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Digital Transformation: The paperless factory
Valentijn de Leeuw Vice President
ARC Advisory Group [email protected] AIOTI
ALLIANCE FOR INTERNET OF THINGS INNOVATION
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 2
Content
ARC Advisory Group Digital Transformation: Smart Manufacturing and Industrial IoT 1. Paperless design, engineering, compliance and asset management 2. Paperless manufacturing 3. Paperless supply chains Outlook and recommendations
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 3
About ARC Advisory Group
Global Technology Strategy Consultancy § Domains: Industrial Design and Operations § Technologies: Automation, Instrumentation, IT, Industrial IoT (IIoT) § Typicals:
• Market size and trends • Best Practices, • Benchmarking, Strategy • IIoT Reports, Studies, Blogs, • Speaking engagements
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 5
vo•cab•u•la•ry (vō-kăbˈyə-lĕrˌē)
• Smart Manufacturing § Advanced Manufacturing: Advances in the physical and chemical processes
• Modular production • Additive manufacturing, advanced forming • …
§ Smart Manufacturing Technologies: Digital Transformation • Industrial Internet of Things (IIoT, including Cloud) • IT and Automation based technologies, e.g analytics • …
• Smart Manufacturing Initiatives § High Value Manufacturing Catapult § Industrie 4.0 § Smart Manufacturing Leadership Coalition, etc.
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 6
Smart Manufacturing and Industrial IoT
A WINNING STRATEGY ?
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 7
Smart manufacturing or Industrial IoT: A strategy for growth?
• Strategy for growth? • Hype? • Miss the train?
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 8
Manufacturing growth and competitiveness
Manufacturing § Resilience § Competitiveness § Growth
Are correlated with a High degree of § Technology intensity § Technology/manufacturing
complexity § Quality
DE
Complexity index 2010 versus 1995
SE UK
FR IT
ES
Impacted by Smart Manufacturing
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 9
Smart Manufacturing and Industrial IoT
THREE DOMAINS
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 10
Digital operations, asset lifecycle and supply chain management
RemoteMonitoringConnectedServices
SmartComponents
Sales
SupplyChain
Manu-
facturing
Business
Ops
Predic=veMaintenance
SmartProduct&ProcessDesign
SmartLogis=cs
ConnectedProduc=onAssets
Status,HistoryofProducts
BusinessProcessExecu=on
ConnectedProducts
AdvancedAnaly=cs
Andmanymore…
ConnectedSCON
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 12
Model for Major ALM (or PLM) Processes
Design & Build Operate & Maintain
Portfolio Mgt.
Plan Design Procure Build Operate Maintain Re=re&RecyclePlan Design Procure Build Operate Maintain Re=re&Recycle
Project Performance Management (PPM)
Asset Performance Management (APM)
Project PerformanceManagement
(PPM)
Asset PerformanceManagement
(APM)
Asset & ProjectPortfolio
Management(APPM)
Handover
ModificationRequestsFunded
Projects
New Facility
Requests
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 13
Vision for Computer Integrated Engineering and Production
Dr. Thomas Tauchnitz, Sanofi Aventis, 2005 § Single repository for all engineering disciplines from front-end through operations and
maintenance § Integrated compliance management § Manufacturing Operations Management and control systems synched with repository § Generic, modular designs to maximise reuse
PLM suites for discrete industries are far ahead in cross-lifecycle integration
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 14
Software is available for all functions along the life cycle
Challenges are related to synchronization among systems, applications and organizations
Owner – Operator
Operations/ Maintenance
(Registration) Qualification
Engineering/ Documentation (Construction/ Commissioning)
Process Design /
Documentation
Contractors Warranty Qualification Engineering/ (Construction) /
Engineering / Asset Management
3D Equipment / Plant design / OTS
Automation, Instrumentation, MPC, RTO
LIMS / PAT
Innovation Management / Project Management / Enterprise Asset Management / Portfolio Management / Risk & Compliance
Process Simulation
Other MOM functions, HSE
R&D
Process Simulation
Equipment Design
Process Synthesis
Control methods
Process Analytics
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 15
The reality: Asset Information Erosion
• Asset information is generally spread over applications, data bases and paper files
• Processes do not emphasize the synchronization of these sources
• Result is that information becomes inconsistent
• When external service providers are involved information becomes incomplete and more inconsistent
• Information is rarely handed over completely and electronically
• The cost of poor asset information is over 4% of CAPEX (NIST)
EPC$
Integrated$Approach$
O&O$
FEED$
Engineering$
Construc9on$
Commissioning$
Maintenance$
Redesign$
Shutdown$
Asset$Data$Quality$
Plant$Asset$Lifecycle$
Information Handover
Legal Requirement Level
Information Losses Paper-based Handover
O&O
EPC
EPC + O&O
Asset Information Quality and Quantity During Handover
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 16
World class producers have low cost and high availability
Maintenance has an impact on reliability (McKinsey, 2009) § World class oil and gas producers have 95-98% availability § Make right decisions on savings § Execute plans and processes flawlessly § Can improve availability with several percent while reducing cost 25-30%
30 McKinsey on Oil & Gas :LQWHU�����
operators, planners, and well services staff,
run frequent well reviews to analyze performance
gaps and identify ways of restoring and optimiz-
ing volume. The well services function ensures that
operators apply expert knowledge in well
interventions, use prior learnings and optimize
SURGXFWLRQ��VHH�([KLELW����ZKLFK�VKRZV�WKH�
VLJQL¿FDQW�YROXPH�RSSRUWXQLW\�IURP�VXSHULRU�ZHOO�
DQG�UHVHUYRLU�PDQDJHPHQW��
Superior contractor and supplier management.
