white paper manufacturing the future: the smart factory

www.fujitsu.com/smart-factory

White Paper Manufacturing the Future: the Smart Factory Journey

White PaperManufacturing the Future: the Smart Factory JourneyFujitsu America, Inc. Ray Russ, Greg Pincar, Alok Sahu

Contents

Introduction »

The Smart Factory and its Benefits »

The Smart Factory Framework »

The Smart Factory Journey »

Case Studies »

Conclusion »



Introduction – Manufacturing the futureNot since the industrial revolution has manufacturing been able to trumpet a reputation as the place where the future happens today. However, over the last two decades, it has earned the reputation of being a noisy but dull branch of the modern technological world. Among the myriad of reports and studies about technological innovation, it is much more common now to hear manufacturing cited as an arena where so-called ‘digital transformation’ is being played out.

Why the change? Consider the evolution that started two decades earlier. From the 1980s, Information Technology (IT) was where the real excitement happened, driven by the microprocessor revolution. This was followed by the old world of Operational Technology (OT)– when valves, pumps, milling machines, metal pressers, lathes and conveyor belts joined the party. By embedding processors in OT and connecting everything in the factory to each other as well as the enterprise IT systems, manufacturers created the first version of ‘connected factories’. A few years later, the ability to give any device an IP address opened the doors to the Internet of Things (IoT) and a new set of ‘hyper-connected’ possibilities for manufacturers. Now they could really see what was happening along entire supply and value chains.

Long hidden away by intermediaries and retailers, they even have access – holy grail – to direct contact with the ultimate end user be it consumer or customer. The speed at which all this is possible has been accelerating too. Modernizing legacy IT environments can now be extremely rapid, leveraging modern platforms like cloud, SaaS and PaaS to enable fast adoption of new technologies and applications.

In Germany in 2011, the emerging new possibilities were brought together in a vision called ‘Industry 4.0’. Since then, this has seen widening global adoption and is delivering numerous benefits unthinkable just a few short years ago. At the heart of the Industry 4.0 vision is the Smart Factory.

The Smart Factory is where the future is being made today. This white paper discusses what a Smart Factory is, its benefits, a framework for envisaging a Smart Factory future radical enough to disrupt markets and a roadmap to that radical future that is both pragmatic and low risk.



The Smart Factory and its BenefitsSmart Factory emerged from the trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, IoT, cloud computing, Artificial Intelligence and more.

A Smart Factory is a highly responsive, adaptive, and connected operation integrated into a digital supply network. The basic principle is that by connecting machines and other systems, businesses are creating intelligent networks throughout the manufacturing process that can control each other autonomously, or at least semi-autonomously, and in real time. Cyber-physical systems monitor physical processes, create a virtual copy of the physical world (a 'Digital Twin') and make decentralized decisions. Through the IoT, cyber-physical systems communicate and co-operate with each other and with humans in real-time both internally and across organizational boundaries, even extending to suppliers and partners in the value chain, as well as customers and end users. In an ideal deployment, this approach can bring the production cost for an individual order right down - very close to mass produced levels, helping industrialized regions such as North America and Europe practically eliminate their higher labor cost disadvantages compared to countries like China or India.

Hyper-connectivity is the key to the Smart Factory, as it underpins the real time automated flow of information, analysis, instructions and transactions from which efficiency gains can be realized. The true potential here is far more significant than even efficiency gains. That’s because, when implemented effectively, it can create entire new business models and to enable manufacturers to stay relevant. This is crucial considering the disruption that most industries have faced over the last decade – businesses that have been leaders in their field have been displaced by newcomers with new ways of operating that deliver greater value to their customers than traditional approaches. Faced with potential knock-out blows from all sides, manufacturers must think and plan radically enough to ensure they can endure the shock waves of competition. The alternative is bleak: nobody aspires to be the next Kodak, Sony Walkman or Nokia.

Consequently, many businesses are disrupting themselves to address these changes and to stay competitive. Many traditional manufactured products can now be sold via a managed services model – for example some jet engine manufacturers now no longer sell engines, instead they sell

engine operating hours. Some manufactures in the construction industry no longer sell excavators, they sell the volume of dirt moved. While some water pump manufacturers now charge by volume of liquid pumped. What all these companies have in common, is that their Smart Factory vision extends beyond the manufacturing process itself to encompass the entire value chain –especially how customers consume the final product.

