Capgemini [s PoV on Industry 4.0 and its business ...Technology Innovations Advanced Analytics Internet of Things and Services Decentralization and autonomous control Virtual and Augmented

TRANSFORM TOGETHER

Capgemini’s PoV on Industry 4.0 and its business implications for Siemens Siemens Digital Transformation Executive Forum

June 5th 2014, Udo Lange

Contents

Copyright © 2014 Capgemini Consulting. All rights reserved.

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▶ INDUSTRY 4.0: Drivers for an industry on the verge into a new industrial era of connected enterprises

▶ FROM SMART FACTORY TO AGILE SUPPLY CHAINS: How technology solutions are shaping the future industry value chain

▶ THE CAPGEMINI FRAMEWORK FOR INDUSTRY 4.0: Business & Technology Transformation in the digital age

▶ TRANSFORM TOGETHER: Business Opportunities for Siemens to nurture the value chain

Industry 4.0 is considered the fourth industrial revolution – materializing Digital Transformation in the Manufacturing Industry

Digital Transformation in Manufacturing: The fourth industrial revolution


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Digital Transformation is a value-adding challenge that drives future

manufacturing competitiveness

First mechanical loom, 1784

First assembly line Cincinnati slaughter houses, 1870

First Industrial Revolution

through the intro-duction of mechanical production facilities with help of water and steam power

Second Industrial Revolution

through the intro-duction of a division of labour and mass production with the help of electrical energy

Third Industrial Revolution

through the use of electronic and IT systems that further automate production

Fourth Industrial Revolution

through the use of cyber-physical systems

Degree of complexity

1800 1900 2000 Time

First programmable logic controller (PLC), Modicon 084, 1969

Digital maturity, by industry 2012 1

1 Capgemini Consulting: The Digital Advantage: How Digital Leaders Outperform Their Peers in Every Industry 2 Capgemini Consulting: The Internet of Things: Are Organizations Ready For A Multi-Trillion Dollar Prize?

Our study revealed that in 2012 Manufacturing companies were rather laggards in regards of Digital Transformation

With the appearance of Internet-of-Things, Industrial Manufacturing companies are stepping up the maturity ladder.2

Market challenges and Technology Innovations

Companies are leveraging technology innovations to respond to the Paradox of contradicting market challenges: increasing performance vs. reduced costs

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Technology Innovations

Advanced Analytics

Internet of Things and Services

Decentralization and autonomous

control

Virtual and Augmented Reality

Machine Intelligence

& Robotics

Cloud

M2M*

Mobility

Big data/ analytics

Additive Manufacturing

Social media

*Machine-to-Machine communication

Global markets and global manufacturing networks

Increasing organization complexity

Increasing product complexity

Expectation for instant (real-time) response

Need for more customization

New competitors and cost pressure

MARKET CHALLENGES: THE PARADOX

http://www.facebook.com/de.capgeminiconsulting

Contents


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Through the emergence of cyber-physical systems together with other technology trends, the future manufacturing process will be organized and orchestrated differently

The core element: the Cyber Physical System (CPS)


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The virtual model of the CPS serves as simulation object, in order to enable decision making

Sensors and actuators provide real-time information and control options during production and field usage

Interfaces and communication platforms enable M2M communication and human influence across different product lifecycle stages

M2M Device

M2M GatewayM2M Area

Network

M2M Device

M2M Communication

Network

M2M Server

platform

Business application

Device domain Network domain Application domain

Agent

CYBER-PHYSICAL SYSTEMS (CPS) ARE …

Physical object with embedded system possessing own machine intelligence (CPU, memory)

Additional sensors and actuators

Connectivity via standardized interfaces to other IT or CPS (M2M-communication)

