Download Connecting Manufacturing, Products, and Assets

Executive Insights | Feature Story
This article appeared in the Jul Aug Sep 2016 issue
of SAPinsider (www.SAPinsiderOnline.com) and appears
here with permission from the publisher, WIS Publishing.
Connecting Manufacturing,
Products, and Assets
Exclusive Q&A on IoT Disruption of the Supply Chain
with SAP’s Thomas Ohnemus and Richard Howells
S
mart, connected products are everywhere in the consumer world. Data from built-in sensors in
personal health trackers, smart appliances, and home security systems is changing consumer
expectations to the point where continual data tracking and transmission are expected — the
Internet of Things (IoT) is here. The impact of IoT on manufacturers that produce these consumer goods
specifically is clear, but what about the larger impact from the enterprise perspective? SAPinsider
recently sat down with SAP’s Thomas Ohnemus, Vice President of Solution Marketing, and Richard
Howells, Global Vice President of Extended Supply Chain, for an exclusive interview on the topic
of deriving business value from connected products, assets, and manufacturing. Ohnemus and
Howells touch on IoT examples across industries, and a new SAP solution that provides end-to-end
management of connected assets.
Q: How should the enterprise think about the
potential of smart products and the Internet
of Things (IoT) for business?
offer customized vehicles as opposed to an assembly
Richard Howells: The digital disruption that is per-
Thomas Ohnemus: Another important thing to
vasive in the consumer world is driven in large part
remember when deciding how to harness the value of
by demand for an improved customer experience
IoT is that smart products are in fact becoming smarter.
and personalized products. This is now impacting the
They provide value to the manufacturer — not just to
enterprise as well. Disruptive technologies, including
the consumer — long after they’ve left the show floor.
3D printing, robotics, and IoT, are causing both con-
Today, whether you realize it or not, every car has
sumer and industrial manufacturers to reengineer
smart components. And soon enough cars will be
traditional manufacturing processes in response.
connected to other cars. The majority of innovation
Making connected devices and smart products only
in the car industry right now is in software improve-
scratches the surface, though.
ments, not in the engine or physical design. Real-time
The bigger business challenge is in deciding how to
insights into connected products can help make the
turn the data that connected assets — machines and
product more intelligent over its lifespan and for
devices across the enterprise — provide into valu-
future iterations of the product. This has a material
able information that can improve business processes
impact not just on manufacturing, but also on engi-
and change business models. How does it add value?
neering. It also creates the challenge of managing a
Maybe it’s transitioning from making products to
growing network of connected products and assets.
selling a service, such as an industrial manufacturer
IoT isn’t merely about building a smart product;
that transitions from selling physical air compres-
it’s about harnessing insight throughout an entire
sors to instead selling compressed air as a service. Or
network of connected products to serve a modern,
maybe it’s becoming a lot size of one manufacturer to
agile digital enterprise.
line of three or four models.
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Thomas Ohnemus
Richard Howells
Vice President,
Solution Marketing, SAP
Global Vice President,
Extended Supply Chain, SAP
Q: How are organizations embracing this
potential to reshape their business models?
organization using these tools to achieve a busi-
Ohnemus: There is so much untapped potential.
sake. Leveraging the throughput or performance of
Companies recognize that there really aren’t any
a connected device isn’t new, but using it to solve a
restrictions for how a network of connected assets
business problem and implement different business
can solve even the most vexing business problems.
models is how IoT has evolved. Organizations are
For example, innovation in the delivery business
coming to terms with the fact that IoT is an enabler
has been static for decades; other than faster deliv-
of solutions that can help solve a business problem.
ness result — it is not technology for technology’s
ery times, shipping companies pick up at location A
so it is out to change this dynamic by transitioning
Q: What challenges does embracing an IoT
mindset present for companies that are
transitioning to a digital framework?
to a “last-mile” model. The company saw the poten-
Howells: First, the challenges won’t be limited to
tial for disruption and met it head-on by becoming
the trailblazers. With an expected 50 billion con-
a manufacturer of digital products, reshaping some
nected devices by 2020, a lot of companies are going
long-held notions about what it means to provide a
to be asking this question. Becoming a digitized busi-
delivery service.
ness results in a host of downstream implications.