Each Smart Factory transformation starts with digital networks that connect the factory with both suppliers and the products that are delivered to customers. Enriching a factory with digital capabilities means that throughput, utilization, and quality are maximized but, as a result of this integration, the new Smart Factory also knows exactly which resources are available from which supplier and can automatically order them at the most appropriate time to meet customers’ changing demands. The factory is fully automated and can adapt to changes quickly. In addition, the manufactured products can then be enhanced bydata-driven services that enable new consumption models, such as engine hours rather than jet engine sales. Furthermore, the intelligence of the system doesn’t endwith a product sale – the sensors, where applicable, in each product can detect any deterioration in performance andcan automatically request maintenance.

Transformational companies have another characteristic in common: they all collect a great deal of data across the whole lifecycle of their products and convert them into valuable information, essentially creating additional value around their products. They have not just optimized how their products are manufactured; they have also taken astep back to look at how to improve the customer experience. Optimizing quality and cost are still crucial factors but the real value now comes from using data to enrich the products, for example by including value adding services such as pay per use models or predictive maintenance capabilities.

Human-to-machine (H2M) optimization can also gather performance data from hundreds or thousands of industrial machines used by different customers, so that a manufacturer of such machines can then apply advanced analytics and artificial intelligence to that data to gain insights into factors or conditions that could causeless-than-ideal performance or even machine failures.This data will also be used to drive the design for the next generation of machines.



The Smart Factory FrameworkThere is no single answer to what a Smart Factory is. Building one will be different for every organization, product line and business, with so many options available that most struggle to know where to start. As manufacturers move to the digital manufacturing era, it is important they have a clear perspective of what their digital future will look like. Many manufacturers have, at best, a fragmented point of view.

To help manufacturing customers breakthrough the competing priorities and claims surrounding any Smart Factory project, Fujitsu has refined its experience in manufacturing into a model that can be used by any organization to guide thinking and planning. The model has three layers: Attributes, Capabilities and Enablers and is addressed in that order. In other words, a decision is usually made last regarding the enablers, which include technologies that make the Smart Factory a reality, not as a magic box solution at the start of the project.

In the Smart Factory Framework (Fig. 1 below), ‘Smart’ at the center of the wheel is defined as a function of three key Attributes. A Smart Factory must be:

» Connected – the enterprise is horizontally and vertically integrated to facilitate the real time flow of intelligent data between people, processes, technologies, physical assets (factory) and virtual assets

» Real-time - actual time during which a process or event occurs. Within the Connected System, the input data and intelligent data is processed near real time (milliseconds), so it is available for immediate use

» Intelligent - capable of analyzing, in real time, states and/or actions, in response to varying situations, requirements and past experiences, and updating data accordingly.

Enablers

Capabilities

Attributes

Figure 1. Fujitsu Smart Factory Framework



The Smart Factory Framework also introduces a Smart Factory Maturity Model (Fig. 3). The maturity model is to aid manufacturers in gauging where they are in their journey, to guide their future direction and layout a roadmap. The Smart Factory Maturity Model introduces definitions and criteria for the four phases of maturity for each of the seven smart capabilities. This allows for maturity to be assessed as a whole or just for a selected business function.

These three attributes create seven Smart Factory Capabilities which can be delivered either separately or in totality and which transform performance and outcomes. They embrace:

» Smart Manufacturing Operations» Smart Quality Management» Smart Plant Maintenance» Smart Engineering» Smart Supply Chain Collaboration» Smart Green Manufacturing» Smart People

Each of the smart capabilities has its own; definition, target user group, value proposition, building blocks and maturity model. For example, Smart Manufacturing Operations Capabilities (Fig. 2 right) is for production operations executives, managers and operators. It is defined as ‘a fully integrated, collaborative manufacturing system that optimizes the use of resources to respond in real time to meet changing demands and events on the shop floor’. The Smart Manufacturing Operations Capabilities have seven potential building blocks including: Scheduling and dispatching, Product tracking and traceability, document management and work instruction, labor management, process control, data collection acquisition, and/or performance analysis. Each of these building blocks is a functional component within the end-to-end process of manufacturing operations.

Figure 3. Smart Factory Maturity Model

Formative Developing Maturing Smart

Institutionalized knowledge with

limited initiatives

Focused on functionswith dedicated

initiatives

Systematic approachand understanding

of end state

Clearly defined visionand roadmap

Heavy reliance oninstitutionalized

knowledge.Organization recognizes

the need for change but is focused

on firefighting.

Recognition of functional solutions to improve data

collection and decision process. Initial thoughts of an Enterprise process

and solution.

Creating the vision for an integrated approach.

Basic understanding of technology enablers and data requirements across

the Enterprise.

Validated vision for an Enterprise wide system that is horizontally & vertically

integrated, connected and real time enabled

by technology and intelligent solutions.

A fully integrated, collaborative manufacturing system that optimizes the use of resources to respond in real time to meet changing demands and events in the shop floor.

