Economy 4.0

While in the US now the term Manufacturing 4.0 was coined as the equivalent to Industrie 4.0 in Germany, the Germans have moved on and coined more of these buzzwords of the 4.0 type.

It started with Logistics 4.0, which certainly has to happen in connection with Manufacturing 4.0, because that can only work if it works along the supply chain. So Logistics 4.0 is pretty much part of Manufacturing 4.0 and of course there would be a few more expressions of that type that would fit that pattern. So just let us come up with a few more of those, for example Maintenance 4.0 or Customise 4.0.

On the other hand the Germans did a study on the wider implications of Industrie 4.0 (http://doku.iab.de/forschungsbericht/2015/fb0815.pdf) and in that context they came up with Wirtschaft 4.0 or what we would call Economy 4.0 in English. And of course we could extend on that again and come up with a few more, for example Work 4.0 (an important part of that study), Education 4.0 (lots of studies there, but I’m not sure any of those are addressing consequences and needs of Economy 4.0) or Utility 4.0. (I’ve seen that one, everyone trying to jump on the bandwagon I guess.)

The most recent of those was Mittelstand 4.0, and I came even across Police 4.0 too. It is clear that everybody will be affected, so let’s call that Society 4.0? After all, what I came across the other day was Customer 4.0 as well. Yep, you will have to change too. And because due to the Internet of Everything (IoE) it’s not just everybody affected, it’s everything else as well. However, World 4.0 sounds a bit like we had three before already and just in case 4.0 does not work, we can have another one!

Have a Vision

On the LinkedIn Australian Manufacturing Forum there was a post of Tim McLean pointing to the following post on Industry 4.0:

http://txm.com.au/blog/what-is-industry-4-0-something-new-just-ground-hog-day

While I agree with most observations made, I do not come to the same conclusion. Industry 4.0 is not only IoT and additive manufacturing. There are so many other things that will change the manufacturing world. And it’s not only a hype, there is a big push in Europe, particularly in Germany and other countries are following suit. This will change the manufacturing landscape.

I agree that this change will not happen tomorrow, you should not stop doing what you are doing well now, and you should not throw out all your old machines and buy everything new, bigger and better just so you don’t miss the rush. A German study pointed out that it will take another ten years until Industry 4.0 has penetrated all industries. No, I’m not that optimistic either, that will take much longer.

But what I do advocate for is for you to develop a vision. And to figure out how you could get there. How you could make a start now. If you have a vision then with every investment decision you have to make, you will know much better what to do, because you know what best fits the big picture.

To figure out where this could go, first have a look at all the emerging technologies in your field. Then look at the developments in ICT. Could you automate order processing? Part of it? Make a start somewhere? Could you automate quoting? Or ordering of external components? Could you customise? Are part of a supply chain where still a lot could be automated?

Automating production, in particular of customised products, can only happen if you have the data needed somewhere on a computer!

It was pointed out in that report as well, that complexity will increase and I agree with that. However, have to make sure that we handle that complexity in the software, wherever this is possible. And we have to make sure it does not get more complex than what the software developers can handle efficiently.

So what does all that mean? Industry 4.0 could be a great opportunity, if you go about it the right way. If you know where you want to go, and if you direct your investments in that direction, then you could stay ahead of your competition. Just start by developing a vision! About 80% of your competitors don’t even have that, according to a survey I came across recently!

Big Bang Implementation

Several times now I’ve received the feedback that smart factory, industry 4.0 or manufacturing 4.0 projects have to be implemented from scratch and that to start such a factory it will be necessary for all concerned to learn the new system before you can start, as it will be completely different to everything people have seen before.

Sometimes software developers would like to just start from scratch all over again, and understandably so. The old system might be more than 30 years in its making now, got several partial makeovers to adapt to new technology and hundreds of extensions, adaptions, changes and bug fixes throughout its life. It all seems too complex already and to add more functionality for say a mass customisation extension with new user interfaces for order entry, automated quoting, machine data generation and machine control seems just to add more complexity again.

However, we sometimes underestimate the complex requirements of the existing software, and if we try to start from scratch, quite often after spending quite some time in rediscovering those requirements we find that there is not much we can simplify. After all, if all those that went before us working on that software were not completely ignorant, then they would have refactored it reasonably well with every major change, extension or upgrade.

For more than 35 years I’m now in the business of software in a technical environment and have seen many big bang project launches. Fortunately I was only actively participating in one of them and that had actually achieved its goals, albeit after working overtime, sleepless nights and a minor cost and time overrun.

Almost all others that I have experienced more as a bystander have either failed completely or were only partially completed, or they were late and with a massive cost overrun, and most of the time they were all of that: late, over budget and only partially complete. Usually those big projects take too long and are thus already technologically out-dated at the time of going life. Quite often their specifications were changed during the development process as well, to adapt the project to new technologies, products and markets. Sometimes the requirements were kept frozen to keep the costs in check, with the consequence that at the time of the launch part of the software was out-dated and not useful.

