WelcomeIndustry 4.0 implemented successfully

13. Niedersächsischer AußenwirtschaftstagFrank Maier • Chief Technical Officer • Lenze SE April 2016

Our program for today…

• Short Introduction to Lenze

• 2 Megatrends drive us

• The Challenge

• Proposed solutions: 2 examples from Lenze

• More drive(s) for innovation

SHORT INTRODUCTION TOLENZE

Always one idea ahead –for more than 65 years.

Our enthusiasm for innovative ideas has a long tradition. Over 65 years ago, Hans Lenze founded the company with considerable courage and great vision, and pursued his strategy for growth with determination.

Since then, the company has been in the ownership of the family, who will continue to have responsibility for the Group and to exercise a lasting influence on our actions in the future.

Sales: 634 Mio. Euro

Employees: 3437 (@April 2015)

Equity ratio: 62 percent

Key Figures

621

505

417

567 577 585610

634

0

100

200

300

400

500

600

700

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Mio

€

Development of sales in Mio € from 2007 to 2014

Aerzen, GermanyHeadquarters forWorld & Europe

Uxbridge, USAHeadquarters for America

Shanghai, ChinaHeadquarters for Asia

On hand in 60 countries.Wherever our customers need us, we offer sales, engineering support, and service.

7 development centers8 productions5 logistics centers

Sales and service in more than 60 countries.

Lenze Businesses

Drives and AutomationIncrease productivity and product

quality for repetitive processesthrough automation solutions

MobileInnovative solutions to

enable competitive electromobility for

commercial vehicles

SelectionReduction of procurement cost through wholesale of

power transmission components

EncowayReduction of process cost for selection, configuration,

quotation and order processing of complex

products

2 MEGATRENDS DRIVE US

Megatrend 1

• The consumer market requires an increasedindividualization of products which starts toinfluence the whole supply chain.

Lot size 1 Becomes the Standard – Without Incremental Cost

Personalized bookLot size 1,0• 10 different characteristics• At 68 positions in the book

• Price: 24,95 €

Lenze Geared MotorsAvg Lot size 2,4• 1028 possible variants per gearbox• ca. 400.000 geared motors / year

• Price: < 500 €

Personalized chocolateMin Lot size 20• Arbitrary colors and motive• Express or normal delivery

• Price: 50 €

• Highly networked processes• Flexible machine operation with „zero“ setup time• Sophisticated, mature logistics

We need the SMART Factory!

Courtesy ZVEI Courtesy ZVEI

I need 5of them

Please mix:Chocolate and

caramel cookiies

Hey, the Maierorder must be first

I need only 2

Ooops, here area couple of

broken pieces,need to sort out

The SMART Factory is• Adaptive and anticipating• Resource efficient (material and

people)• Ergonomic (and safe)• Horizontally networked (along the

value chain)• Vertically networked thoughout all

business processes

throughCyber-Physical Systems (or Intelligent Technical Systems)

The process reverses: The machine does not produce a determined good, but the good tells the machine what it wants to be!

A great example for an adaptive system!

Example: We measure Disney World

Some important technical elements arerequired

Courtesy ZVEICourtesy ZVEI

I need 5of them

Please mix:Chocolate and

caramel cookiies

Hey, the Maierorder must be first

I need only 2

Ooops, here area couple of

broken pieces,need to sort out

Pattern recognition

ERP Integration

M2MCommunication

Cognitive robotics

ArtificalIntelligence

How competent are we asmachine builders in these fields?

……

Megatrend 2

• The consumer market requires an increasedindividualization of products which starts toinfluence the whole supply chain.

• The change in demography requires higher levelof automation and man – machine integration. In particular, SW resources are short already and thegap will widen further.

Demographic ChangeE

urop

eA

mer

icas

Asi

a-P

acifi

c

France

Italy

UK

Canada

Germany

Spain

Brazil

China

Indonesia

Russia

Mexico

India

JapanSouth Korea

USA

Labor shortage / surplusin 2020

6%

8%

6%

3%

-4%

17%

-7%

7%

5%

-5%

6%

6%

3%-6%

10%

Labor shortage / surplusin 2030

-1%

-4%

-1%

-11%

-23%

-3%

-33%

-3%

0%

-24%

-8%

1%

-2%-26%

4%

• We need more automation and must make the SMART factory real to address the upcoming global workforceshortage,.

• However, to be able to do this, we need the right skills!

