Industry 4.0: Will Your Business Survive?
First came steam power, then mass production, then industrial automation. We are now at the dawn of the next wave: Industry 4.0, which combines Cloud Computing, Big Data and Analytics, Horizontal and Vertical System Integration, the Internet of Things, and Cybersecurity to interconnect manufacturers and their customers and suppliers in an extended supply chain. It introduces the much-awaited convergence of digital and physical components in the manufacturing world. Industry 4.0 factories will be embedded within the global networks of supply and demand through Cloud Computing. Geographical boundaries will be erased as superior technologies provide instant communication between machines and users around the world. Smart factories are approaching zero downtime, supply chains are becoming transparent, and mass customization is becoming the norm. More and more, Asian manufacturers are leading the wave in adopting new and revolutionary technologies which, when combined with a low-cost labor base, provide a devastating blow to their American and European competitors. Can you afford to wait?
The term Industry 4.0 was coined in 2011 at the Hanover Fair, the world’s largest industrial expo. It is used to describe networked value chains that can self-regulate, meaning that manufacturing lines can automatically trigger critical maintenance procedures, or reconfigure production to accommodate sudden logistical problems. Networks continue to grow in complexity as value chains expand globally, and the monitoring and control systems that once oversaw a single facility are now being linked across multiple locations. Companies that wish to compete effectively in the twenty-first century must act holistically across every department at every location, including suppliers and end users.
Six Principles of Industry 4.0
Implementing Industry 4.0
Many components of Industry 4.0 systems are already in use in small, isolated applications. Successful implementation requires that these optimized cells be expanded and fully integrated throughout the chain, both horizontally and vertically. Areas of focus can be largely divided into two categories: the Internet of Services and the Internet of Things.
The Internet of Services
The Internet of Services is the label applied to a configurable pool of networking resources that can be allocated on an on-demand basis. Resources may include processing power, storage space, access to applications or data, and more. The most common application of the Internet of Services is Cloud Computing, which allows companies to erase the boundaries between physical locations, and provides a common platform for all departments. The Internet of Services is the backbone of all six principles of Industry 4.0.
The Internet of Things
The Internet of Things refers to smart machinery. It is any instance in which a physical object has connectivity to a network, such as 3D printers, scanners tied to an inventory system, robotic assemblers, etc. Connecting these machines through a network allows companies to more precisely allocate physical resources such as raw materials, track maintenance and efficiency benchmarks, remotely control production lines, and more.
When these two Internets are completely integrated, companies have more flexibility in choosing locations, suppliers, and distribution channels. Plant layouts become more flexible as the production chain becomes more transparent to suppliers, designers, and end users. Downtime is reduced as the system self-regulates in response to changing production demands and maintenance schedules. Production feedback is combined with market data to provide essential analysis.
ISA-95: Automating Manufacturing Organizations and their Factory Floor Control Systems
ISA-95 is an international standard from the International Society of Automation for automating a manufacturing organization and its factory floor control systems. Importantly, it has been and adopted by Industry 4.0. It is used to exchange information to accomplish manufacturing operations management between sales, finance, logistics, production, maintenance and quality (as in Figure 1). ISA-95 specification facilitates real-time access to critical data by establishing a bridge between Business Planning & Logistics and Manufacturing Operations Management systems. It incorporates the Business to Manufacturing Markup Language (B2MML) XML standard.
Open Platform Communication Unified Architecture (OPC UA)
OPC UA is an open architecture using Internet Protocol (IP) to exchange information throughout an automation system with Web Services, a computing industry standard. It can reside at all levels of a system, including embedded controllers, and completes the vision of Internet Protocol to the Internet of Things.
PLCopen enables the exchange of information between controllers, systems, enterprise and the cloud. PLCopen OPC UA is a collection of universal, secure, and reliable network communication methods built on industry standards.
