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HowtoStartwithIndustry4.0inSMEs

PracticalRoadmapforIndustry4.0IntroductioninSME24thofNovember,2017Chambre deCommerce,Luxembourg

ThomasKorne

PortfolioIPL- InstituteforProductionandLogisticsSystems

EuropeanResearchandDevelopment

Production&logistics

Qualification,coachingandtraining

Managementandorganisation

Globalorientation Strategyconsulting

§ LeanSixSigma§ Companyandsupplierdevelopment

§ Academicresearchmethodology

§ Developmentofinnovativemethodsforpracticalapplication

§ Greenfield-/Brownfield-concepts

§ Developmentandtransformationofproductionsystems

§ Industry4.0Roadmapping

§ Supplychainorganisation

§ Designofmaterialflow

§ Worldwideprojects§ LocatedintheGreaterRegionofFR,LU,DE

§ Projectmanagement§ Interims-management&service

2

AgendaContentofPresentation

§ Introduction§ StrategicneedforIndustry4.0intheSMEsector§ Introductoryexamples

§MethodologyforcreatinganindividualRoadmapIndustry4.0§ Phase1:Companyanalysis§ Phase2:Identifyopportunities§ Phase3:Selectandevaluateopportunities§ Phase4:CreateandrealizeRoadmap

§ Summary

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StrategicNeedforIndustry4.0Enablers,OpportunitiesandRisks

Enablers Opportunities

Barriers/Risks

Digitalization(„BigData“)§ Increasingavailabilityofdataabout

customer,productandproduction

Connectivityandcommunication(ICT)§ InternetofThings(IoT)§ Real-timecommunication§ Permanentavailabilityofbroad-

bandconnectionsforlargedata

Disruptivetechnologies/software§ CyberPhysicalSystems:lightweight

robots,Automatedguidedvehicles,drones,3Dprinting,VR/AR,mobiledevices,pick-by-tech,etc.

§ BusinessAnalytics,AI,Blockchain

1

2

3

§ Delayduetounclearcost-benefitratio§ Deficitspreventimplementation:lackof

technologyandknowledge,rigidorgani-zational structures,poormasterdata,etc.

§ Cultureofpreservationandlackofcouragegrantscompetitiontime-criticaladvantages

4

§ Vertical/horiz.integration§ SupplyChaintransparency§ Processautomation§ Flexibilityandagility

Efficientproduction

§ Newservices§ Masscustomization§ Newtypesofcooperation

Newbusiness/products

Aclevercombinationofenablersinowncompanyleadstonewopportunities

IndicativeOpportunitiesofIndustry4.0ValueDriversforPotentialsaccordingtoMcKinsey

5Source:McKinseyDigital(2015)

Resource/Process

Assetutilization

Labor

InventoriesQuality

Supply/demandmatch

Time-to-Market

Service/After-Sales

Productivityincreaseby3-5%5

30-50%reductionoftotalmachinedowntime²

45-55%increaseofproductivityintechnicalprofessionsthroughautomationofknowledgework4

Costsforinventoryholdingdecreasedby20-50%3

Costsforqualityreducedby 10-20%6

Forecastingaccuracyincreasedto85+%3

20-50%reductionintimetomarket1

10-40%reductionofmaintenancecosts1

1Cf.McKinseyGlobalInstitute:Bigdata:Thenextfrontierforinnovation,competition,andproductivity2McKinseyanalysis3McKinseyanalysis4CF.McKinseyGlobalInstitute:DisruptiveTechnologies5See,forexample,ABBcasestudy6Cf.T.Bauernhansl,M.tenHompel,B.Vogel-Heuser(Hrsg.):Industrie 4.0inProduktion/Automatisierung/Logistik (2014)

ANewViewonWaste„DigitalWaste“byUnusedInformationaccordingtoMcKinsey

6Source:McKinseyDigital(2015)

IndicativeBarriersforIndustry4.0IntroductionChallengesforaSuccessfulImplementationofIndustry4.0

Source:PWC(2014),Studywithn=235companiesfromGermany,5businesssectors 7

6%

13%

18%

19%

20%

22%

26%

30%

46%

0% 10% 20% 30% 40% 50%

Unsufficientnetwork/storagecapabilities

Slowexpansionofbasictechnologies(broadband)

Lowpriority/commitmentfromexecutive…

Issueswithdatasecurity

Lowmaturityofrequiredtechnologies

Unclearlegalsituationconcerningownershipof…

Missingstandards,normsandcertificates

Unsufficientqualificationofworkforce

Unclearcost-benefit-ratio,unclearinvestments

FactsaboutIndustry4.0inSMEsStatusintroductionandimplementationofIndustry4.0inGermany

Source:StudyandthesisofUniversityAnsbach (2017)withn=333companiesfromdifferentbusinesssectorsinGermany 8

44%

56%

IsyourcompanyusingIndustry4.0applications?

