Blog 4-7: Pimping Up Industry 3.0

For those that have made it this far in reading my series of Blogs, Kudos! Hopefully you have been active in providing feedback and comments to keep the discussions alive.

At the end of the last blog, I presented that Collaboration is critical to addressing many of the challenges we are faced with inside Industry. In this blog, I am going to share my perspective on how this applies to the technology companies that service the industry.

Without a doubt, the technology and tools that have emerged and evolved thanks to I3.0 are nothing but astounding. The impact the technology has made is massive, and hence adoption was extremely fast. This lightspeed acceleration however did bring with it some challenges. We sometimes forget that technology companies, are also “manufacturers”. Manufacturers, that just like in the Food & Beverage sector – simply are not ready for mass customisation at scale.

This has driven technology companies, that perhaps were very specialised in their early days, to become HIGHLY GENERIC with their offers. A product that is “jack of all trades, master of none” is a smart approach to take when you desire volumes that can be attained over multitudes of diverse industrial segments. The ability to manage bespoke products, tailored to a specific customer or specific application are costly, hence slowly disappear, or become diluted. This is not to say you do not see this laser focused approach with products or applications, you do, but it is predominantly within the vast number of start-ups that I4.0 has triggered, or the SMEs that have retained it as their focus and Unique Value Proposition (UVP).

When I3.0 was evolving, this customisation could be found everywhere. Some examples I have stumbled across in my career that I would like to share:

• Scottish Courage, a successful brewer in the UK (now split between Heineken and Carlsberg), when embracing the power of I3.0 realised that the offering of PLCs, the way they were programmed and operated, did not fit well with the Hybrid nature of a Brewery. So, they decided to build their own, the Canongate Control System. Designed specifically for their needs. This product does not exist anymore in the market.

• The APV Computer Controlled Operating System (ACCOS) was built by the Process OEM APV (now SPX). Like the Scottish Courage example above (in fact they used this in one brewery), they simply needed a technology which was fit for purpose and designed to complement the process equipment that they built. Off the shelf products did not meet the requirements that they had. Interestingly this is still an offer available in the market via SPX.

It was not just hardware though that experienced this customisation. Here is an example I thought worth sharing related to software:

• Before Anheuser-Busch became part of AB InBev, I had the pleasure during my Rockwell Automation days of working with their Senior Director of Engineering. Rockwell acquired many software companies, and they were having a discussion on how to implement these technologies into A-B. My colleague raised an interesting point. Over many years, A-B had operational people coming up with “problems that needed answers”. They would look to the market, but there was never anything available that fitted. So they built it themselves. He shared that at one point they had over 200 separate bespoke software systems running in Brewing alone! Their biggest challenge – no single off the shelf piece of software would ever be able to replicate what they had created. Anything they did would involve compromise.

There are many examples of smaller companies that have had great success being 100% aligned to the needs of the customer. Listening to their requirements, their use cases, their operational needs, and building something that fitted.

Take motion control companies like ELAU and B&R, powerhouses in creating motion solutions that physically fitted, and performed exactly to the requirements of the OEM. Or software companies like ProLeiT that decided to work with brewers, to employ brewers, and to create the perfect brewery solution, brewmaxx. Whereas major software players adopted OpenBatch as the standard, and tried to force fit it into a brewery, often with major problems. OpenBatch from Sequentia became the foundation for all major S88 batch systems, but not for ProLeiT.

The challenge with these companies is they are now no longer independent. ELAU and ProLeiT are part of the Schneider Electric family, B&R is part of ABB. Being “custom” is what made these companies great, now being part of a company where scale demands homogenisation will present another interesting challenge for the user of the technology, ensuring they now get a solution fit for purpose.

What all of these “custom” systems did, was to codify the knowledge of the customer they are serving (i.e. how to make beer better, how to bottle it faster), which is in contrast to codifying the knowledge of someone that gets their buzz from the technology (i.e. let’s build this latest tech into the offer – just because we can, irrespective of the real value it brings). Too often we simply apply technology for technology’s sake.

We should never forget that all money that any technology company obtains originates from the End User of their technology. Of course, there may be many tiers of suppliers between the tech company and the end user (i.e. System Integrators, Panel Builders, Machine builders, etc), but ultimately the source of all funds is the End User. So surely it is extremely important to build products and solutions that fits their needs based upon what they do?

This customer centric approach does however present a headache when it comes to the cost of ownership. Mass customisation presents headaches for initial procurement prices (i.e. they are deemed “expensive”), as well as lifecycle maintenance costs (they get labelled as being “black boxes”). But this simply means it needs a different business model. A generic solution that does not completely fix the problem has a low Return On Investment. Whereas one designed fit for purpose, that addresses the use case, delivers a high ROI, and in turn, presents with it, a new revenue stream to fund it.

The question should no longer be "how much does it cost", It should be "how much does it save".

Looking at history, it would be interesting to see what implementing ERP would be like if we knew then what we know now. Back when rollouts started, the goal was to deliver “Vanilla SAP” (no customisation), a generic solution, irrespective of the complexity of the MAKE part of the supply chain. This led to a problem. Business entities, even factories producing the same product, were different. So, to stick with the vanilla flavour, the plants were forced to change processes to comply with the new business system. The ERP was effective, but suddenly manufacturing was made less effective. Seems a bit crazy to do this to the value creation piece of the business.

You can even take this down a level further to Manufacturing Execution Systems (or MOM). Why are there so few comprehensive MES roll-outs across the Food & Beverage industry? Same problem perhaps as with ERP; top-down approach, trying to keep the "vanilla flavour", and ultimately too focused on the costs rather than the value it should be delivering?

So where am I going with this, and why is it relevant for I4.0 and Digital Transformation? Well for me the above demonstrates that there is a divide, or quite a few of them, between technology providers and the needs of the end users. For example:

• The understanding between ALL types of SUPPLIERS and what the Value Drivers are for the End User.

• The inability for ANY PARTY to create or articulate the Use Cases that impact the value drivers.

• A common understanding of just exactly what a Solution is and how you define success.

• TRUST – to change the business model, it requires trust across all parties.

I started this blog mentioning the importance of collaboration, and now end it conveying that this can only truly happen if there is TRUST between all parties. End Users trusting they are not getting “ripped off” by suppliers. OEMs trusting that by being more collaborative in areas like Lifecycle Costs does not mean they risk losing services business. Employees trusting their management and peer groups that in the event of sharing and improving processes to the left and right of their traditional operating theatre will not put their job at risk.

In today’s world, TRUST can probably be bundled in with TIME as being two of the most critical resources needed to support any digital transformation, it certainly is not availability of funds.

Look out for the next blog where we will explore a little deeper the discussion around these divides and the cultural transformation required.

Blog 5-7: The Crack in the Foundation, coming in one weeks time