» Scheduling, dispatching

» Product tracking and traceability

» Document managementand work Instruction

» Labor management

» Process control» Data collection

acquisition» Performance

analysis

Smart Manufacturing Operations

Figure 2. Smart Manufacturing Operations Capability

Smart Factory Maturity Model



Technology (Agnostic)

» Recognized as one of the Enablersin the journey to a Smart Factory

» Dependent on the organization, business, processes and products

» Must be relevant, provide value, and support the business and be accepted by the users

The final layer of the Smart Factory Framework contains the Enablers - the candidate technologies to create capabilities. They are the final pieces in the jigsaw – not the table on which the jigsaw rests.

This layer is a guide for manufacturers to select the right technology and tools to enable the Smart Factory capabilities -by business functions. For example, some emerging technologies like AI have, through over-enthusiasm and opportunistic behavior, led to sub-optimized or point solutions. The Smart Factory Framework puts AI in the correct business function context in order to explore and define exactly what it can do.

Furthermore, the Smart Factory Framework not only provides a generic technology selection guide, but also provides a library of reusable assets to enable manufacturers to try and validate the technologies and business cases in as little as weeks. This is the differentiator between the Fujitsu Smart Factory Framework and the ones from other advisory companies.

This is just a small example of the technical enablers available today. There are no shortages of solutions, applications, platforms, IoT devices, etc. available to make your transformation and business successful.

Figure 4. Smart Factory Technology Enablers



The Smart Factory JourneyThe Framework focuses on the strategic needs of the manufacturer and how a Smart Factory can accelerate reaching them. This must be both visionary and realistic.

Having enough vision and courage to take radical action is essential. But, while incremental change is not enough, this does not imply manufacturers should adopt a ‘year-zero’, revolutionary approach, where only root-and-branch greenfield factories can be expected to survive.

There are many examples where existing factories, some of them decades old, have been transformed by radical new thinking. For example, according to McKinsey, Bayer was able to increase productivity at a legacy site in Italy by 40%, while the Bosch Wuxi site in China, already operating at 94% overall equipment effectiveness, pushed this to 100% without any new capital investment1.

The three-pronged Smart Factory journey is the roadmap to reach those goals. It starts with stage 1 - Ideation, ‘thinking big’ get all the ideas out in the open and agree on a vision. At stage 2 – Build - get realistic. It’s important to start small here – don’t go all-in. Find out what really works, what doesn’t and then move to stage 3 - Run – which is rapid scale-out, based on the lessons learned in stage 2.

Within these three stages, there is a lifecycle (Fig. 5 below) comprising five Smart Factory Transformation Services:

1. Think Big

» Co-defining the state of the target, mapping out client’s own Smart Factory vision and strategy, developing client’s own Smart Factory maturity model and evaluation criteria, and developing the business case

» Co-developing the roadmap, defining the capabilities needed, developing an integrated, outcome based, roadmap and identifying pilot opportunities

2. Build – Start Small

» Proof of Value – implementing proof of value pilot projects which have a business outcome oriented and bi- modal approach. Jump starting with rapid deployment offerings, applications and Fujitsu technologies and other platforms.

3. Run – Grow Fast

» Managed Implementation – Digital cultural and organizational transformation, technology implementation

» Managed Services – Transformational Managed Services and hybrid IT, supporting the factory of the future

Figure 5. Smart Factory Transformation Services

» Hybrid IT» Transformational Managed Services

Build - Start Small

» Technology Implementation

» Organizational Transformation

» Industry Best Practices

» Bi-modal Approach

» BusinessOutcome-based

» ID Pilot Opportunities

» Outcome-based Roadmap

» Vision and Strategy

» Maturity Model

» Business Case

Plan - Think Big

Run - Scale Fast

The Smart Factory Journey

1 McKinsey & Company podcast: The future of manufacturing, March 2019



There is further breakdown in the model into reusable processes and tools within each of the five Transformation Services. For example, for the ‘Think Big’ stages of co-defining the target state and co- developing the roadmap, the process is shown in Fig. 6.

Figure 7. Smart Factory Consulting Deliverables

Discovery Gap Analysis Roadmap / Business Case Development

BusinessObjectives

Current State Processes

Current KPI’s

Domain Integration

Pain Points

Current State Maturity Model

FinalReport

Business Case

Future State Maturity Model

Roadmap

» Product Lifecycle Management» Plant Maintenance» Quality Management» Shop Floor Integration

BusinessRequirements

Technology Requirements

Organizational Requirements

ProcessRequirements

People Requirements

Figure 6. Smart Factory Roadmap Development

In the phase of business process maturity assessment, consultants use the methodology and tools based on Process & Enterprise Maturity Model (Fig. 7) to rate the five process enablers – design, performers, owners, infrastructure and metrics, to assess the Process maturity and generate a maturity report (Fig. 8 overleaf), used to guide the roadmap development and implementation.