Yes

Nein

53%

4%

43%

DoyouplanspecificinvestmentsinIndustry4.0applications?

Yes,weplanintroduction

No,Industry4.0isoutofquestionforus

No,wedon'tseeneedforaction,currently

CurrentuseofIndustry4.0-applications.Resultofquestionnaire– Industry4.0inSME,n=297

PlanneduseofIndustry4.0-applications.Resultofquestionnaire– Industry4.0inSME,n=202.

FactsaboutIndustry4.0inSMEsApplication

9

10%24%

36%38%40%

89%96%

0% 20% 40% 60% 80% 100% 120%

OthersMarketing

R&DSales

PurchasingLogistics

Production

InwhichareasofthecompanycouldyouimagineusingIndustry4.0applications?

ApplicationofIndustry4.0Resultofquestionnaire– Industry4.0inSME,n=293,multipleanswerspossible.

Source:StudyandthesisofUniversityAnsbach (2017)withn=333companiesfromdifferentbusinesssectorsinGermany

FactsaboutIndustry4.0inSMEsPotentialBenefits

10

9%

9%

6%

7%

26%

24%

25%

36%

36%

41%

36%

53%

61%

25%

29%

41%

43%

38%

43%

47%

44%

45%

44%

53%

40%

32%

53%

52%

48%

39%

28%

26%

23%

15%

17%

12%

9%

6%

6%

13%

10%

5%

11%

8%

7%

5%

5%

2%

3%

2%

1%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

FosterWork-LifeBalanceShortentime-to-market

IncreasemotivationofworkforceOverwhemingofemployees

DevelopmentofnewbusinessCustomizedproduction

ReliefforemployeesNewbusinessservices

ResourceefficiencyFlexibleproduction

ImprovedMESEfficiency

Increaselevelofautomation

WhichofthefollowingopportunitiesbyIndustry4.0doyouconsiderrealistic?

doesapply doesratherapply doesrathernotapply doesnotapply

OpportunitiesforIndustry4.0Resultofquestionnaire– Industry4.0inSME,n=295,multipleanswerspossible

Source:StudyandthesisofUniversityAnsbach (2017)withn=333companiesfromdifferentbusinesssectorsinGermany

IntroductoryExampleforMarketing4.0intheApparelIndustry

Industry4.0inMarketing&Sales

11Source:BigDataMonitor,LOCTeam

„BigData Monitor“§ Comprehensiveanalysisofsalesdata

forhighvarietyfashionproducts§ Increaseexpertiseofresponsible

employees§ Developmentofadatamodelfor

earlywarningsincustomerdemand§ Modelprovidesprobabilityofsuccess

ofanewproductbeforemarketentry§ Easesdecisionmakinginproduct

development§ Reductioninnumberofvariants

Industry4.0inProductionIntroductoryExampleforCraftsmanship4.0

12Source:withkindapprovalofBusiness-KompetenzZentrums (eBZ)Kaiserslautern

Observationalstudiesandsituationalanalysisforconstructionsites

Industry4.0inProductionIntroductoryExampleforMaintenance4.0

13

MachineconditionmonitoringatAGFAPeißenberg andmaintenanceviaInternet24/7

Source:PresentationAgfa-Gevaert HealthCareGmbH Werk Peißenberg,AKJAutomotiveKongress Saarbrücken,13./14.September2017

„MobileControlApp“§ Getmachineinformation§ Makeprogramchanges§ Integratedcameratransmitsvideo

fromproductionprocesslivetoiPad§ Onlinemonitoringfrom"outside"

Meetingswithsteering-committeetoalignresults

IndividualCompanyRoadmapforIndustry4.0Approach,PhasesandInstruments

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealize

roadmap

1 2 3 4

Phase

Instruments

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§ Pre-structuredInterviews§ Organisationandtasks§ Infrastructurewith

input/output§ Coreprocessesand

communication§ Typicaldeviations§ Strength/Weaknesses§ Strategicfieldsof

actions

§ Quick-CheckI4.0(Form,examples)

§ BusinessModelCanvas§ DesignThinking

Workshop

§ Catalogueforevaluation(Workshopwithkeyquestions)

§ Benefit-feasibility-matrix§ Checkofpre-requisites

human,technology,organisation(Workshopwithkeyquestions)

§ Investmentcalculations§ Evaluationofnon-

monetarybenefits(WorkshopwithExtendedPerformanceAnalysis)

§ Roadmapping I4.0§ Projectplansforstepwise

introduction§ Operationalsupportof

implementation

Source:AK4.0model,Seiter M.etal.(2016),modified

Phase1:CompanyAnalysisPre-structuredInterviewsInterviewsMaptheCurrentStateoftheCompany

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A)Organizationandtasks B)InfrastructureandI/O C)Coreprocessesandcomm.

