prediction is that 41% of enterprise workload will be run on public cloud platforms by 2020. Another 20% will be private cloud-based solutions, while 22% will rely on hybrid cloud adoption.

Applications & technology use - How are the applications and technologies built? Are they closed and bespoke applications or systems, or are they designed with open and configurable interfaces? The trend has been to build applications around a core with open application interfaces, which allow third parties to add additional functionality or for companies to modify their systems.

Computing and analysis – Where does the computing take place? Locally, at the enterprise level or in a cloud-based manner? The trend is clear, that computation and analysis takes place on all levels with a significant increase in cloud-based, third-party analytics.

Taking the three major trends into account, we see that there is a major shift from bespoke, company focused IT systems and technology management towards an open system which allows the plug-and-play of new applications based on business processes and task needs – i.e. “orchestration”.

These three trends are illustrated in the graph on the next page.

What does that mean for businesses?

The main drivers for the system are shifting away from “in-house technology management”:

• The focus is on application changeand requirement management,stability / security and businessmapping towards drivers to“orchestrate” the right input systems;

• The focus is on the definition ofinterfaces and policies, rules andauthorisation, management ofownership models and systemsdriven by business goals and astrategic direction.

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Creating business value by building digital manufacturing ecosystems

The trend from in-house technology management to system orchestration is supplemented by a parallel increase in overall computing power. Computing power will significantly increase, in particular, in the mid-term when quantum computing becomes available. Computing constraints will not be the limiting factor but the best orchestrated business solution will drive business advantages. This trend shows that future systems will be defined by the business model and its flexibility to use different tools to implement the required actions.

At the same time it has to leave room for third-parties to add value in this eco-system, if it offers the required functionality and complies with the overall rules, interfaces and

authorisation management. The focus point is therefore mostly the underlying data, and new and evolving applications are being used in order to achieve the business benefit.

Hence, the future trend will not be reliant upon who owns the overall system, but who is responsible for data at any point in the development timeline, as well as who can add value to the digital ecosystem by integrating new task and business orientated applications or technologies to maintain the flow of data.

The image below shows the change in technology as we move from local company managed IT to virtual tasked orchestrated IT.

Figure 1: The change in technology

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Creating business value by building digital manufacturing ecosystems

Example – Finance Systems (Xero)

There are many examples which demonstrate the shift towards “orchestration” and illustrate the drivers described above. Such is, for example, the case with the relatively new finance system – Xero – which is used by mostly small and medium sized businesses.

The main application is built on a third-party public cloud (AWS) and provides the main functionality of the financial reporting and accounting system.

However, the system is completely cloud-based and offers open interfaces which enable third party providers to add value to the core system. All of this is managed within the Xero-App Marketplaces and allows companies to “orchestrate” their best practice system, which supports their

overall goal. However, the overall solution is not tied to a specific software provider of Xero itself. That means that if new innovations take place, applications can be swapped in/out of the live system, developing the overall system such that it ideally follows the overall business goals and strategy.

The actual processing and computing can be done externally through, for example, Microsoft Power BI.

That is just a small example that demonstrates the power of “orchestration”. It can also be used in other instances for more complex tasks, such as in manufacturing.

Characteristics Drivers

• The business model is the main focus• The ecosystem is driven by interactions between

different open applications / technologies• “Boundary”-innovations• Open innovation from outside the organisation• Flexible and integratable across company boundaries• Open to “unplanned” opportunities / innovations

“Orchestration”: • Management of

interfaces and policies /rules / authorities

• Ownership modeldefinitions

• Business goal andstrategy definition

• Organisation as key focus• Applications / technologies driven by company ROI• Internal focus – innovation developed and driven

from within the company• Limited input from outside the organisation• Less flexible• Potentially more secure• Difficult to integrate with other companies

Management: • Application change and

requirementmanagement

• Stability / security• Business process

mapping

Table 1: Characteristics and drivers for digital businesses

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Creating business value by building digital manufacturing ecosystems

Figure 2: Example for finance systems

Example – Manufacturing Systems

Manufacturing systems can be orchestrated in the same way around a centralised cloud computing system, where applications and visualisations are launched and executed in a virtual desktop environment with several instances per organisation. Specific applications can be added on the server-

side and orchestrated with access rights configured for each profile accessing the system though a Virtual Desktop Infrastructure (VDI). A pay-as-you-go access for certain parts of the system can also be made available, for example, for external users.

Figure 3: Example for manufacturing systems

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Creating business value by building digital manufacturing ecosystems

Digital Twin as “Orchestrated” Digital Ecosystem Digital twin refers to a digital replica of physical assets (physical twin), processes, people, places, systems and devices that can be used for various purposes. This digital twin in manufacturing businesses has to ensure it can interact with various different systems, information and data storage locations. Additionally, it also spreads over various different functions and, for best benefits, across company boundaries.

Overall, we see three different elements of a digital twin which work together but have different focuses:

• Product digital twin is a digital replicaof the physical product in the digitalworld through-out its life cycle.

• Manufacturing engineering digitaltwin is an accurate and complete digitalrepresentation of the developedmanufacturing engineering system(ME Digital Twin) through the use of adigital, collaborative single source oftrue data environment, where OEM’sand suppliers can combine inputsthrough integrated digital workflows toengineer, validate and optimise themanufacturing system virtually beforeequipment is manufactured anddelivered physically.

• Operation digital twin connects thephysical to digital in order to mirroroperations. This requires the ability tobring together a complex mix oftechnologies. Sensors, and the datathey create, are increasingly available –now even becoming built into modern

equipment – but making sense of such huge streams of data calls for a sophisticated mix of edge computing, high-speed data platforms, machine learning, simulation and processes.