As more and more companies around the world adopt the principles of Industry 4.0, its broader benefits are already being discovered. Industry 4.0 is transforming manufacturing relationships from silos to an integrated information and product flows across borders. Integrated communication throughout a value chain optimizes work-in-progress inventory. The complete vertical and horizontal integration of networked systems gives manufacturers greater factory flexibility, and allows them to accommodate more special requests from more customers. Things like small-batch product runs, or linking to new, remote production facilities to take advantage of cheaper labor, more abundant raw materials, or reduce delivery lead times is more and more feasible. This expanded integration has created higher revenues and increased productivity on a company level, as well as leading to general industry-level improvements such as higher employment and more investor capital. In addition, related knowledge-worker industries such as software development, architecture, and network engineering are also seeing growth.
“Glocal” Enterprise Software Model: “New Normal” | Grow Your Markets | Faster, Leaner, and Simpler
Multinational enterprises are experiencing a trifecta of fierce domestic competition in Growth Markets, zero (or in some cases, negative) growth rates in the developed world, and an inherent lack of Operational Agility. Any response to the trends, whether it is a Globalized local (or “Glocal”) approach to the Growth Markets, combining the best of the developed and developing worlds, improving operational efficiencies, or adopting Cloud Technology to improve Operational Agility, are constrained by these multinationals’ legacy Enterprise Resource Planning (ERP) implementation. Legacy ERP software is old technology, slow to implement and adopt and adapt, time and resource consuming, inflexible, and distracting from the core missions of these organizations. Legacy ERP is slow, heavy, and complex and often times paralyzing. Introducing Industry 4.0 to a world of Legacy ERP that is many decades old is like mixing oil and water; adoption is a significant challenge. The external factors, combined with internal challenges caused by the legacy ERP, have led to an existential threat to the Multinationals – the “New Normal”. Can these multinationals survive the trifecta of Growth Markets competition, slowing Developed Markets, and a lack of Operational Agility? And can they adopt Industry 4.0 fast enough to overcome these challenges?
“Glocal” Enterprise Software Model is a non-invasive and non-disruptive approach for Multinationals to handle this existential threat. It is a 2-speed model: the Global Headquarters and core business units in developed markets operate on legacy ERP, while the new growth units in developed and growth markets adopt a faster, leaner, and simpler cloud technology that is a true business enabler. With such a model, enterprises normalize, rationalize, and reduce the often out of control technology spending and footprint. Multinationals can become more operationally efficient by adopting cloud technology thanks to “Cloud Economics” and the associated shift from Capital Expenditures (CAPEX) to a more subscription based (OPEX) model. Cloud technologies are faster to implement and agile to allow larger organizations to keep up with their nimbler Asian competitors with significant labor cost advantage. Cloud is also a key building block in the multinationals’ adoption of Industry 4.0. No Cloud, no Industry 4.0.
Murano Corporation’s Enterprise Cloud Software for Industry 4.0: Supply Chain Manager
Just as the Internet of Services is the foundation of Industry 4.0, your company’s Enterprise Resource Planning software is the keystone of your Internet of Services. The ideal network architecture allows you to scale up seamlessly, integrates customizable inputs and outputs, and puts each department and organization in a value chain onto the same platform, reducing mistakes in transference.
Murano Corporation’s flagship offering, Supply Chain Manager, is a next-generation Enterprise Resource Planning Cloud software. It is an integrated, scalable platform with support for Sales, Purchasing, Manufacturing, Finance, and Human Resources functions. Supply Chain Manager is a multi-tenant, on-demand architecture, providing customizable, real-time updates to critical information across every value-chain department. Organizations can now focus on their core competencies and strengths, competing more effectively without being inhibited by incompatible platforms and expensive maintenance fees.
Supply Chain Manager is a true cloud computing solution, meeting all four criteria as defined by the National Institute of Standards and Technology (NIST):
On Demand Network Access
Shared Pool of Configurable Computing Resources (e.g. networks, servers, storage, applications, etc.) that can be easily and quickly allocated with minimal effort.
The last point is the most critical when determining if a platform is truly cloud computing, and Supply Chain Manager was organically developed and purpose-built from the ground up to be a true multi-tenant solution. Cloud means convenient but secure global access to your company’s critical information in real-time is now possible. Powerful executive reports, dashboards, analytics to make faster decisions mean that management can monitor their value chains, including all customers, suppliers, logistics providers, and employees easily. Supply Chain Manager is a key building block for Industry 4.0.
