The Value Proposition of IIoT, Industry 4.0

June 16, 2018
Industrial Internet of Things, collaborative robots, digital twins and more aren’t just new ways of trying to get you to loosen your purse strings. They bring with them the promise of improved business outcomes.

There are some in industry who argue that there’s nothing really new about the Industrial Internet of Things (IIoT). Plants have always gathered lots of data, with sensors streaming information back to supervisory control and data acquisition (SCADA) systems. But there are several technological advances that make IIoT a game changer, including cheaper (and thus more prevalent) sensors, increased computing power, improved networking and more. Factor in the innovative technologies associated with Industry 4.0, and you have a burgeoning value proposition.

Several experts gathered in Chicago at the recent Automation Conference & Expo—put on by Automation World and its parent PMMI Media Group—to discuss the value of automation and how to get executive buy-in. Although much of the panel discussion centered on some of the newest technologies, particularly around IIoT and Industry 4.0, the endgame is still the same as it has always been: Keep production going and make money. As with any new technology on your plant floor, you need to ensure that you get the value out of that investment and that it serves the bottom line.

With SCADA, the value proposition of internal sensors in protocols like DeviceNet and Profibus was geared toward diagnostics. “When it actually went to the field, nobody was really using all that stuff,” said Phil Marshall, CEO of Hilscher North America. “There was a lot of diagnostic data…but it was not implemented because nobody wanted to program all the bits.”

IIoT is trying to automate the implementation of the diagnostics from that data, implementing it more economically, Marshall added. “Things are improving in a multitude of different ways.”

Dave McMorran, business development manager for Iconics, views IIoT almost as an extension of SCADA, with a key difference being the sheer amount of data being collected. “We weren’t collecting it before because it was too expensive. Now we can take all that data, and tools that are out there for analytics can help find answers a lot more easily than in the past,” he said. “You can collect the data, visualize it, store data, put it in context, and make better decisions about your business.”

Lapp Group, which makes cables and connectors for industrial automation, also has a perspective as an automation user, where it has seen how IIoT technologies can improve the value of its production. “There’s an example of a plant in Germany where we still produce connectors—a big challenge is the huge variability and high pressure on cost,” explained Ralf Moebus, head of product management at Lapp. “We made the decision to move production to Eastern Europe because of cost. But 10 years later, with new IoT technologies available, we looked at how can we use the technologies to produce these connectors again in Germany.”

Integrating its production equipment with an enterprise resource planning (ERP) system, Lapp saw an opportunity to offer better service to its customers. Customers can now order connectors on Lapp’s website, and can make specific requests, as one example, about where they want the cable inserted on the connector.

“This was part of the management buy-in. We can say to management that we provide better service for customers because we could produce a lot size of one,” Moebus said. “We could also reduce our stock; we don’t need to have that many versions of connector. We could reduce our stock cost by 30 percent. This is good value and part of management buy-in.”

The ability to produce a lot size of one has been a big driver for IIoT technologies, according to John Kowal, director of business development for B&R. “We’re seeing a big push toward mass customization—what a customer wants when they want it [sent] to their house without a long supply chain,” he said. “This is particularly appealing to a consumer who’s always been online.”

The nature of selling to manufacturing end users has changed as well, noted Mike Wagner, global OEM business manager for packaging at Rockwell Automation. Gone are the days when products were sold to engineers as individual line items. He related a story in which Rockwell was working with Taiwanese electronics manufacturer Foxconn to develop a new facility in Milwaukee. It took about six months of back-and-forth discussion as Rockwell kept talking about products, which was the wrong approach.

“At the end of the day, that’s not how you win the business,” Wagner said. “The terms you use are not technology in any way. It’s all about business and business outcomes.”

Digital twins and time to market

There are plenty of positive business outcomes to be gained by IIoT and Industry 4.0 technologies.

One important Industry 4.0 technology is the digital twin, which enables manufacturers to simulate equipment to tweak processes in the plant, for example, or to optimize equipment before it’s even placed in a facility. The digital twin can be a major asset in driving automation value.

“Digital twin technology, when used effectively, can really shorten the time to market,” said Colm Gavin, digital sales specialist for Siemens.

In particular, the digital twin helps to get automation involved earlier in the planning process rather than the more typical scenario with regard to deadlines. “The mechanical guy is late, the electrical guy is late, and the automation guy gets squeezed,” Gavin noted. “With the technology we have now with the digital twin, we can work much earlier in the cycle with the mechanical guy.”

The digital twin enables virtual factory acceptance testing. It can verify error handling, scrappage, etc. Manufacturers can simulate how the machine will work and how it will be integrated into a facility. Operators can even be trained on the equipment before it is installed.

“Time to market can really be reduced at that point,” Gavin said. “Digital twin is a key part of Industry 4.0 in combination with IoT.”

Sometimes customers are concerned about how much simulation will cost them. Gavin’s response: “It’s going to be cheaper than the last crash you had on the machine.”

Making a case

Panelists also had advice for manufacturers struggling to make a business case for their leadership. “As we start to work with most companies, they’re either drawing from a capex or opex budget. With opex, they tend to have a tight limit, so it’s more difficult,” Wagner said. “We look at taking one piece at a time and over time, instead of all at once. There are different ways to approach it.” One Rockwell customer he described had a plant in China that was running at less than 35 percent. “We looked at incremental funding to start and then looked at additional funding tranches going forward,” he added.

Others reiterated the idea of starting small and taking off from there. “To justify the cost and determine the benefit you’re going to get, make it a pilot project,” Kowal advised. “Get the latest stuff, the latest controls, and from the ground up build your IoT. But treat it as a separate factory—a factory within a factory.”

It’s important to look at which parts of your operations make the most sense to automate. Realistically, about 15 percent of the operations can be truly 100 percent automated, noted Kyle Kidwell, technical application development engineer for the Great Lakes region at Universal Robots, which specializes in collaborative robots (cobots). “Is it something where you can implement a machine to reteach what people do naturally? Things that operators do that are very difficult to translate into machines? Things that are ergonomically not sound for people to be doing?” he asked. “You have to balance out what’s the capital investment cost of the hardware vs. the cost of maintaining labor.”

Asked specifically about how to assess production operations for the use of cobots, Kidwell advised taking a closer look at manual labor—its pain points, labor shortages, or other reasons you’re not manufacturing parts. “You can see which applications are ideal for automation, and which ones aren’t,” he said. “You can calculate how quickly you’re going to get payback for implementing an automation cell.”

Kowal returned to the batch-size-of-one topic, noting its ability to build new business cases for a manufacturer. “If you can give the new consumer what they want when they want it, it’s a whole new business model,” he said. “You become a partner with what management is trying to do, which is figure out how to take their business to the next level.”

For more about optimizing the value of automation, read Automation World’s four-part series on the topic:

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