Can the European Commission’s Recovery package transform ICT for manufacturers?

11 May 2010

The European Commission’s reference to ICT in “factories of the future” is the latest in a number of attempts to broaden the adoption of these technologies going back more than 20 years. Steve Diggines, business leader for STICORP, Europe and a member of the MESA UK working group, explores the technologies involved and considers what has prevented their adoption in the past.

In the 1980’s the term “computer integrated manufacturing” (CIM) was coined. Since then many standards and sometimes competing terms were introduced and adopted, such as the ISA 95 standard for the integration of enterprise and control systems. More recently, the European Commission has recognised the importance of ICT in factories by making it a key part of their “Factories of the Future” public private partnership programme. However, the fundamental strategy of all these standards and methodologies has not changed much since their inception. The quest was and still is - how to use integration technologies to migrate from standalone production units to an integrated production system in order to improve manufacturing performance (agility, efficiency, quality and profitability).

Compare the following:

From the 1980’s “Computer integrated manufacturing (1980’s) - the manufacturing approach of using computers to control the entire production process ... allows that the processes exchange information with each other and they are able to initiate actions. Through this integration, manufacturing can be faster and less error-prone” (Wikipedia)

From Factory of the Future (2009) Integrated process automation and optimisation for sustainable manufacturing: Highly integrated shop floor-based platforms and systems, in seamless cooperation with enterprise software, capable of achieving operational targets, such as yield and quality increase, while ensuring energy efficiency and reduction of waste (Smart Factories: ICT for agile and environmentally friendly manufacturing 2009)

"Factories of the Future" is one of the three public-private partnership programs, included in the European Commission's recovery package. It will consist of a research programme of €1.2 billion intended to support the manufacturing industry in the development of new and sustainable technologies. If the benefits identified in this initiative are so great that the EU is willing to invest €1.2 billion why have manufacturers taken so long to deploy technologies that can make a real difference on the shop floor and what can make them change now?

The Technology Strategy Board (TSB) invests in programmes and projects throughout the UK in an effort to promote technology enable innovation. The organisation supports the “Factories of the Future” initiative. Its head of technology, Will Barton, said: “Technology Strategy Board has been happy to help shape and support the “Factories of the Future” PPP initiative as it encourages manufacturing companies to adopt just those novel technologies that will help them to maintain a competitive advantage into the future.”

Barton added that he felt the PPP initiative was and its goals were “entirely consistent” with his organisations own strategy.

Sean Robinson, global industry manager of Food and Beverage at GE Intelligent Platforms, argues: “To quickly deliver financial and operational value to small and mid-size producers ICT solutions must have two critical capabilities: They must integrate quickly and flexibly with varied equipment and control systems and manual processes. They must also provide read-to-use functions that immediately enable recovery of capacity, improvements in quality and elimination of waste.”

Charles Horth, founder and CEO of STICORP has been working in this field since 1995 and has dedicated himself and his company to address the issue. He has identified typical profiles of manufactures that have been adopters of integration technology. In fact, companies that adopt this technology do so for the following reasons:

• They have a compelling business case or need for improving production performance
• They are investing in their plants to stay “ahead of the curve”
• They are want to drive open communication standards within their automation strategy
• They are motivated to recoup their initial investments from multiple production lines
• They need an enterprise wide view of all production activities in real time

The reasons why all of these have been entry criteria are due to a number of barriers to implementing this technology, for example the cost of integrating multiple control systems. Or the cost of putting a base infrastructure in place capable of supporting the whole plant (typically multiple servers, databases, software applications) and typically long payback periods due to lengthy implementation cycles before any benefits are seen.

The reality is that only a small percentage of manufacturers meet these entry criteria who are typically either in high value industry sectors or are leading brands within other sectors such as CPG and food and beverage. To move forward, there needs to be greater adoption amongst the remaining majority of the manufacturing base that is not in this fortunate position. Either because they are too small or they lack the business case for a costly change in ICT systems. They must rely on continuous improvement to drive costs down bit by bit and still expect an immediate payback – which is very difficult to achieve with this strategy.

When we study these companies, we often see seemingly insurmountable barriers to the adoption of this type of technology: Here are some typical pain points that STICORP has discovered when consulting with plant management:
• Multiple obsolete control systems -potentially part of a cannibalised system with the same integration capabilities as a toaster. “I am lucky I can start and stop it, let alone get fault data out of it” – customer 1
• Limited bargaining power “the OEM comes with their own control system that doesn’t fit my standards, but they won’t change it” – customer 2
• Old and dated plant – “why should I spend money to integrate to this, when I want to get rid of it” – customer 3
• Limited resource (“lean” has meant cutting jobs that are not directly adding value to the product). “I am interested, but I have too many other things to do at the moment” – customer 4
• Long payback times. Typically up-front costs for these project can be 100’s of thousands if not millions. Equate this to the number of loaves of bread a bakery would need to produce (or not waste) and the business case just doesn’t stack up. “I’d rather skip the loaves than spend the money on this technology” – customer 5
 
Because of these barriers, manufacturers are trying to stay ahead by fixing problems piece by piece. Often this means putting in place point or temporary solutions to solve specific problems without thinking about the longer-term impact.

So what is the answer? From the perspective of our customers and STICORP we believe the three major areas that can impact sustained manufacturing improvement are:

• The entry point needs to be lower – suppliers of these technologies (software, hardware and integrators) need to make it easier for companies to start small. Possibly on a single line or production unit and then grow the system as they need to. Or co-ordinated with an upgrade or replacement of obsolete equipment. There are new and innovative solutions that have a rapid ROI with a minimal investment from several vendors including STICORP.

• There needs to be a general change in the investment environment allowing investment in longer term projects that provide true competitive advantage and sustainability (a well used but useful term). Short term paybacks do not necessarily provide long term competitive advantage or sustainability. This requires a change in stakeholder and management outlook and also external support

• If the EU and Government want to help, they need to make sure that investment gets to where it is needed. These investments need to be targeted to sustainable manufacturing improvement which is the essence of “Factories of the Future”

Steve Diggines is the Business Leader for STICORP - Europe and a member of the MESA UK working group. He also leads the current STICORP “invest in results” for CPG initiative.

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