Connecting all relevant physical objects with virtual (“cyber”) counterparts

… THE LINKING ELEMENT OF AN INDUSTRY 4.0 ENVIRONMENT

Virtual Model

Physical/ Mechanical Systems

Embedded Systems

Sensors & actuators

Electronic hardware

Software

Human-Machine interface

Interface to other

systems

IT Systems

Intranet/ Internet

The combination of Cyber-Physical Systems in lead to the concept of the Smart Factory where products and systems are interacting and taking decentralized decisions

Smart Factory


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Augmented human operator

Cyber-Physical Production

Systems

IT Systems

C-P Machine 1 Embedded Electronics

Sensors & actuators

Electronic hardware Software

Human interface

Machine interface

Intranet/ Internet

Cyber-physical Transport

System

C-P Vehicle Embedded Electronics

Sensors & actuators


Human interface

Machine interface

Secured data

exchange

10101101011100101101

Cyber-physical Product

C-P Product


Human interface

Machine interface

SMART FACTORY

Central integrated business planning for demand management

Order-specific variants (“lot-size 1”) to enable customization

Machine-to-Machine communication between Cyber-Physical-Products and Cyper-Physical Production-Systems

Embedded analytics

Decentralized decision making for production control

Real-time decision making

Multi-agent technology

Corrective actions based on quality data analytics

Extending the concept of the smart factory across the whole value chain, creates agile end-to-end processes leveraging multiple internal and external business services

From Smart Factory to Agile Value Chains


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Service-oriented Business Architecture Business functions as self-contained/

independent services (internal and external)

Cross-company, flexible process flow Process instances (products/orders) as

self-organized ‘agents’ Standardized or common interfaces/

protocols A common 'data lake‘ as platform for

analytics functions (Big Data) Supply-Chain-Control tower providing

extended supply chain transparency

Development

Services (Product/

Production System)

Production Services

Assembly Services

Purchasing Services

Maintenance Services

Erection & Installation

Services

Delivery Services

Production Systems

Product definition

Quality Mgmt.

Services

'Data lake'

Industry 4.0 is characterized by maximized efficiency, interconnectivity and highly dynamic environments

Summary: Characteristics and Benefit Potentials of Industry 4.0


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Active/ autonomous cyber-physical objects (products and production systems)

Decentralized decision making

Process flexibility to enable customer-specific solutions (‘lot-size-1’)

Vertical integration from ERP and Planning to individual sensors

Cross-factory and cross-company process flow (horizontal integration)

Virtual model and integrated/ embedded analytics capabilities

COMMON CHARACTERISTICS OF INDUSTRY 4.0

Increased revenues through new services and business models

Better utilization of production capacities across global manufacturing networks

Elimination/ reduction of logistic costs

Improved profitability/ reduced costs for small batch sizes

Improved quality / reduced quality costs

Reduced lead-times

Increased flexibility

Improved customer value and satisfaction

“Cisco and GE estimate that the size of

the IoT pie is over $10 trillion.”1

BENEFIT POTENTIALS

1 Capgemini Consulting: The Internet of Things: Are Organizations Ready For A Multi-Trillion Dollar Prize?

Vertical integration and networked manufacturing systems

Horizontal integration through value networks

End-to-end digital integration of engineering across the entire value chain

Manage the people, culture and leadership transfor-mation (‘People 2.0’)

In order to achieve the Industry 4.0 target scenario, several key elements need to be resolved/ established

Challenges on the way to Industry 4.0


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Product

Production

Machine

Service

Company 1 Company 2 Company 3

Goods flow

Financial flow

Information flow

Agile Value Chain

As fundamental challenges, data security and communication standards are to be established.

