December 7, 2017

The digital factory… where is it?

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Rory Moore

Head of Industrial Services, Tieto

Digital is good. Transformation is even better! When we speak to many of our factory owner clients, we hear the same challenges repeated over and over again: “how can we achieve a holistic view of our production floor and processes when there is a disconnected ecosystem?” This is perhaps the most relevant question of our time.

While there is no shortage of connectivity solutions today, as more and more machine suppliers offer Industry 4.0 products, there is a fundamental obstacle to be tackled: most original equipment manufacturers, OEMs, have no incentive for sharing the data they collect with third parties. That’s why most factory owners fail to take advantage of the opportunities that such data might bring.

What do factory owners actually need?

Imagine a scenario where factory owners can connect ALL machines in their production lines. By gathering data at a central location, analysing it and then applying the data to optimize processes, they can reduce costs and by extension increase profitability. It should come as no surprise that this would have a positive impact on business.

Technology isn’t the issue today, integration and implementation is. And in much the same way that machine manufacturers do their utmost to protect the IP of their design and materials, they lock down the results of their data gathering and IoT solutions, which gets in the way of value creation.

The paradox of our time

  1. Machine OEM's are still focusing on their physical products. A mindset change is acutely required to ensure they focus on delivering the billable services around their products.
  2. Factory owners are focused on cost reduction and by extension this means reducing the cost of maintenance (but they often miss the importance of Total Cost of Ownership which goes beyond maintenance)

In this reality of contradictions, factory owners find themselves pursuing ambitions that clash with the interests of OEMs. From the very start this means that a profitable partnership can never fully come to fruition and both sides lose out.

Getting untangled – the art of transformation

While a commonly used word these days, transformation is the most sophisticated way of future-proofing your business. To attempt an explanation relevant to all business cases it difficult, especially in a short article, but my main point is this: both factory owners and machine builders are in a race against the clock to change their ways of working.

As more and more IIoT solutions become available for connectivity, they will also become a commodity and thus price driven which, in turn, can lead to less value for end users.

For this reason, machine OEM's need to focus on the not just the 'billable' services around their products, but on the outcome of their machines. That’s the only feasible way of unlocking value for all parties involved.

If machine builders can take greater responsibility and ownership of the outcome and performance of machines, factories will see their total costs decline. And here’s the magic bonus… they would be more than happy to pay for the privilege.

Summing it up

The conclusion here is simple. When factory owners seek to implement IIoT solutions, their first question to OEM service providers should be:

How will your IIoT solution help me reduce my total costs of ownership?

This will either weed out the service partners who bring little or no value, or it will start promising discussions for future partnerships.

Tieto Real Time Factory

Want to embark on a digital roadmap for your factory? We’d be happy to discuss ways of helping you save costs and to achieve a faster rate of return on your IIoT investment.

Let’s discuss and uncork the business challenge.
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