and deliver to location B. But one company in this
space is investing heavily in 3D printing technology,
For a business that now relies on machine uptime,
Howells: It’s not just companies that are using these
the availability of that machine becomes para-
new technologies to solve a business challenge and
mount. How can you best employ sensors to predict
stay ahead of the curve. The challenge for one Euro-
with relative certainty that machine’s failure? Say
pean seaport — which moves roughly 140 million
you’re operating a fleet of refrigerated trucks, each
tons of cargo each year — was how to cope with an
with hundreds of sensors. How do you manage the
anticipated throughput increase in a fixed space. The
complexity of thousands of pieces of real-time data
answer was to use sensor data and IoT technologies
concerning weather, fuel consumption, traffic, and a
to optimize the movements of every truck, train, and
host of other variables? Analyzing the performance
cargo ship entering and leaving the port. By turning
of these assets, sending instructions back to the fleet,
real-time data into intricate activity patterns, logis-
triggering repairs, leveraging geo-fencing and loca-
tics teams can take time-saving measures such as
tion tracking — doing all of these things in real time
rerouting a truck to avoid an open drawbridge, for
to make informed, intelligent decisions is necessary
example, or steering a truck to an open bay to avoid
to optimize a network of connected assets through-
idling trucks waiting in a long queue.
out the life cycle of the products.
Opportunities to save time and money by leveraging connected assets to become more efficient
Ohnemus:
are endless. This is a very real example of an
manufacturers has been to create documentation
Traditionally,
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the
challenge
for
of how to use and maintain a product. As products
it happens can be vitally important to a company that
become more intelligent and more customized, this
depends on uninterrupted uptime. Through a connection
challenge intensifies: How do you provide up-to-the-
with SAP Asset Intelligence Network, which also provides
minute, individualized documentation for a product
real-time visibility into the supplier network, a company
that changes after the point of purchase? The challenge
can make more intelligent decisions about when to ser-
for product designers and engineers is to harness new
vice a part, for example.
machine intelligence into subsequent models. How
product description with the software and electronic
Q: Is the information collected and stored in SAP
Asset Intelligence Network bilateral, meaning
you’re not just managing connected assets that
have already left the shop floor but managing
how those products are built for a future release
as well?
pieces, managing all of this information, and providing
Ohnemus: The concept of the live product begins with
documentation of a live product.
research and development (R&D) and, of course, also
does the fact that engine parts can now coordinate with
other engine parts change design? Real-time insight
into a product’s performance after it has left the shop
floor is an opportunity that engineers have never had
before, so the challenge comes from tying the physical
includes the entire manufacturing process. In the R&D
Q: How does SAP help simplify the management
of a diverse network of connected products?
state, innovation and improvements in software and sensor
Ohnemus: I mentioned the challenge of documentation
they’re in the hands of the end consumer. This is a sys-
for individualized products. With the idea of a live prod-
tems engineering concept, whereby the physical product’s
uct, the thought was to take all of the related product
description — such as its materials and its complex struc-
information — such as a fluid product description, mate-
tures — is managed in concert with all of the electronic
rials, engineering and manufacturing data, and a service
and software components. A greater transparency into
bill of material — and put all of this into a holistic digital
product performance throughout the life of the product
representation in the cloud, which is customer-specific
provides manufacturers with real-time insight that enables
and updated in real time throughout the life of a prod-
them to react to the latest market demands. On the shop
uct, and includes how a specific product relates to other
floor, intelligent machines can coordinate to create a seam-
assets in a connected network. And this technology exists
less production line, and this efficiency leads to fast adjust-
in the form of SAP Asset Intelligence Network, a central
ments for customized components. In the end-to-end
hub with which you can manage an entire network of
production chain, use of intelligent machinery leads to
connected products.
much more flexibility and transparency from the top floor
Having a continuously updated digital avatar adds
to the shop floor.
technology ensure that products get smarter even after
value in design and engineering by providing updated
documentation changes, but the real value is actually
Howells: The true value of holistic management of con-
derived when the product is in use or is being updated.
nected assets is to solve a business problem, so the more
All of the data produced by the product is easily stored
information you can make sense of, the more opportuni-
and visible in the network. A company can decide what
ties you have to return this value. A company that can
data is important to act on and then analyze its product
service a vehicle with a software update without taking
portfolio in real time to better predict how a particular
the car off the road will be thrilled, but the manufacturer
asset will behave.
will be even more thrilled. Having received real-time performance updates, the manufacturer can use this detail
Howells: The options for deriving additional value from
to make a real-time adjustment to the next production
SAP Predictive Maintenance expand significantly in the
line. And this is on top of providing a superior customer
context of SAP Asset Intelligence Network. Imagine the
experience.
practical benefits for a vehicle manufacturer that can
Connected products and connected assets are every-
push out a notice for an automatic repair that can be
where you look. Harnessing the power of IoT to drive
completed with a software update without making the
new business processes and new business models is
customer actually service the vehicle. Sensors that can
already paying dividends for forward-looking companies
detect potential for machine failure and take proactive
that understand that efficient management of a con-
steps to mitigate this potential for disruption before
nected device network is a differentiator.
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