Contents


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Industry 4.0 is essentially empowered by digital technologies. Manufacturing companies can drive growth and efficiency by addressing 8 key value drivers


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The Capgemini Consulting Industry 4.0 Framework

Future Manufacturing Business Model

Technology Enabler (Selection)

Agile Operation Model (Decentralized, Modular, Flexible, Boundless)

Infrastructure (connects Cyber-Physical Systems)

Go

vern

ance

&

Pro

cess

es

Peo

ple

Lea

der

ship

&

Ch

ange

Smart Solutions

Smart Products

Smart Services

Customer Integration

Collaborative Innovation

After Sales Integration

Smart Supply Chain

Agile Collaboration

Network

Connected Supply Chain

Smart Factory

Decentralized Production

Control

Data-driven Operational Excellence

Mobile Cloud Analytics M2M Social Robotics

EFFICIENCY DRIVER GROWTH DRIVER

Industry 4.0 is essentially empowered by digital technologies. Manufacturing companies can drive growth and efficiency by addressing 8 key value drivers


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The Capgemini Consulting Industry 4.0 Framework



Agile Operation Model (Decentralized, Modular, Flexible, Boundless)

Infrastructure (connects Cyber-Physical Systems)

Go

vern

ance

&

Pro

cess

es

Peo

ple

Lea

der

ship

&

Ch

ange

Smart Solutions

Smart Products

Smart Services




Smart Supply Chain

Agile Collaboration

Network


Smart Factory


Control



EFFICIENCY DRIVER GROWTH DRIVER

Presented as Case example in breakout

Example: Collaborative Innovation

For a world-class aircraft and rocket engine manufacturer we established an end-to-end engineering platform to enable extended-enterprise engineering collaboration

Benefits Global transparency about demand and

resource availability through consolidation across all levels of the network

Validation of plans by checking sales plans against network planning quantities

Reservation of agreed quantities to ensure delivery reliability

Triggering the investment process at an early stage

Solution Implementation of a collaborative platform

to share configurations and digital mock up with external partners and suppliers

Definition of product data model Reengineering of modification processes in

order to find the right balance about the rhythm of evolution into digital mock up and PLM corresponding configurations

Background Need to globally collaborate all along

product life cycle with more suppliers and partners

Real time collaboration of internal and external users around digital mock up must be improved

Communication must be facilitated Partners and suppliers don’t have a direct

access to product configuration


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Horizontal Integration: Supply-Chain Control Tower

Manufacturing companies can target supply chain complexity by connecting physical commodity flows with digital platforms


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Tracking & Tracing System

Master Data Supply Chain Event Management

Supplier Logistic service provider Internal Logistic service provider

ASN & GPS

GPS RFID & GPS

RFID & GPS

ASN & GPS

ASN

ASN RFID

RFID

Increased transparency and

improved remote accessibility Real-time processing and

improves network monitoring Increased flexibility and

improved decision-making

Digital platform integration backbone

Electronic interfaces Big data analysis Instant cloud access

Cyber-physical supply chains interconnect and map value networks and thus provide a transparent and unique view for breaking down operational issues.

Example ‘Connected Supply Chain’: Supply Chain Control Tower

Using a Control Tower provides E2E supply chain visibility, reduces transport costs and increases supply chain and LSP control

Benefits More efficient, integrated organisation Increases load efficiency Improved tracking and customer services Improved customer satisfaction Improved transport efficiency using best-in-

class carriers and redesign transport solutions (e.g. x-border domestic)

Improved Performance Measurement and Freight

Solution Integrated management organisation (LSP ‘s and

Samsung) for steering, planning & controlling IT product flow from Port-to-Customer

Develop and implement logistics buying function for procurement and contract management of warehousing and transport services

Set up new administrative organisation in such a way that all required cost data is captured automatically

Carrier (selection, evaluation, invoicing) and inbound (terminal planning, customs status) integration

Background Warehouse and distribution activities are

outsourced; further supply chain optimisation within current organisation is complex

Purpose is to increase E2E supply chain control, improve efficiency by using best-in-class carriers and become less dependent on their LSP’s

Activities on the tactical level (e.g. carrier management, high level planning, contracting) will be executed by a Control Tower


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With the help of digital technologies, integrated business planning transforms counteracting functional goals into an overall value orientation for the entire organization

Vertical Integration: Integrated business planning


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IBP consolidates planning activities of supply chain, marketing, production and finance and optimizes operational performance as well as capital costs.

