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What does production look like in
the “new normal”? Different from
today – because the crisis ensures
that the previous maximization of
efficiency must be supplemented
with resilient and adaptive production systems. A significant contribution is made by the digital transformation.
Resilient and
adaptive: industrial
production in the
“new normal”
Everywhere, opportunities are currently being sought to create the “new normal.”
But what happens when a vaccine is found or a treatment becomes available?
Will we then return to the previous business as usual? No – says German futurologist Matthias Horx vehemently. The “new normal,” according to Horx, does
not consist of glass dividers and protective masks, but of a reconfiguration of
social systems at all levels of human coexistence – including the economy.
As a result, some familiar knowledge needs to be adapted.
siemens.com/digital-connectivity
The “new normal” does not only consist of protective masks, but also of a reconfiguration of the social systems.
Efficiency at all costs?
The classic competitive paradigm applied to companies
during business as usual: in order to be successful in the
market, a company must either realize a structural cost
advantage (be able to offer its products less expensively
than comparable competitive products) or it must deliver a
better product for the same price. In both cases, it is paramount for companies to keep an eye on their efficiency
because even the better performing product must always
be in relation to the price. Every user would certainly
want a day-long battery life for smart phones – but if this
unique selling point costs USD ,, the group of buyers
will be extremely small. Efficiency gains arise, among
other things, from the so-called experience curve effect.
This model states that unit cost decreases significantly
with increasing production volume. According to the
model, doubling the accumulated output leads to a cost
reduction of to % per unit.
The production systems, configured from technologies
and organizational patterns, follow this strategic criterion
of maximum efficiency. For this reason, the assembly line
production was introduced over years ago; from the
s, the production was increasingly outsourced to lowwage countries as an extended workbench; followed by
the implementation of just-in-time as a logistics concept
and the deployment of ever more efficient (i.e., ultimately
more cost-effective) technologies. Growth is also a decisive
factor, as only in this way can cost reductions from the
experience curve effect be realized faster than by competitors – and only through the implementation speed can
competitive advantages be developed.
Maximum efficiency makes companies vulnerable
However, the coronavirus crisis has shown how vulnerable
and fragile systems maximized for efficiency can be, says
Matthias Horx. Just-in-time only works as long as transport
routes and national borders are open. The reduction in
the in-house vertical range of manufacture and the elimination of a “second source” in favor of lower costs require
a supplier not affected by virus-induced plant closures,
etc. To be able to react better to crises, a healthier balance
between efficiency (i.e., cost minimization) and effectiveness (what actually comes out in the end) is thus needed.
For some goods, the classic competitive paradigm was
completely irrelevant during the first phase of the pandemic – it was simply about being able to deliver at all.
But the coronavirus is only a proxy for crises of all kinds –
global challenges such as sea pollution, depletion of natural resources, and climate change also fundamentally
question the previous notion of “more and more, always
cheaper.”
New skills for companies
Companies must therefore develop two skills that supplement the pursuit of efficiency: resilience and adaptivity.
Resilience describes the resistance to crisis events, adaptivity the adaptability to the increasing volatility in the
markets. Resilient companies continue to produce and
deliver even when there are significant supply chain disruptions; adaptive companies quickly adapt to changing demand structures, for example, when a coronavirus results
in the demand explosion for headsets and hair clippers
practically overnight – or a famous influencer hypes a
product on YouTube, resulting in a rush of buyers. This
adaptivity means something else than the often required
flexibility. The latter aims to expand the production program
to include more and more variants so that the product
range can be tailored more and more finely to the demand
– but without losing the economies of scale.
Both must be holistically anchored in the company – as
has been the goal of efficiency to date – and also change
the necessary production system. From an organizational
perspective, for example, these are redundant supplier
structures that also take geographic distribution into
account instead of just pure cost optimization – thus increasing the resilience of the supply chain.
Digital transformation as driver for the “new normal”
Technologically, it is above all the digital transformation
in the industry that helps companies gain resilience and
adaptivity. If the task of automation was the high-precision,
repetitive execution of defined tasks, digitalization enables
the control of complex systems (such as a production) in
“live operation” – even in situations that have not been
previously coded in detail or for which all the information
required is not available. The linking of all digital systems
with each other and the automatic synchronization with the
actual operating processes are therefore important in order
to distribute the information obtained in almost real time
to all relevant parties inside and outside the company – an
architecture that can be described as digital connectivity.
The resulting Industrial Internet of Things (IIoT) makes it
possible to react more quickly to disruptions and demand
fluctuations.
Three examples on this from Siemens: In an electronic
Kanban system, the material removed is automatically
recorded using an RFID reader and reported to the cloud
or the supplier’s order system via a data connection. If the
production program shifts, the supplier is automatically
and immediately informed – no lengthy inventory taking,
planning iterations, and manual orders. Second example:
With the support of real-time locating systems (RTLSs) and
automated guided vehicles (AGVs), permanently installed
conveyor technology can be replaced by a flexible and
dynamic flow of goods that can react immediately to
changing conditions in the factory – be it the blocking of
areas for infection prevention reasons or the reinforcement
of certain production sectors to meet increased demand.
And the third example: Modern communication technologies and software systems allow numerous operating,
maintenance, and adjustment tasks to be performed
with out personal presence from a safe home office –
from control diagnostics and programming (TIA Portal,
SINEMA Remote Connect) to virtual commissioning and
simulation-based operator training (SIMIT) to complete
plant operation with the web-based process control system
SIMATIC PCS neo.
An AI-based robot completes assembly tasks without prior teaching.
In addition to these existing possibilities, new technologies are needed
as well. Supplementing automation
systems with artificial intelligence (AI)
will make even greater adaptivity
possible. At the Hannover Messe,
Siemens showed an AI-based robot
that can mount a wide variety of
devices to a top-hat rail without prior
teaching – by simply transmitting
the digital production order. Additive
manufacturing technologies exhibit
a similar potential as they allow a
stronger decoupling of workpiece and
machine configuration. As an IIoT
communication technology, Industrial
G is not far away – among other
things, it will enable decentralized
control algorithms for a large number
of mobile robots and AGVs. Last but
not least, a prospective business
blockchain could provide for a new,
likewise decentralized and resilient
processing of transactions in the supply chain.
Start with determination!
Regardless of which technology actually enables the necessary step towards
greater resilience and adaptivity in
specific cases, companies should now
invest in their own digital transformation. The coronavirus crisis has shown
with urgency that if you started digitalization in time, you now have a
decisive competitive advantage.
Security information
In order to protect plants, systems, machines and
networks against cyber threats, it is necessary to
implement – and continuously maintain – a holistic, state-of-the-art industrial security concept.
Siemens’ products and solutions constitute one
element of such a concept. For additional information on industrial security measures that may be
implemented, please visit
https://www.siemens.com/industrialsecurity
Published by
Siemens AG
Digital Industries
Process Automation
Östliche Rheinbrückenstr. 50
76187 Karlsruhe, Germany
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© Siemens 2020
Subject to changes and errors. The information
given in this document only contains general
descriptions and/or performance features which
may not always specifically reflect those described,
or which may undergo modification in the course
of further development of the products. The requested performance features are binding only
when they are expressly agreed upon in the concluded contract.
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