Figure 8. A real-life example of process maturity rating

Implement MES pilots in four selected plants all over the world across four Business Units.

Working with Client and SAP to monitor and socialize value realization and strengthen business case.

Manual to Automated / End to end Connectivity Reduces all paper based tracking to automated data collection with real-time analytics. From fragmented to end to end traceability with detailed Non Conformance. Auto start of Machines based on Recipe and Material

Cycle Time / Reporting ImprovementOutput per hour increased by 7%. Reduced Reporting from three days to real-time for quality and process analysis

End to End Visibility Capability Comprehensive OEE Capability across Plant / Line / Individual Machine.Integrated with PLC / IO devices

Case Study: Multinational Conglomerate



World's leading provider of inkjet print heads for commercial and industrial printing. Enterprise, Integrated manufacturing and quality management solution connects machine, processes, data and people.

Case Study: Hi-Tech Industrial Printer Head Manufacturer

Reduced time to market, labor and inventoryImproved production planning and scheduling with Top floor to shop floor integration and end to end traceability

Improved production controlResulted in reduced cost of poor quality and improved labor time

Productivity Improvement and Real time Reporting Significant reduction in end user based on Simplified UI Design, Interaction time reduced by approximately 20% compared to older MES System

Multinational Organization – principal business making window blinds and covering.Elegantly simplify our work, accelerate our growth and empower our people.

Case Study: World Leading Blinds Manufacturer

Standardization of Manufacturing System and ProcessesReduced Footprint from 12+ MES System to Enterprise MES System.Unified User Interfaces across plants for similar process

Improved Information for Decision MakingWith connectedness from top floor to shop floor availability of data is already helping in identifying optimization in whole supply chain

Improved Customer ExperienceAt a given moment customer is able to track where his products are in whole supply chain and when it would be delivered as most of the product are make to Order



One of the Biggest Building Material Companies in the world. Enterprise, Integrated manufacturing and quality management solution connects machine, processes, data and people

Case Study: Leading Housing Insulation Manufacturer

Improved Quality and YieldReduce time of Simple Quality Management implementation from 20+ weeks to 10 weeks with Fujitsu ‘template’

Increase Efficiency Reduce time of Production execution implementation from 24+ weeks to as little as 12 weeks

Increased Shop Floor VisibilityFujitsu brought in Self-Service reporting with reusable componentsto improve end user satisfaction

ConclusionFuture factories will be distinguished by anow-evolving set of technological and organizational characteristics which will set them apart from what we have today.They will be:» Information-intensive and highly

automated» Agile, flexible and reconfigurable to meet

the demands of mass customization» Highly connected and integrated

electronically to orchestrate an enterprise’s management of information about its processes, products and intellectual property, and the knowledge of its workforce and its customers

» Characterized by highly trained, skilled and motivated employees

» Capable of effectively collecting, analyzing, and using in its decision-making processes the enormous amounts of data that are being generated from pervasive connectivity, and…

» …Highly productive, competitiveand sustainable

Characterized by highly trained, skilled and motivated employeesThere is no generic Smart Factory solution that is applicable across all manufacturing companies. Translating Smart Factory into value requires an outcomes-based framework – as discussed here - to select attributes, capabilities and enablers that are specific to your business, organization and product line. This provides the basis for a Smart Factory journey leveraging proven processes and tools and with regular checks of maturity against the Framework.


Contacts

Ray Russ: [email protected] »

Alok Sahu: [email protected] »

Greg-Pincar: [email protected] »

Web: fujitsu.com/smart-factory »

Unclassified. © 2020 FUJITSU. All rights reserved. FUJITSU and FUJITSU logo are trademarks of Fujitsu Limited registered in many jurisdictions worldwide. Other product, service and company names mentioned herein may be trademarks of Fujitsu or other companies. This document is current as of the initial date of publication and subject to be changed by Fujitsu without notice. This material is provided for information purposes only and Fujitsu assumes no liability related to its use. We reserve the right to change delivery options or make technical modifications. ID-6791-006/05-2020

Fujitsu is helping various customer across globe to shape their journey in to the future, whether its Industrial Manufacturer in America or 5G enabled Smart Factory in Nordics or a Food Processing plant or Car Manufacturer in Asia region with various initiatives which are

helping them to move ahead in their smart factory journey.

Kick start your smart journey

www.fujitsu.com/smart-factory »

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white paper manufacturing the future: the smart factory

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