Siemens on the impact of the IoT

Recently, ProcessOnline spoke with Michael Freyny, Executive General Manager: Digital Factory/Process Industries and Drives at Siemens, about the impact of the Internet of Things (IoT) on industry. Freyny is a keynote presenter at the upcoming ACI Connect conference in Sydney, 12-13 August.

What are the key challenges that the IoT brings to the industrial sector at this time?

The key challenges that the IoT brings to the industrial sector is the sheer pace of change and the increased competitiveness of those who invest. Old paradigms quickly disappear and this means several things.

Firstly, it needs to get onto the CEO’s agenda to drive change from the top down. A survey of 235 German industrial companies published by Booz and Company suggests that the digital transition will lead to a significant transformation of their companies that will require considerable investment — which leads me to my next point: it requires a commitment to invest. The same survey estimated the share of investments in Industry 4.0 solutions will account for more than 50% of planned capital investments for the next five years. Australian companies should also get serious about their investment because IoT presents an opportunity like never before.

Third, companies need to take a broader view of the world. Competition is global rather than local; on the flipside so are the opportunities.

Finally, find a technology partner who understands what’s needed. Siemens alone invests around $6 billion in R&D every year, so it’s difficult to keep abreast of the latest technologies unless you are closely partnering with a credentialed technology company.

We’re seeing some of our customers actually taking a deliberate strategy already to restructure and prepare their businesses based on IoT and Industry 4.0. This means looking beyond the four walls of the factory and digitalising entire value chains and supply chains.

This future we call Industry 4.0 (the fourth industrial revolution) and according to the final German white paper report … “the introduction of the Internet of Things and Services into the manufacturing environment is ushering in a fourth industrial revolution. In the future, businesses will establish global networks that incorporate their machinery, warehousing systems and production facilities in the shape of Cyber-Physical Systems (CPS).” Siemens was a co-author on this white paper.

Siemens is in a unique position in that we’re not only preparing ourselves for the future but almost everything that we sell is designed to prepare our customers for that same future. The IoT is very real for Siemens and over the past three or four years we’ve invested more than $4 billion in acquisitions to ensure that we have the right offerings to prepare our customers for the future.

What opportunities does IoT offer the industrial sector?

This is all about productivity and competitiveness. It’s actually an opportunity for Australian companies to find their place in the global supply chain and really prosper. With more and more of the manufacturing equation done in the virtual and digital worlds, geography becomes much less relevant.

With IoT we can reduce waste and improve process efficiency by maximising the supply chain and logistics, reduce the time frame from design to production and effectively turn big data into smart data to drive informed and efficient business decisions.

IoT actually means that no matter where you are in the world, you can participate in the global supply chain like never before. 2013 OECD data suggests that more than 70% of global trade takes place within the value chains of multinationals. Therefore, to participate it’s critical to adopt globally accepted standards and tools such as product lifecycle management software that are already used by these multinationals. For instance, more than $700 billion of US defence department programs use Siemens PLM to allow global collaboration and engineering communication on common platforms. This requires new learning and new skills — beginning with schooling through to university and into industry learning programs. In June this year, Siemens launched a national secondary schools program to promote STEM skills (science technology, engineering and mathematics) because this is a long game.

Is IoT just another passing fad, or is the connected enterprise a very real and ongoing factor that all industrial organisations need to manage and harness?

Companies who ignore what’s happening do so at their peril. This is not a passing fad but rather a description of what is happening and what will continue to happen. For Siemens it’s already real business.

We call it Internet of Things and ‘Services’ because in our service business alone, we already generate around €500 million in revenue with digital services. For example, preventive maintenance of trains on the Barcelona-Madrid high-speed rail line enables us to achieve 99.9% punctuality.

We also use digitalisation to improve our own productivity. At our Amberg electronics factory, real and virtual worlds have already merged. Our products communicate with one another and the machines via RFID chips to optimise the manufacturing process. For instance, by using energy analytics in the plant in the past 12 months we’ve been able to save 100,000 litres of liquid nitrogen and reduce energy consumption by approximately 200,000 kWh compared to the previous year (5%).

Closer to home at the Snowtown II wind farm in South Australia commissioned last year, 800 sensors continually monitor and send data from the 90 turbines to our centre in Denmark. The data is automatically processed — along with information from more than 7500 other Siemens turbines around the globe — to create sample values for the normal operation of the various types of wind turbines. Through some clever analytics the data is converted to smart data which can remotely alter any single turbine to optimise energy production.

How close are we to seeing Industry 4.0 as an everyday reality rather than a futuristic concept, and what does this mean for the local A&C sector?

You can’t buy Industry 4.0 off the shelf. It’s not the next version of a software package. However, there are many solid examples where at least in part this has already been implemented. We describe it as a journey to Industry 4.0 because the journey has begun and people need to get on board this journey.

A very real example which I saw first-hand in Hannover earlier this year was the Maserati Ghibli on show in the Siemens exhibit. The success of the Maserati Ghibli is a perfect example of digitalisation of processes using Siemens industrial software platforms and automation.

The components were developed in PLM NX, and the production processes were simulated in using PLM Tecnomatix. Siemens TIA (totally integrated automation) is used for the flexible automation of the production line, and the complex production processes are planned, optimised and monitored with SIMATIC IT MES software.

Time to market was 16 months — a benchmark for the automotive industry. There was 30% less development time. They are able to produce three times as many cars as before. They have incredible production flexibility where no two cars are the same and the available data means that every part in every stage is tracked and measured in real time.

This is just one of many examples.

Michael Freyny heads up Siemens’ key industrial divisions in Australia and New Zealand and is an advocate of businesses embracing the Internet of Things (IoT) and getting on the ‘journey to Industry 4.0’. He recently joined Siemens in Australia and brings with him over 23 years’ experience with Siemens, holding senior positions in Asia, the USA and Europe — most recently in Germany where he was globally responsible for key industrial technologies. He will be presenting the keynote address ‘IoT and Industry — perfect match or perfect storm?’ on Day 2 of the ACI Connect Conference and Exhibition, 12-13 August, Sydney Olympic Park.