,Q�WKH�SDVW�IHZ�\HDUV��WKH�PDUNHW�IRU�RLO�¿HOG�
VHUYLFHV�KDV�EHHQ�YHU\�WLJKW��DQG�KHQFH�LW�KDV�EHHQ�
GLI¿FXOW�IRU�PDQ\�RSHUDWRUV�WR�WLJKWO\�PDQDJH�
SHUIRUPDQFH�RQ�H[LVWLQJ�FRQWUDFWV��:RUOG�FODVV�
FRQWUDFW�PDQDJHUV�KDYH�D�UREXVW�SHUIRUPDQFH��
management system in place and hold frequent
dialogues with suppliers. They know how to
set incentives so that the contractor optimizes
value for the operator. Thus a well service
provider is not rewarded according to the volume
RI�DFLG�XVHG�WR�FOHDQ�XS�ZHOOV�EXW�UHFHLYHV�
LQFHQWLYHV�EDVHG�RQ�LQFUHPHQWDO�SURGXFWLRQ�
YROXPHV��:RUOG�FODVV�RSHUDWRUV�PDQDJH�
VXSSOLHUV�JOREDOO\�DQG�PDLQWDLQ�GHYHORSPHQW�
programs with select companies. They
develop an in-depth understanding of supplier
cost structures and continuously squeeze out
waste while allowing margins appropriate to the
current market environment.
Cost-optimization management.�:RUOG�FODVV�
RSHUDWRUV�PDNH�WKH�ULJKW�GHFLVLRQV�DERXW�ZKLFK�
costs to reduce, thus avoiding a downward
VSLUDO�LQ�UHOLDELOLW\�SHUIRUPDQFH��VHH�([KLELW����
which illustrates the vicious circle that many
operators can go into when reducing maintenance
H[SHQGLWXUH���,Q�DGGLWLRQ�WR�WKH�FRVW�RSSRUWX�
Exhibit 3
False economies
Short-term cost savings must be balanced against long-term performance.
Maintenance cost gap,% to top quartile
Increased focus on preventive maintenance brings slow improve-ment in reliability
Falling reliability forces operator to spend more on reactive maintenance
Operator cuts cost by eliminating planned maintenance activities
Production efficiency, % of production potential
Web 2010MoOG Upstream operationsExhibit 3 of 3Glance: Short-term cost savings must be balanced against long-term performance.Exhibit title: False economies
50
45
40
35
060 65 70 75 80 85 90 95 100
1998
1999
2000
2001
30
20
15
10
5
25
Target area
Producing assets Specific producing asset, over time
Precisely what ISO 55000 defines
§ Good practices in defining asset management system
§ Quality of governance is key
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 17
Implementation examples Dr. Tauchnitz of Sanofi implemented his vision
§ Developed engineering modules (multi-year effort)
§ Internal collaboration required adjustment to processes and mutual trust
§ Developed with Siemens first one-way then bidirectional interface with PCS7, from which NE150 was derived
Christoph Jauslin of Novartis implemented paperless integrated engineering globally
§ Paperless engineering, handover, operations and maintenance
§ Developed e-compliance, implemented by Siemens in COMOS
Monitoring & controlling
High-level risk
assessment Review & approval
Test & confirmation
Review & approval
Definition & setup
Review & approval
User requirements
Detail design
Performance qualification
Implementation
Validation master plan
Validation report
Quality, project & test planning
Quality report & handover
Installation qualification
Functional design Operational qualification
Creation & release
Review & approval
COMOS Provides Project and Workflow Support for Integrated Asset Information and Compliance management
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 18
Expected benefits § Manage information and processes
for compliance § Guarantee safe operation,
maintenance and change with up to date “as built” information
§ Single version of the truth § Eliminate non-value adding work § Reduce search time § Stream-line work processes
• Speed up management of change § Improve collaboration § Reducing engineering and contractor
cost OR improved quality
Unexpected benefits § Maintenance quality reduces cost in
maintenance and production § Cost of compliance constant despite
more complex regulation § Reduced on-boarding time § Increased % as-built documentation
Adding documents to the equation: KANEKA Belgium
Plant Environment Project
Environment
Changes
Corrective Changes
Documents
Assets
Standards and Specifications
Archive
Controlled Copies
Approved Revision
Controlled Copies
Approved Revision
SAP Intrane
t Plant 4D e-plan
CAD
Solution
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 19
Asset information integrity as key enabler
Design & Build Operate & Maintain
Portfolio Mgt.