Cloud

Big data/ analytics

Operations

Cross-functional resource allocation and capacity planning enhances

workforce management

Improved planning and forecasting due to cross-

functional connection leads to an increased EBIT

Market simulation leads to improved portfolio decision-making

Strategy insights for R&D provide orientation

on profitability

Cascading strategy across the organization enhances trust

Real-time operational decision-making optimizes performance

and capital costs

Example ‘Vertical Integration’: Integrated Business Planning

For a global component manufacturer we established a platform for integrated business planning in order to enable optimized demand and production planning

Benefits Accelerated order confirmation and

improved on-time-delivery Reduced inventory levels and order lead-

times Reduction of transport costs due to

improved material availability

Solution The entire S&OP process was re-designed,

following an IBP logic and based on the principle “one plan - one number”

Development of an integrated business planning (IBP) process aligning all sales and supply activities with financial planning

Implementation of IT solution to support integrated planning process from Demand- to Production Planning (modules: DP, SNP, PP/DS, gATP)

Background Customer was operating in an optimized

global supply chain network Delivery performance was below industry

standard Low degree of supply chain planning

process integration Supply chain cost transparency was

missing, the “real” logistic costs were not taken into account although they were forming a crucial part of the total costs


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Contents


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Agile Operation Model(Decentralized, Modular, Flexible, Boundless)

Infrastructure(connects Cyber-Physical Systems)

Go

vern

ance

&

Pro

cess

es

Peo

ple

Lea

der

ship

&

Ch

ange

Smart Solutions

Smart Products

Smart Services




Smart Supply Chain

Agile Collaboration

Network


Smart Factory


Control



EFFICIENCY DRIVERGROWTH DRIVER

To exploit the opportunities of Industry 4.0, the various Siemens divisions should evaluate all dimensions of the Industry 4.0 framework

Implications for Siemens Business


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Products

Services

Process & Organization

People & Culture

IT & Technology

Integration & Standards

Review the product portfolio and determine the level of integration (e.g. sensor vs. turbine vs. control system)

Implement multi-agent technologies

Develop and establish stan-dards for M2M-communi-cation across the portfolio

Develop and establish security standards capable for Industry 4.0 scenarios

Establish cross-enterprise integration platforms (e.g. 3D-printing grid)

Leverage and develop more cloud-based solutions to increase flexibility

Establish Industry 4.0 processes in own factories

New services reaching out to end-customers (B-2-B-C) e.g. healthcare or drives

Evaluate value chain for data driven business models (e.g. energy efficiency management)

Establish stable digital process management to ensure fast response and process compliance

Establish agile team culture Enable agile and decentralized

decision making Prevent ‘not-invented-here’

culture

Leveraging our broad cross-discipline capabilities, Capgemini is committed to support Siemens in the exploitation of the business potential of Industry 4.0

How can Capgemini support Siemens in this Transition?


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Definition & establishment of security and communications standards (e.g. security solution on device level and corporate M2M-communication standards)

Assess your digital maturity and market potential

Identify and develop business opportunities

Design the business model

Develop the roadmap towards Industry 4.0

STRATEGY & ROADMAP

Review of the product and service portfolio for adaptation requirements

Re-engineering of product portfolio to CPS

Service innovation and implementation

Apply customer value analtics to improve revenue and profit

PRODUCT & SERVICE

Design, implementation and operation of digital platforms (e.g. the service cloud) and infrastructure

Integration platforms (vertical and horizontal integraztion)

Referenzarchitekturen

Design and implemen-tation of digital business processes

OPERATIONAL EXECUTION

People and culture transformation

Leadership skills transformation

Transform towards end-to-end engineering integration

TRANSFORMATION


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Thank you for our attention!

Documents

Capgemini [s PoV on Industry 4.0 and its business ...Technology Innovations Advanced Analytics Internet of Things and Services Decentralization and autonomous control Virtual and Augmented