Digitization Delivers for Manufacturers
We recently worked with the MPI group to examine the extent to which manufacturers are leveraging Industry 4.0 across their organizations. This summary specifically looks at how manufacturers (including paper companies) have applied digital technologies to improve plants, processes, and production performances (e.g., quality, on-time delivery, inventory turns, manufacturing costs). It also explores the opportunities and challenges manufacturers encounter when applying digital technologies to plants and processes. Since the Industry 4.0 Study was initially fielded more than five years ago, manufacturers have dramatically increased the pace at which they use Industry 4.0 technologies to enhance their operations. They’ve recognized that it’s not a question of if they should digitize their production, but when: digital laggards are falling behind digital leaders, and the gap is widening. This summary also highlights how self-described digital Leaders manage operations and perform vs. other companies.
Industry 4.0 Is a Foundation for Manufacturing
A majority of manufacturers (58%) have a strategy in place and implemented for applying Industry 4.0 technologies to processes, and 45% (average) of their production processes and equipment incorporate smart devices and/or embedded intelligence.
Among the 32% of executives who described their company’s Industry 4.0 capabilities as “Leaders,” 78% have a strategy implemented for Industry 4.0 technologies vs. just 56% of companies described as “competitive” and 22% of those described as “industry catchup/no Industry 4.0.” Digital Leaders also are more likely to report higher percentages of production equipment and processes that incorporate smart devices and/or embedded intelligence.
The papermaking industry is not famous for change, because often it is held back by the scale and capital investment required to adopt new technology. Progress has come slowly and incrementally, in cycles of planning, investment and build. But we see that industry 4.0 is accelerating the rate of change and implementation of digital solutions in the paper industry has rocketed from just 6% to 32% in 5 years (Source: 1StepChange).
The manufacturing activities most likely to incorporate at least some application of smart devices and/or embedded intelligence are manufacturing (78%), shipping/logistics/ transportation (75%), maintenance (74%), and document management (75%). Most of those areas represent key steps in the paper value chain. A higher percentage of Leaders report significant application for these activities. Industry 4.0 enables the delivery of critical information in real time.
A good example is Koehler Paper Group, a mid-sized producer of thermo-papers based in Germany. They to do predictive (production) quality in their mills. In correlating sensor data in real-time combined with enterprise data, they learned so much about their processes, that they can predict product quality parameters and they can correct production processes before issues occur. In this way they can stay within the allowed quality interval and less rework or scrapping will be required. Koehler says this approach paid off instantly.
More than half of manufacturers invested more than 5% of sales in implementing an Industry 4.0 strategy in their plants, processes, and supply chains in the past year. Some 74% of digital Leaders invested more than 5% of sales vs. 55% of competitive and 32% of catchup companies.
Impact from Industry 4.0 to Manufacturing Performance
The vast majority of manufacturers report that the application of smart devices and/or intelligent devices has improved production-related activities. Digital Leaders are far more likely to report “significant improvement” for these activities. Not surprisingly, these improvements also lead to better production performances.
And it doesn’t necessarily require huge budget for achieve significant advances. Family-owned Steinbeis Papier supplies magazine, office, and digital printing paper, made from locally sourced recycled paper. The company is exploring use of advanced analytics and artificial intelligence (AI) to analyze their data in real time for automated production monitoring and value chain optimization.
Being a relatively small paper company with limited IT resources, Steinbeis had to find a way to manage onboarding tens of thousands of sensors to their data model. Their approach is a good example of a company beginning to “industrialize” the application of technology. Steinbeis worked with a partner that provided a kind of web crawler to analyze their internal network for sensor data streams. This helped them to automate much of the onboarding process. Today, every second more than 25,000 sensors on the production lines deliver data, which is then analyzed in conjunction with data from the MES and SAP ERP systems in near real time. They check for inconsistencies in product quality, identify malfunctions easily, or simply benchmark equipment or production runs.
Deployment of Industry 4.0 in plants has increased productivity and profitability for nearly all manufacturers, with many reporting sizable increases: 66% report increased productivity of more than 5% over the past year, and 63% report increased profitability of more than 5% over the past year. Increases are even more pronounced among digital Leaders. A vast majority of manufacturers expect productivity and profitability improvements to increase over the next five years.
Industry 4.0 Manufacturing Challenges
The application of Industry 4.0 to production has not been without some difficulties: many manufacturers report that Industry 4.0 initiatives have not achieved all their objectives or sometimes have unforeseen challenges.
One example came from both a metal and paper producer – that had remarkable similar processes in their approach to using sensors to monitor and control quality. Both have sensors set up at very frequent intervals along the metals and paper rolling production lines – approximately every 10 cm – but both are only taking measurements every 100 cm. Despite their desire to track even more measurements, their infrastructure for sending, processing (in real time) and storing the data would not be able to cope with this amount of data – or would simply become unrealistically expensive.
Industry 4.0 Takeaways
Manufacturers are already reaping rewards from their investment in Industry 4.0 technologies. But the MPI Industry 4.0 Study finds that many aren’t taking full advantage of digital tools to improve operations. Given the range of opportunities to improve processes, productivity, profitability, and other performances via Industry 4.0, nearly all manufacturers should aggressively invest in their development by:
• Identifying the targets for application of Industry 4.0 technologies based on opportunities to improve critical operations measures (e.g., safety, quality, environmental).
• Applying smart devices to deliver real-time data to plant managers and executives to improve scheduling, asset management, workforce productivity, etc.
• Digitizing processes to facilitate widespread information sharing (with suppliers and customers) and to establish automated, proactive decision-making on the plant floor.