Plan Design Procure Build Operate Maintain Re=re&RecyclePlan Design Procure Build Operate Maintain Re=re&Recycle
Project Performance Management (PPM)
Asset Performance Management (APM)
Project PerformanceManagement
(PPM)
Asset PerformanceManagement
(APM)
Asset & ProjectPortfolio
Management(APPM)
Handover
ModificationRequestsFunded
Projects
New Facility
Requests
AssetLifecycleInforma2onManagement
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 21
The Emerging Smart Production Environment
New or Changing … § Software: Analytics,
APS, MES/MOM, EAM/CMMS, LIMS, PAM, Security, etc.
§ Mobility and enhanced worker connectivity
§ Remote services; Product ‘as-a-Service’
§ Smart sensors, assets, network connectivity, cloud
§ Increased variety and changeovers
… All along with traditional automation and enterprise systems Smart
Products
Connected Products
Smart Metrology
3rd Party Services
Plant Systems and
Assets
Enterprise Systems
Connected Enterprise
Flexible Worker Schedules
Location/Nav Services
Video Presence (Expert Help)
Augmented Reality
Smart Tools
Connected Worker
Collaboration
Self-Planning Systems
Smart Components
Smart Logistics Smart Carriers
RFID
Smart Warehouse
IIoT Smart Module
Remote Monitoring &
Services
Connectivity Platform
Advanced Analytics
Apps
Smart Machines
Connected Machine
Smart Containers
Advanced Analytics
Logistics Services
Connected Supply Chain
Value Chain
Smart Consumers
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 22
Modular equipment, units and lines Revolution in engineering, construction and production
• Bayer’sproduc=onunitinstalledatINVITE
(Fine)Chemicals,PolymersandPharmaceu=calsDockingamodularplant
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 23
Standards for functions and integration well-defined
Functions for Production, quality, inventory, maintenance ops
Integration content Paperless is feasible Missing:
§ Value chain interoperability
§ M&A
IIoT implications for MES § More generic
specifications § More real-time
instantiation
Level 4
Level 1
Level 2
Level 3
Business Planning & Logistics Plant Production Scheduling, Operational Management, etc
Manufacturing Operations Management Dispatching Production, Detailed Production Scheduling, Reliability Assurance, ...
Batch Control
Discrete, Packaging Control
Continuous Control 1 - Sensing the production process,
manipulating the production process
2 - Monitoring, supervisory control and automated control of the production process
3 - Work flow / recipe control to produce the desired end products. Maintaining records and optimizing the production process.
Time Frame Days, Shifts, hours, minutes, seconds
4 - Establishing the basic plant schedule - production, material use, delivery, and shipping. Determining inventory levels.
