A view of Industry 4.0 from the trenches

Smart Manufacturing Experience

May 2018

Introduction

Justin Ahmad

• Senior principal with the Boston Consulting Group based in Boston

• Focuses on supporting clients in the industrial goods/automotive sectors on operations topics

• Specific topic expertise on Industry 4.0 and digital transformation in operations

• 17 years of experience, mix of industry and consulting

• Prior to consulting, engineer at Toyota Motor Manufacturing

Observations from industry… A mix of reactions to Industry 4.0

In such a competitive industry, a reduction

in cost would be abig advantage

Lots of talk and excitement about

industry 4.0

We're already doingmany pilots

Not sure what industry 4.0

means for me

Our pilots are interesting but value

is unclear

We have many disconnected

initiatives within our organization already

We're alreadyvery lean

My work force is aging and complexity is increasing… I need

something new

Common questions

What does Industry 4.0 mean

for my company?

When/ how should I get

started?

Objectives for this session

• Share approach on how to select the rightI4.0 applications

• Discuss key success factors on turning anI4.0 vision into reality

• Share observations on enabling the org. for Industry 4.0

Approach: Start by identifying pain-points to address…Illustrative

Culture

Quality

Productivity Material flow & planning

A

B

C EData &

Systems

F

Maintenance & Reliability

D

Culture - reactive,

siloed, decision rights

poorly defined

Lack of root cause in

daily routines

Low adherence

standard work

Spans of control too

high

Frequent part

shortages

Weak planning &

scheduling systems

Low inventory

visibility

Inefficient material

flow

Lack of quality built into

process

Reactive processe

Inconsistent labor

utilization

Low adherence

standard work

Non-linear process

flow

Production and

maintenance siloed. High recurrence of

downtime issues

Slow decision making

Financial impact of

operational issues unclear

'Amazon' scenarioOperator assistw/AVGs

Standard work with NVA reduction

Direct to trailer

Layout scenarios/solutions to address pain-points … creativity comes from breaking constraints

"Logic will get you from A to B.

Imagination will take you everywhere''

Plant warehouse example

Future state scenarios

Low HighLean process

Low

High

Automation

Opportunity to combine new technologies in creative ways … and ignite process innovation

Note: Play video

Also need to understand limits of enabling technologies

Technological maturity (not comprehensive)

mediumhigh low

AR Glasses

lowmediumhighPredictive analytics

mediumhigh lowAdvanced robotics

lowmediumhighAdvanced AGVs

Vision for the factory of the future built bottoms-up

Sensors/vision system

AI optimization

1

2

Combine technologies to address pain-points

1

2

Individual point solutions … … Build factory of the future vision

Illustrative

Key success factors for creating factory vision

Factors for success Factors for disappointment

• Think big … excite the organization

• Focus on solving problems not technologies

• Factory vision built bottoms-up toaddress realpain-points in the business

• Opportunity to engage/enable the workforce

• Enabler for learning/platform tobuild capabilities

• Clear linkage back to P&L and value

• Incremental … lost in the initiative mix

• Push technology to solve problems

• Factory vision a top-down set of'silver bullet' solutions

• Method to eliminate workforce/management issues

• A final solution

• Disconnected pilots/unclear value

Implementation learnings: Prioritize like an investor …

• Near-term value • Self-funding program • Acceptable risk

Develop like a software company (Agile) …Illustrative

Current state Future stateMVP – Minimal Viable Product

MVP Approach

Immersive training station Augmented realityin production

Standard work and on-the-job training

Interactive training tablet

Add features to successful MVPs

Enable 'digital' within the organization …Fast to set up and unrestricted in innovation High level of integration and centralized strategic direction

• Digital separated from core businesses as stand-alone

• Protected ground for "disruptive" activities

• Digital centralized in DA• Central strategy

definition • DA driven execution,

collaboration with BUs

• Digital anchored at multiple points in the organization

• Central steering, specific efforts by BU as needed

• Digital embedded into BUs• Development of BU-

specific strategies• Independent execution

BU BU BU DA BU BU BU DA BU BUDA DA

BUDA

BUDA

BUDA

BUDA

DA

Stand-alone model Centralized model Decentralized model Matrixed model

DA = digital accelerator

+ Fosters innovation & change▬ Costly model w/resource

duplication▬ Operate in a silo

+ Drives scale and standardization /consistency

▬ Less responsive /detached from BUs

+ Balances scale with BU embedded integration

▬ Governance is difficult (shared accountabilities)

+ Maximizes integration, adoption & relevance of digital in BUs

▬ Challenging to drive consistency & best practices

Leanings from Auto on Industry 4.0 organization

A

B

C

• Cross-functional teams (e.g., IT architect, software development/data scientists,

process and controls engineers)

• Agile development to learn and improve applications through testing in

a real environment

• Build/embed technical capabilities in plants to utilize and maintain

new technologies

Get started!

"If we did all the things we are capable of, we

would literally astound ourselves" – T. Edison