Big bang project launches are usually quite difficult too. People in long term employment quite often learn best on the job. You can try to educate them in advance as long as you want, it will all stay in the abstract. After training they will have to go back and do it all the old way anyway, so training in advance is difficult. And as hard as your software developer might have tried to find all the bugs, the last ones in a big new system are always found by the users. In addition to that users might want to use the system in a way that developers did not know or understand, thus creating more problems.

Think for example of the internet of things (IoT). Your industry might even have adopted one of the about a dozen existing “standards”. Which does not mean that this will be the overall standard that will emerge in about two years’ time. But if it makes sense to make a start now and if you have a project that you could have up and running in three months, then go for it! If the interface has to be changed two years down the track, then that does not mean that all the processing has to change.

It is good to have a vision. Looking at what you have and where you want to go quite often means it is not too hard to figure out where you want to make a start. If something changes, be it the market, your products, competition, or technology, then it is fairly easy to assess the new situation, figuring out where you stand and where you want to go and make the necessary adjustments for the next iteration.

That’s why I am a strong advocate of iterative development and agile programming. Even if it sometimes seems hard to find a way of doing it, thrust me, big bang implementations are even harder!

Mass Producer Problems

In my last blog post I’ve written about problems and potential solutions for manufactures of bespoke products. In this post we will have a look at mass product manufacturers and their problems. So, if you are a mass producer of standard products, do you experience some of the following problems?

  • You get a lot of competition from cheaper overseas suppliers with products of reasonable quality?
  • Are many of your customers no longer prepared to pay the high premium for your better quality product?
  • You get a lot of customer enquiries that want your products better tailored to their needs?
  • Did you do some research into running smaller batches with more product variants? What would the consequences be? Did you find some of the following issues?
    • You would have to have more variants on stock which would increase prices
    • Chances are you still run out of stock with some variants and it could take too long until the production of that variant is scheduled again
    • Because the processing time for the different variants is different at some of the workstations, there would sometimes be a built up of work in progress in front of some work stations, clogging up the shop floor
    • You would still not be able to produce all the desired variants
    • The percentage of variants you could still not produce is too high
    • There will always a certain percentage of very individual versions for which the customer would be prepared to pay a premium
    • Decreased productivity
  • Or did you experience that already and encountered some of the problems above?

As a result of such a change some of your customers might be happy because they can now get a product that is close to what they need and are happy to pay a little more for it. Many others might not be happy at all, because they now have to pay even more for what they could get cheaper from competition, and others because they still can’t get what they really need.

Does it seem to you there is no way out of this because after all you are mass producer and producing bespoke products would mean lot of manual work? Really? Is there none in your field that starts doing business differently? Take a step back, google it and you might start developing ideas.

I remember a manufacturer of printed circuit boards. They would produce large batches of custom circuit boards, fit the components and solder the completed boards. However, quoting was a nightmare, because customers wanted to see a working prototype. To produce a few of those, they would have to set up the whole production line which could take a day or two, and then run the production of just a few units. This could only be done between to production batches, which sometimes would mean a wait of several weeks.

The way out for them was to install a smaller and simple production line that was better suited to run small batches as well.

This might not be the way out for you, but sometimes only a few upgrades to some of your machinery could make your production way more flexible. However, the way to mass customisation always starts with finding an efficient way to specify the bespoke products. In the long term, you will need that in electronic form, so your specifications can be converted to production data.

Would there be a way that your customers specify online? Could you build a specification process so that your customer happily specifies online and thus does some of the work? If the information provided that way is sufficient to calculate a price, then customers might be happy to go onto the system and play with the various options until they found the right compromise between their vision and what they can afford.

Those things could become very complex, so if one web developer tells you that this can’t be done, this might only mean the he can’t do it. In that case you would have to search around a bit to find someone able to do that.

To stay productive you might have to improve your production processes as well, so that the custom products still could be produced automatically. This might not mean to buy all new and shiny machinery, but just upgrade or replace some key machines to help reduce complexity for the workers. Sometimes not even that is needed for a start, all you need is better organisation of the work flow. This could mean better production papers or labels with barcodes so reporting progress back is easy. With a little bit more effort you could have them report back any issues they have, for example defects, and a system that promptly handles that.

Again you don’t need an expensive ERP system that forces you to work the way it is built and is complicated and hard to use anyway. And again not every web developer might know and understand what you need, meaning you have to find the right people to do the job and are happy to grow with you.

Bespoke Manufacturing Problems

Are you a manufacturer of bespoke products? If so, do you experience some of the following problems?