Time Frame Months, weeks, days
Level 0 0 - The actual production process
Level 5 Business Management
5 - Strategic level, long term business planning, Financial, HR .. Time Frame
Years, Quarters, Months, Weeks
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 24
Impact on Integration Standards
Implications for standards
§ Reference Architecture Industrie 4.0 investigates extension of the physical model of ISA-88 and ISA-95 standards
Enterprise
Site
Area
Produc=onUnit
MayContain1ormore
Produc=onLine
WorkCell
SpecifiedbyISA95
StorageZone
StorageModule
ProcessCell
Unit
SpecifiedbyISA88
BatchorCon2nuousOpera2ons
DiscreteOpera2ons
InventoryOpera2ons
Con2nuousOpera2ons
Unit
Workcenter
Workunit
(GenericOpera2ons)
ConnectedWorld
(Connected)Product
FieldDevice
EquipmentModule
ControlModule
MayContain
MayContain
ExtensionproposedbyRAMI4.0
ExtensionproposedbyRAMI4.0
Sta=on
ControlDevice
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 25
Fast, world-wide production visibility and support
• SMLC:ALCOAOpera=onalIntelligence• Globalreal-=mesmelterproduc=ondatawithreal-=meanaly=cs• Internet
Source:GeoffWoods,ALCOA,livedemo,OSIsoZUC,2014
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 26
Impact on applications: IoT as MES add–on Optimizing Manufacturing with IoT at Intel
• IoT solution in parallel with MES § Flat architecture § Processing at the ‘edge’ § Controller connection to Cloud § Storage, analytics and predictions
• Complex partner network • Case 1: predictive combined asset and
quality analytics: 9M$ benefits § Reduce non-genuine off-spec (losses -25%) § Predictive maintenance (cost -20%)
• Two other cases with major benefits
• Lessons for other sectors § Incremental Industrial IoT application § Large data streams from ubiquitous
sensing need large bandwidth § Data selection at controller level § Wide range of analytics applications
possible h^p://www.intel.com/content/www/us/en/internet-of-things/white-papers/industrial-op=mizing-manufacturing-with-iot-paper.html
Short-termgainspossiblebyincrementalsteps
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 28
Traditional Supply Chain • A
dapt
ive
Pro
duct
ion
§ Dem
and
pull
§ Mat
eria
l sup
ply
coul
d be
pro
vide
d vi
a S
CO
N
Source:Poe^er,NamurGeneralAssembly2013
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 29
Source:Poe
^er,N
amurGen
eralAssem
bly2013
Industrie 4.0: Cyber-physical systems, real-time operating networks • V
MI u
sing
cyb
er-p
hysi
cal
syst
ems
§ R
equi
res
real
-tim
e op
erat
ing
SC
ON
!
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 30
From MRPII to Advanced P&S
• Manufacturing agility and supply chain speed will cause
• High Supply Chain volatility
• Traditional supply chain management will be insufficient
• Can be damped with near real-time predictive analytics
Collaborative Forecasting
and Demand
Management
Supply &
Demand Balancing
Scheduling And
Capable to Promise
Rough Cut Capacity Planning
Distribution Requirements Planning
Sales and Operations Planning
Master Production Scheduling
Material Requirements Planning
Infinite Capacity Scheduling Available to
Promise
Statistical Forecasting
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 31
From MRPII to Advanced P&S and Analytics
Collaborative Forecasting
and Demand
Management
Supply &
Demand Balancing
Scheduling And
Capable to Promise
Rough Cut Capacity Planning
Distribution Requirements Planning
Sales and Operations Planning
Master Production Scheduling
Material Requirements Planning
Infinite Capacity Scheduling Available to
Promise
Statistical Forecasting
Towards Predictive Supply Chain Analytics
and Network Optimization
Volatility can be damped with near real-time predictive analytics
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 32
Emerging SM / IIoT Architecture – SC Analytics
PlantOpera=ons
CorporatePurchasingEngineering
XYZChemical XYZChemical XYZChemical
Enterprise
Maintenance
XYZChemical
Device buses
Production Management
Logic & Motion
Discrete ControlProcess Control
Infrastructure (Networks…)
Wireless
HMI / Workstations
Fieldbus
Application Specific
Appliances
Safety
XYZChemical
Client
3rdPar.es
Supplier
Physicalassetwithsensors,actuators
LocalIoTComputeandCommunicatemodule
SmartMachine
IoTSmartModule
EmergingOp=on:ConnectAssetsUsingNewTechnologies
NewIoTAnaly=csandApplica=ons
PurdueHierarchy
IIoTHierarchy
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 33
Shorten SCM implementation time dramatically • SMLC Testbed General Mills • Complex integrated solution
requirement § Each implementation
iteration takes years § Objective: reduce
application building and integration to a few months.
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 35
Mastering the 4th Industrial Revolution: Davos 2016
Great opportunities § Consumer opportunities § Economic growth opportunities § Job opportunities for the highly skilled § Mobility without physical relocation § Barriers for entry shrink (investment to compete digitally is small) § Digital transformation can go hand in hand with sustainability
Great challenges § Rising inequalities, shrinking middle class § Privacy and cyber security § Skills transformation (every job will have digital components) § Low Investment/Savings ratio § Lack of physical interaction between people
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 36
Davos 2016: All stakeholders must take responsibility and contribute to make digital transformation a success
VISION, EXPERIENCE, ANSWERS FOR INDUSTRY © ARC Advisory Group • 37
It’s not just a matter of technology
In the end, it all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them. Prof. Klaus Schab, Founder and Chairman of the World Economic Forum
Thank You. Formoreinforma=on,contacttheauthorat
AIOTI ALLIANCE FOR INTERNET OF THINGS INNOVATION