THE CHALLENGE

To summarize

As always: There is lots of new technologies which require new competenciesBUT: There is an increasing lack of people with the right skill

Courtesy ZVEI

Pattern recognition

ERP Integration

M2MCommunication

Cognitive robotics

ArtificalIntelligence

……

PROPOSED SOLUTIONS:2 EXAMPLES FROM LENZE

Increasing number ofproducts and variants.

Individualization

Individualization

Standardization of theproduct and build of

variants through software

Megatrend

What does this mean for theLenze customer?

How does Lenze addressthis?

Individualization through standardizationis possible !?!

Integrated intelligence reducesthe number of variants.

different mortorcontrol: Contactor,

starter, inverter

different brakevoltages

different motorpower

different gearreduction ratios

Different mainsfrequencies

50Hz / 60 Hz

One variant with theLenze Smart Motor

Configuration of standard building blocks becomes key

• In the last 5 years we created 10.000 new products per month, thereof 7500 through configuration.

• The fraction of configured products increased continuously and will continue to do so.

May 2010 August 2015 Increase CAGR

Lenze-Produkte 985.784 1.621.837 636.053 9,4%

Thereof through configuration 431.188 904.748 473.560 15,2%

44% 56% 75%

A structured portfolio of standardized building blocks isessential to enable individualization with acceptable effort.

Demographic Change

Demographic ChangeMegatrend

What does this mean for theLenze customer?

How does Lenze addressthis?

„As easy as that!“

Increasing lack of skilledresources hit German SMEs

particularly strong!

Individualization through standardizationis possible !?!

Integrated intelligence reducesthe demand for highly skilledpersonnel!

• SmartDevices and simple Apps buildthe link to the IT world

• Customer oriented assistancesystems simplify turn-on andtroubleshooting processes

Example: FAST

• Application Template plus pre-developed, standardized technology SW modules enable up to 80 % of machine software “off the shelf”

• Structured program layout improves software quality, allows appropriate software re-use and simplifies machine maintenance

Thesis 4

The ability to cooperate becomes a new core competency..

Thesis 1

Our society needs automation.

Thesis 2

Batch size 1 becomes the standard. Without any extra cost or loss of quality.

Thesis 3

Software expertise becomes the crucial factor.

Thesis 5

We will successfully make it!

Industry 4.0 is a key driver of innovation.We are a key driver of Industry 4.0.

Summary

• The existing trend of more and more value creation through softwareinstead of mechanics or hardware continues and accelerates

• This a combined with a lack of skilled SW engineers which may evenwiden further driven by the demographic chnage

This must be addressed by

• Increasing efforts in standardization to allow and support re-use ofstandardized building blocks

• Strong, worldwide collaboration in the supply chain to better balance, re-distribute of workload. Thuis requires consequent focus on the owndifferentiating competencies

As easy as that.

Thank youfor yourattention!

MORE DRIVE(S) FORINNOVATION

Intelligent Paths to Energy Efficiency

Horizontal conveying drive:• Permanent Magnet

Synchronous Motor (PMSM, 450W/ 120 Hz)

• efficient bevel gearbox

• sensorless control• decentralized drive

concepts

Hoist drive:• Permanent Magnet

Synchronous Motor (450W/ 120 Hz)

• efficient bevel gearbox

• new recovery unit instead of brake resistor

up to 10 % energy reduction @ comparable

cost

up to 40 % energy reduction @ comparable

costLenze Demonstrator HMI 2016

it‘s OWL booth hall 16, A04

Vorreiterprojekt„Ressourceneffizienz“

des LandesNordrhein-Westfalen

Flexible Conveying:

Source: ITA Hannover

„Plug & Communicate“DecentralizedNetworking

„Plug & Route“DecentralizedProduct Routing

„Plug & Transport“Conveying matrixwith decentralizeddecision making

See an early demonstrator in hall 12 booth B70

ZeitmanagementFolie Zeit

1 -

2 1 min

3 -

4 1 min

5 1 min

6 1 min

7 1 min

8 -

9 1 min

10 2 min

11 2 min

12 3 min

13 2 min

14 1 min

15 2 min

Folie Zeit

16 -

17 2 min

18 -

19 1 min

20 2 min

21 2 min

22 1 min

23 2 min

24 2 min

25 -

26 2 min

27 2 min

28 1 min

29 -

30 -

Total:35 min