Reaping the Benefits of Industry 4.0: An Asian Pioneer’s Success Story
Padmansha Technologies Pvt. Ltd., part of the Asian wave of manufacturers exporting globally from their low labor-cost base, is a leading manufacturer, exporter and supplier of a wide range of Digital Control Panels, Pump Controllers, and similar technology. Headquartered in the Thane District in the outskirts of Mumbai in India, they source and export internationally to Spain, Middle East, New Zealand, and Russia, in addition to catering to the local Indian market.
As they grew, they added a sales system here, an accounting program there, eventually accumulating a large, kludged-together network of incompatible platforms and processes. And of course, hundreds of spreadsheets. Imagine the risk of operating a business on spreadsheets that can be easily corrupted or deleted. Padmansha is not alone in excessively relying on spreadsheets to manage critical business operations. Sadly, the most widely used Enterprise Resource Planning (ERP) software in any business, big or small are spreadsheets (and home-grown, poorly designed and implemented Microsoft Access databases).
But this world of hodge-podge systems required inefficient and time-consuming work-arounds. Customers were not invoiced on time and accurately. They rarely, if ever, paid on time. Simple things such as identifying open receivables were a huge challenge. Their Days Sales Outstanding (DSO) was off the charts. All these inefficiencies led to severe cash flow issues.
On the manufacturing and production side, they had no easy way to triangulate demand, inventory, and capacity. They had no formal or informal sales and operations planning process. Production schedules were erratic and disconnected from reality on the manufacturing floor. Raw material was purchased in excessively large quantities to avoid stock outs and production line shutdown. Precious capital was tied up in raw material inventory. Raw material inventory turn was subpar.
Among many other challenges, Padmansha found it especially difficult to track items as they moved between their production lines. Also of concern was the ability to keep accurate stock counts of bulk materials such as sleeves and fasteners, as well as an easier way to generate the daily production records, which were being manually compiled for management. All these challenges severely hampered the company growth.
After a brief but disastrous period with a local Indian software vendor, which they found to be lacking in key features, they selected U.S.-based Murano Corporation’s Enterprise Cloud Software: Supply Chain Manager. It has transformed the various manufacturing relationships within and outside from multiple organizational silos to a considerably more integrated operation with tremendous productivity and efficiency gains. Latest innovative American Cloud technology allows Padmansha to leapfrog both their domestic and international competitors by their adoption of Industry 4.0.
Every department from Sales to Operations to Purchasing to Inventory can now accurately track production and inventory in real-time. Purchasing now has access to a more accurate inventory and can reduce excess inventory and stock outs. Raw material inventory turns have gone up. Their capital issues have been alleviated. Follow-up with customers no longer falls through the cracks, and Accounting has better oversight on incoming and outgoing payments. Their open receivables have dropped. Similarly, Manufacturing can now track each component as it moves between production lines, through various work centers, quality inspection, warehousing, and delivery. Padmansha’s management now has instant access to every aspect of their value chain. They can track the various imports and exports, each piece and part, the stages of production, inventory, shipping, etc., as well as generate production and accounting reports as needed from anywhere in the world. This is important, as they are often traveling to meet new vendors, support existing customers, and open new markets. Despite gaining tremendously, Padmansha actually was able to save on their Information Technology (IT) costs by avoiding costly servers, database software, consultants etc. From Dubai and India, Padmansha’s employees run their daily manufacturing schedules on Supply Chain Manager using the most advanced American Cloud Infrastructure and Technology, which resides in Research Triangle Park, North Carolina, USA.
When asked about their experience with Murano Corporation’s Supply Chain Manager, ERP Co-ordinator Raviraj Anchan had this to say:
“We were using software from a local company but were not satisfied with its features. After switching to Supply Chain Manager, we are really impressed with this software in terms of features, easy user adoption, and access to numerous reports, back end support, and most importantly, the real-time access to crucial company information.”
And the Managing Director of Padmansha Technologies’ Middle East Operations, Padmanabh Kulkarni, had this nugget:
“Supply Chain Manager is a very good, robust engine for our business …”
Will your business survive if your Asian competitors beat you with cheap labor and innovative American Cloud technology?