D)Defectsanddeviations E)Strength/Weaknesses F)Strategicfieldsofaction

§ Organisation,R&R§ Tasksandfocusof

departments§ Qualificationofemployees

§ Importantresources(machines,licenses,etc.)

§ Inputandoutputsfromrelevantdepartments

§ Importantprocesses/productsin/fromdepartments

§ Communicationstructures

§ Typicalissuesanddeviationsindifferentdepartments

§ Issuesbetweendepartmentsaswellascustomers/suppliers

§ Strength/weaknessesofdepartments,products,company

§ Strength/weaknessestocustomersorwithsuppliers

§ Strategicchangerequests§ Futuremarketpotential§ Differentviewpointsfrom

employeesandexecutives

Infra-structure

Input Output

Fehler✓ ×

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Phase2:IdentifyOpportunitiesQuick-CheckI4.0forProduction

16Source:VDMA(2016),modified

1

2

3

4

5

6

Sixapplicationlevelswithfivetechnologicalandsequentialdevelopmentstages supportbrainstormingofideas

Quick-Check-interviewsorworkshopsreveal

Currentstate

Futurestate

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

iBin:automizedinventorydetection

andtriggerforpurchaseorders

Quick-CheckProduction:DataprocessingExample:InventoryManagement

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Automaticprocessplanning/control

Evaluationforprocessplanning/control

Analysingdataforprocessmonitoring

Storageofdatafordocumentation

Noprocessingofdata

Manualdisposition(orderpoint)forC-partsintraditional

containers

DataAnalyticswithdatabasedinventory

reduction

Know-howauto-mation forinventoryplanning(Cognitive

Computing)

Documentationofreplenishment;manualordering

process

Technology:Traditional

HumanManualprocess

Organisation:Skilledlabor required

Technology:traditional

Human:Manualprocess

Organisation:Standardizedwork

Human:Competencyindata

SAPDeutschlandSE&Co.KG

Organisation:ConsistentMasterdata

Technology:DataAnalyticsTool

Human:Acceptancebyworker

SAPDeutschlandSE&Co.KG

Organisation:Clarifiedlegalbasis

Würth Industrie ServiceGmbH&Co.KG

10)6) 7) 8) 9)

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Source:forpicturereferencesseeendofpresentations

Technology:ERP&Software

Human:Onlyforescalation

Technology:RFID,opticalcamera,ERP

Organisation:Skilledlabor,consistency

Phase2:IdentifyOpportunitiesQuick-CheckI4.0forProduct/BusinessModel

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Sixapplicationlevelsarealsoavailablefornewproductsorbusinessmodels,eachwithfiveconsecutivedevelopmentstagesforbrainstorming

Source:VDMA(2016),modified

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

1

2

3

4

5

6

Quick-CheckProduct:MonitoringExample:ProductSafetyinTransportation

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Independentlyadoptedcontrolmeasures

Prognosisofitsownfunctionalcondition

Recordingofoperatingconditionfordiagnostic

DetectionoffailuresNomonitoringbytheproduct

Technology:Properpackaging

HumanManualprocess

Organisation:Skilledlabor required

Technology:Tags

Human:Manualprocess

Organisation:Controloftags

Human:Actbasedondata

Organisation:ConsistentMasterdata

Technology:Sensors,Software

Human:Escalationonly

Organisation:Reliabledata/limits

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Source:forpicturereferencesseeendofpresentations

Technology:Sensor,App,Server

Human:Escalationonly

Technology:Innovationrequired

Organisation:Customeracceptance

1) 2) 3) 4) 5)

Packagingwithself-correctionincaseofenvironmentalissues

Passivesecuritywithwarning,sturdy

packaging,bubblewrap

DropTagEVENT:Low-costtoolforcondition

monitoring

Packagingprovidesprognosisabout

functionalityofgoods

Tiltingindicatorfortransportcontrol

EnviroPackGmbH TransPack-KrumbachGmbH

CambridgeConsultantsLtd&Inc

DBSchenker SecurityGuard

Phase3:ChooseandEvaluateOpportunitiesEvaluationCatalogueandBenefit-Feasibility-Matrix