  • Quoting is really time consuming, because you have to collect all the job- specific data and then work out the price manually or with the help of a spread sheet that sometimes does not really properly match the specifications of the job?
  • Some Customers want products tailored to their exact needs, all the bells and whistles, the best materials only, but can’t afford your price?
  • This results in a low conversion rate, meaning even more work per order?
  • When you have a lot of work an get very busy, too much goes wrong:
    • You miss deadlines
    • Too many defects cause additional delays
    • Products are not fully checked before delivery and thus
    • Some products are delivered faulty
    • Too much expensive material wasted
    • Too much work in progress on shop floor causes
    • People waste too much time to find jobs
    • Decreased productivity
  • Do you sometimes loose track on your invoicing, because delivery was not reported and thus the invoice not sent, or you followed up on overdue invoices very late?

So you spend all your time quoting to have your business running, and you are putting out fires everywhere because you have too much work to complete?  As a result you work long hours on a regular basis, have no time for family and friends and your last holidays were years ago? To make things worse you don’t even make a lot of money that way because you lose too much on the bodged jobs and the wasted material? Does this sound familiar?

Does it seem to you there is no way out of this because after all you are producing bespoke products and that involves a lot of manual work? Really? Is there none in your field that starts doing business differently? Take a step back, google it and you might start developing ideas. Would there be a way that your customers specify online?

There are many ways you can improve your bespoke manufacturing business. Could you improve the specification process so that your customer happily does some of the work for you, for example by providing his specifics online? If the information provided that way is sufficient to calculate a price, then customers might be happy to go onto the system and play with the various options until they found the right compromise between their vision and what they can afford.

Those things could become very complex, so if one web developer tells you that this can’t be done, this might only mean the he can’t do it. In that case you would have to search around a bit to find someone able to do that.

Another option to gain efficiency would be to automate some of the production processes. This might not mean to buy all new and shiny machinery, but just some key machine that helps reduce complexity for the workers. Sometimes not even that is needed for a start, all you need is better organisation of the work flow. This could mean better production papers or labels with barcodes so reporting back progress is easy. With a little bit more effort you could have them report back any issues they have, for example defects, and a system that promptly handles that.

Again you don’t need an expensive ERP system that forces you to work the way it is built and is complicated and hard to use anyway. And again not every web developer might know and understand what you need, meaning you have to find the right people to do the job and are happy to grow with you.

Angela’s Dream

As was reported in many German media and in the Hannover Fair’s newspaper on April 14, Angela Merkel was presented at the Fair with the first customised perfume, “Angela’s Dream” produced on a new machine develop in a joint cooperation of Optima with Festo and Siemens.

Optima’s web site gives more background information on this technology, see http://www.optima-packaging-group.de/opg/group/en/news/news_more.php5?id=702

As was explained there, Optima has in the past already produced packing machines for the complete packaging of personalised perfumes. This comprised the ability to select an individual flacon and the corresponding box, which can be labelled individually and is folded directly on the machine.

The new machine demonstrated at Hannover Fair even included a CO2 laser that would engrave the flacon. Visitors at the fair were able to enter their specifications and design their own labels on tablets and “order” with the Optima machine. This gives everyone an individual perfume as far as flacon and packaging is concerned. Welcome do lot size 1 and industry 4.0 as Optima put it.

However, this reminds me more of my younger years when I sometimes personalised Champaign by sticking a personalised inkjet printed label over the original one. That did not change the content of the bottle one bit, and I guess people appreciated that! However, for it to be a true customisation, there is one piece missing in that mass customised perfume production: specifying your own scent. The machine would then really create an individual perfume specifically for you. It is easy to see that it would not be too hard to come up with a machine that does that part of the job.

But creating perfumes is an art form. (That holds for Champaign too!) The challenge would be to create a web interface that allows users to come up with a specification of a scent in such a way, that in the end a perfume can be produced that meets the expectation of the user, given the specification entered. If the user specifies something really awful, then she should at least get a warning. For example the system could describe the expected scent and give tips on how to improve it, for example by warning users if they combine certain components or pointing out that one component would overpower everything else if it’s part was not reduced.

As in all such projects, to build such an interface would need all the help of the experts in the field and a lot of explanation of the software specialists of what can and can’t be done. I remember the hype in the late 1980ies to early 1990ties when everybody tried to build expert systems. These were programmes able to process many rules very fast, and it was then the job of the builders of such expert systems to come up with those rules by interviewing the experts. However, it turned out that’s not how experts work. Rules are for the novices. They are good for a start but once a lot of situations are understood, the practitioners develop an ability to judge a situation intuitively. And that’s when they have become experts.

Experts still know and apply their rules, but more to verify the approach they have to a particular problem. They can’t describe however, how they come to the decision to approach a problem the way thy do. It is my understanding that these problems still exist. Similarly, there is no generic tool that helps you to create a mass customisation user interface. It is really one of the hard parts in most such projects. And quite often, the easier it is to use in the end, the harder it was to come up with.

Any additional ideas or comments? Please feel free to add them below.