Benefits

Implementing such digital twins allows companies to optimise decision making, take pre-emptive actions, enable remote collaboration, implement effective version control and data management via a single source of the data.

Direct functionalities which can be derived from a Manufacturing engineering digital twin are: optimised process and line planning, accelerated factory planning, virtual commissioning, reviews and validation.

How does that constitute an orchestrated digital ecosystem?

The main focus of the digital twin is the underlying data – the so-called single-source of truth, which builds the core and basis of the main system. Attached to that are very different applications, be that for simulations, for planning or training, with different business processes aligned to them, but it is fundamental that they are linked to the same data repository. Typically, in current state systems, a multitude of different applications are deployed and data can be fragmented and static. Data replication and version control can be prone to human error. Efforts are taken to deploy whole company systems which ensure working digital twins. However they do rely on big

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Creating business value by building digital manufacturing ecosystems

Figure 4: Types of Digital Twin

investments and are often tied to a single provider. A different solution is to create an orchestrated system based on a shared

digital ecosystem, centred around a central data system creating the “digital ecosystem”.

Figure 5: Managed to Orchestrated

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Creating business value by building digital manufacturing ecosystems

Strategy for Implementing a Digital Ecosystem

Understanding the Business Case

The fundamental starting point for implementation is the development of an understanding of the business aims. The digital twin can be orchestrated in a way to drive the business benefits and aims which are set in the company priorities.

1 – Definition of the data environment

A shared digital working environment allows all contributors (OEM and supplier) to bring their input together earlier in the engineering process, enabling early identification and avoidance of challenges.

2 – Definition of user benefits & profiles

Remote team members will be able to collaborate on complex visual data in real time, enabling simultaneous co-design of complex systems. As well as improving

efficiency and productivity by avoiding the delays of bringing people, data and physical equipment together, digital design collaboration has the opportunity to reduce design costs significantly.

The Elemental Digital Twin enables product development and manufacturing engineering to collaborate early in the program and influence the design to avoid major cost drivers. Depending on the user and their aims, profiles are created with individual access rights and privileges.

3 – Tool orchestration

Definition of digital tools that are linked to a single source of data, in a shared digital environment. The right tools and technologies are selected in order to support the business aims and user benefits.

Figure 6: Implementing a digital ecosystem

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Creating business value by building digital manufacturing ecosystems

Digital Readiness Review

A structured process to create a company specific digital development roadmap has been developed by HSSMI as the Digital Readiness Review. It is a set of comprehensive and strategic workshops to assess an organisation's current and desired digital future state. The Digital Maturity Model used during the assessment is made up of 5 thematic areas, covering both hard technical and soft business aspects of digital readiness.

1 – Business Model and Processes - What is the business model and processes? How can digital technologies facilitate the creation of value ? This includes re-alignment of industrialisation elements of a Product Development System to support the creation of the Elemental Digital Twin; creation of key Manufacturing Engineering checkpoints that support the industrialisation timeline; re-alignment of engineering order placement timing to support key Manufacturing Engineering checkpoints; and establishing a complete digital thread (understanding gaps in current digital thread- digital readiness).

2 – Leadership & People - How can leadership, people and culture drive change and add value towards business growth? This includes definition of roles and responsibilities and organisational requirements; definition of skills requirements; off-shoring or automation of repetitive tasks; agreement on the rules of engagement with suppliers (level of access and sharing).

3 – Technology Enablers - What technologies, platforms & tools are required / can be used to create value? This includes application and development of the right digital tools that are linked to a single source of data, in a shared digital environment; standard of model creation, including level of detail, structure(s), attributes and kinematics, to support supplier requirements as well as the downstream customer engineering and operation activities; acquisition and implantation of the right hardware including cloud storage and computing solutions to support Virtual Desktop Infrastructures. ]

4 – Data Management - How can data be harnessed to create useful information that can be intelligently used? This includes storage and transmission that supports a shared digital environment, including equipment suppliers; data storage and transmission, that supports the transition to the Analytical and Smart Digital Twin.

5 – System integration for Supply chain collaboration - What internal & external systems need to be linked up to connect: the product, people, plant & supply chain? This includes industry wide standards across manufacturers and supply chain e.g formats,; methods, security etc; file format that can maintain the level of detail, structure(s), attributes and kinematics; storage and transmission that supports a shared digital environment, including equipment suppliers.

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Creating business value by building digital manufacturing ecosystems

Conclusion In the future, we will see an increase of open systems, hosted in the cloud, performing distributed computing around a single data environment. Through open interfaces, companies will “orchestrate” a multitude of different applications.

The trend will not be reliant upon who owns the overall system, but who is responsible for data at any point in the development timeline, as well as who can add value to the digital ecosystem by integrating new task and business orientated applications or technologies to maintain the flow of data.

The right strategic approach needs to be in place to develop these new digital ecosystems. The main driver has to be the business benefit and strategic goals from which the selection of technologies follows suit and not vice versa. A structured way of accomplishing this digital development is the Digital Readiness Review, which has been developed by HSSMI and used to support manufacturing businesses.

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About HSSMI

• HSSMI is a sustainable manufacturing innovation consultancy, committed to helpingmanufacturing companies achieve their ambitions. HSSMI works across manufacturingindustries to help companies respond to market challenges by increasing productivity,transitioning towards a circular economy, and upscaling their products and processes.

• Since being founded in 2012, HSSMI has worked with government bodies, establishedmanufacturers and aspiring start-ups. HSSMI connects industry experts with people whowant to make their products in a cost effective, innovative and sustainable way.

• HSSMI’s areas of expertise include: manufacturing strategy, digital manufacturing tools,circular economy, lean manufacturing and automation, hydrogen propulsion, advancedmanufacturing simulation, E-drives, battery technology, and project management.