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Feasibilitydifficult easy

low

high

Mon

etaryBe

nefits

TOP-OpportunitiesEconomicallyattractive and

feasible

Economicallyattractive,butdifficulttoimplement

Economicallynotattractive,anddifficulttoimplement

Economicallynotattractive,buteasytoimplement

Source:Seiter M.etal.(2016)

⇒Keyquestionssupportafactualassessmentofcost-effectivenessandfeasibilityoftheplannedmeasures

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Phase3:ChooseandEvaluateOpportunitiesDeriveandEvaluateNecessaryPre-requisitesforIndustry4.0Transformation

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Workshopwithkeyquestionswillrevealrequiredmeasuresandadditionalinvestmentstocreatepre-requisitesintermsof

§ Human§ Technology§ Organization

Source:Seiter M.etal.(2016)

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

MonetarybenefiteffectsNon-monetary,direct

quantifiablebenefiteffectsNon-monetary,qualitybenefit

effects

Lowpersonnelcostsduetonetworkedmachines

Optimizedemployeeutilizationthroughtheuseofefficient

machines

Employeesatisfactionthroughattractiveworkplacedesign

LowcoststhroughPredictiveMaintenance

Lowernumberoferrorsduetoearlyerroranalysis

CooperationsthroughjointITplatforms

Lowerinventorycoststhroughoptimizedutilization

Highadherencetoschedulethroughefficientplanning

Transparencyduetohighdataavailability

Lowercost,higherrevenueetc.

Optimizedleadtimes/utilizationetc.

Customersatisfaction,transparency

Phase3:ChooseandEvaluateOpportunitiesMonetaryandNon-monetaryBenefitEffects

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⇒Bettertransparencyincost-benefitratiothroughconsiderationofnon-monetarybenefiteffects

Source:Seiter M.etal.(2016)

CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Phase3:ChooseandevaluateOpportunitiesFinancialEvaluationofNon-monetaryBenefits

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CompanyAnalysis

Identifyopportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

Actual Desired Delta750 80 80.67 1%

Actual Desired Delta Actual Desired Delta5.73 10 10.08 1% 10 9.6 -4%

Actual Desired Delta Actual Desired Delta210 206.91 -1% 3 3.19 6%

Actual Desired Delta Actual Desired Delta

25% Delta

10Desired

8Actual

Revenue increase in T € per year

Cost cutting in T € pro Jahr

Monetary effect in T € per year

755.73Actual Desired Delta Actual

Route optimization Maintenance planningTravel cost per maintenance per day in € Number of maintenances per day

Storage costs WarehousingCalculated storage costs in T € per year Inventory turnover rate on filter

Long-term optimizationReclamation quote

Reclamation costsCalculated reclamation costs in T € per year

19%23.7520

Product qualityDowntime plant in h per year

Needed maintenances per dayDesired Delta Transparency

Non-monetary, direct quantifiable benefit effects

Revenue new customers in Mio. € per year

-6%18.7420

Monetary benefits

Existing customersRevenue existing customers in Mio. € per year

Existing customers

Non-monetary, quality benefit effects

20%

20%

40%

25%

20%

10%

40%

25%

10%

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Strengthofeffect

Phase4:EstablishandRealizeRoadmapRoadmapforstepwiseintroduction Compnany

AnalysisIdentify

opportunities

Chooseandevaluate

opportunities

Establishandrealizeroadmap

1 2 3 4

24Source:Seiter M.etal.(2016),modified

ARoadmapIndustry4.0⇒visualizesthelong-termtransformationstrategy⇒isflexibleandmaybecontinuouslyadaptedbyorganizationallearning⇒detailsnecessarymeasuresinto§ manageablestepsand§ financiallyviablesub-projects

2019

2018

2021

+20

20

20192018 2021+2020

Human

Organization

Technology

Continuousdigitalawarenessandqualificationofemployees

Modifymachines

InstallcontinuousIT

support

Integrationinproduction

Re-alignworkplaces

Definitionandroll-outofdigitalRoles&Responsibilities

Defineandcascaderoadmap

Technologicalassessment

Developmentandtrainingof

digitalcompetences

Efficientcommunication

Softwaretraining

IntegrateITconcept,step

IIIntegrateIT

concept,stepI Processmodification

AlignwithcustomerITnetwork

=stepwisemeasuresforintegrationofIndustry4.0

ChangeManagement

concept

SummaryImportantAspectsofCreatingandImplementingIndustry4.0Roadmaps

§ Industry4.0offersfutureopportunitiesthroughclevercombinationof§ Digitization§ Connectivityand§ Disruptivetechnologies/software

§Benefitsneedtobeindividuallyandmonetarilyassessable§Quick-CheckI4.0supportsandsimplifiesbrainstormingforideas§ Industry4.0roadmapconsolidatesatransformationstrategy§ Thetimefactorcompetitionplaysacrucialroleincompetition§ SimilartoLean,Industry4.0willfailwithoutstrongcommitmentfromleadership

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Q&A

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Thankyouforyourattention!

ReferencesUsed/RecommendedLiterature

MaturityModels

BusinessModelCanvas

FinancingandInvestment

§ BCG(2017):DigitalAccelerationIndex,downloadat21.10.17,link:https://www.bcg.com/capabilities/technology-digital/digital-acceleration-index.aspx

§ McKinseyDigital(2015):Digitaler Kompass Industrie 4.0,Industry4.0Howtonavigatedigitizationofthemanufacturingsector,downloadat21.10.17,link:https://www.mckinsey.de/files/mck_industry_40_report.pdf

§ PWC(2014):Strategy&,Chancen undHerausforderungen dervierten industriellen Revolution,downloadat24.10.17,link:https://www.strategyand.pwc.com/media/file/Industrie-4-0.pdf

§ Seiter,M.etal(2016):RoadmapIndustrie 4.0:Ihr Weg zur Erfolgreichen Umsetzung vonIndustrie 4.0,Verlag tredition GmbH,Hamburg,2016§ Schuh,G.etal(2017):Industrie 4.0MaturityIndex:Diedigitale TransformationvonUnternehmen gestalten,Acatech Studie,downloadat

21.10.17,link:http://www.acatech.de/fileadmin/user_upload/Baumstruktur_nach_Website/Acatech/root/de/Publikationen/Projektberichte/acatech_STUDIE_Maturity_Index_WEB.pdf

§ VDMA(2017):Leitfaden Industrie 4.0:Orientierungshilfe zur Einführung indenMittelstand,downloadat21.10,17,link:http://industrie40.vdma.org/documents/266693/9670777/4%20I40%20konkret%20B-und-R.pdf/6a2d2f93-cd8a-4c11-9287-a63cd7a4dc43

§ Osterwalder,A.,Pigneur,Y.(2011):BusinessModelGeneration:Ein Handbuch für Visionäre,Spielveränderer undHerausforderer,CampusVerlag,FrankfurtamMain,2011

§ Becker,H.P.(2015):Investition undFinanzierung:Grundlagen derbetrieblichen Finanzwirtschaft,7.Auflage,Verlag SpringerGabler,Wiesbaden,2015

§ Seiter,M.etal(2007):Wirtschaftlichkeitsanalyse mit dem ExtendedPerformanceAnalysis- AnsatzEPA– AmBeispiel vonRFIDInvestitionen,IPRIResearchPaperNr.10,Stuttgart,2007

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1) Enviro PackGmbH:https://www.enviropack.de/sperrschicht-luftpolsterfolien.html?gclid=Cj0KCQjwgIPOBRDnARIsAHA1X3Q9YyjidXk1UddUPs0tJPFLyKoy7qnuqryrybpYfM-Dz7a8Fa-jGwQaAjhnEALw_wcB

2) TransPack-KrumbachGmbH:https://www.transpack-krumbach.de/transportkisten-ladungssicherung-export/transportueberwachung/tiltwatch-kippindikator?gclid=CjwKEAjwgIPOBRDn2eXxsN7S4RcSJABwNV90XbOACS0sujUfwxepREZOFSnhicqjWYs0MRvjFmAlThoCLRPw_wcB

3) CambridgeConsultantsLtd&CambridgeConsultantsInc:https://www.cambridgeconsultants.com/droptag

4) DBSchenkerSecurtiy Guard:AKJAutomotivePresentation,DBSchenker

5) Vontobel HoldingAG:https://rogerstuder.vontobel.com/wp-content/uploads/sites/379/zukunft-der-digitalen-welt-wie-wir-dem-digitalen-wandel-begegnen-muessen-e1443169203873.jpg

6) UltimoBeratungsgesellschaftmbH:http://www.ultimo.co.at/theorie.htm

7) BEYER-MietserviceKG:https://www.beyer-mietservice.de/unternehmen/news/berufliche-perspektiven.html

8) SAPDeutschlandSE&Co.KG:https://www.sap.com/germany/products/analytics/business-intelligence-bi.html

9) CreativeMarket:https://creativemarket.com/sjagiello/574425-Cognitive-Computing-Icons

10)Würth Industrie ServiceGmbH&Co.KG:https://www.wuerth-industrie.com/web/de/wuerthindustrie/cteile_management/kanban/ibin_intelligenterbehaelter/ibin.php

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OtherReferences