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Each quarter we sit down with an industry thought leader to discuss the trends, challenges, and best practices that are transforming their business. Today, we’re with Lars Reich, EVP Sales & Marketing, Feintool U.S., to discuss how Industry 4.0 is changing automotive manufacturing and creating opportunities across the industry.
Industry 4.0 isn’t merely a marketing buzzword. The digitalization of manufacturing has significant impacts on manufacturing performance, efficiency, cost reduction, waste, and many other areas. We have invited Lars to share how Industry 4.0 impacts his industry and Feintool and what strategies Feintool decided to follow.
Feintool is a global automotive supplier to OEMs and tier 1 and tier 2 suppliers. More than 95% of the company’s customers are in the automotive space with the remainder in medical manufacturing. Feintool has 15 plants worldwide, which helps it compete on a global scale.
Over the years, automotive, medical, and other manufacturers have required more complex and exacting components, and Feintool has been able to deliver thanks to its focus on innovation. Today the company is a leader in precision stamping and forming processes that produce the meticulous components their customers demand.
Tell us about the significant challenges and changes Industry 4.0 has presented for Feintool?
Some of the challenges are global programs and massive platforms, which can make it difficult for smaller companies to compete and stay in the game. For example, in the past, we supplied parts for Chevrolet Corvette, Malibu, and Impala. Today, most car models share common platforms, so the supplier contracts are larger, but there are fewer of them. It’s very difficult to win those contracts, and if you lose them, you can lose a lot of business. It can also be tough for smaller companies to stay in business, given the two- to three-year sales cycle. Suppliers have to be connected, global, and in the right place at the right time. You need a lot of energy and reserve. It is a very difficult and competitive business. To be successful, we not only have to be the best from a technology perspective, but we also have to be the most competitive from a cost perspective. It’s hard to check both boxes.
What are some of the strategies Feintool uses to stay competitive with technology and cost?
Even with all the technology, data, and tools that Industry 4.0 has spawned, in the end, it’s still about people. No company succeeds without good people. We try to be a company that can attract and retain good talent. And then we have to give them all the tools to be great. We can generate terabytes of data, but if you don’t have the right people to make sense of that data and turn it into insights, it’s worthless.
Investing in global infrastructure is another strategy. Having a global presence opens more opportunities for us and ensures we have facilities where our customers need us to be. In the U.S. operations alone, Feintool has also invested $130 million in the past ten years in new equipment, vertical integration, IT and ERP systems, and CRM to lead in quality and value for our customers. You have to balance talent, global infrastructure, and technology investment to have a chance.
What do you think are the most significant technology trends resulting from Industry 4.0?
For Feintool, it’s about transparency. Industry 4.0 helps provide transparency for the manufacturing process by bringing different systems together to create one view. We introduced a cloud-based ERP system in 2007. Those investments have given us worldwide access to data. Now, we can monitor how our machines are working as well as part quality and sales performance in real-time, and we can use this data to make adjustments to increase efficiency and performance immediately.
In our Nashville production facility, the machines are equipped with sensors to monitor temperatures, vibrations, and other factors that could impact production. Those machines cost about $12 million, and if they go down, we risk shutting down an entire vehicle production line. Nowadays, no one has inventory, so those machines have to be up and running.
Globally, our fineblanking machines are online with Feintool in Switzerland such that equipment health is monitored in real-time and we maximize customer value continuously.
What do you see as the most significant challenges, risks, constraints that Industry 4.0 has created?
For us, it’s the quantity and quality of the data our systems generate. Having data isn’t enough; manufacturers have to know how to interpret and analyze that data to make the right decisions. For example, it’s not enough to know something isn’t working, but the key is to understand why it isn’t working. You have to have the right data and the right analysis because these go hand in hand.
Another challenge is how fast our industry is changing. We are in the middle of a large shift with electric motors, and there is a lot of uncertainty with where the industry is headed. Automotive manufacturers don’t want to make significant investments in certain technologies because they don’t know how long those technologies will be viable. This uncertainty puts tremendous pressure on everyone to make the right decisions. Companies invest in those technologies and don’t know if they will have the return.
What is one piece of advice you want to pass onto our readers?
If you are involved in big projects, break it down into smaller, more manageable steps. Breaking enterprise projects into modular pieces makes it easier to accomplish. You’ll create small successes, which will add up over time. I see it in ERP and CRM implementation all the time. Usually, people want too much, too quickly, but these large projects take time, so be patient and don’t expect immediate success. There are lots of opportunities to celebrate small victories along the way. Rushing things can end in disappointment and failure.
Thank you to Lars Reich for sharing his insights on Industry 4.0 and how Feintool is operating in this new manufacturing environment. If you want to learn more about Feintool, visit https://www.feintool.com/en/.
By: Yannick Schilly, President & CEO – ALTIX Consulting Inc.
Since the early 1900s, factories and manufacturing have been evolving at a fast pace, spurred by Ford and Taylor embracing the science of industrial engineering. Every technology developed, process improved, machines and intelligence introduced—whether hardware or software—have furthered one goal: Creating better quality products, manufacturing them faster, and producing them at a lower cost.
Only this clarity of focus helps manufacturing and industrial companies remain competitive and ensure their prosperity.
Trends in the industry
The manufacturing industry went through multiple stages, called industrial revolutions. The first industrial revolution was led by the steam engine, which brought power and mechanization to the industry and enabled the production of steel, textiles, and the heavy materials necessary for the construction of roads, railroads and trains.
The railroad and the telegraph led to the second industrial revolution, which brought the electricity and the modern production line to the factory. The third industrial revolution, which occurred in the second half of the 20th century, was marked by computers, automation, electronics and robotics entering production plants.
The fourth industrial revolution will be a much faster transformation, fueled by globalization, modern information systems and global connectivity, and mobility of people, goods, and capital. “I4.0” is considered to be the “age of data” and will include the adoption of cyber-physical systems, including connected, smart, integrated, self-learning and self-regulating systems.
Why digitalization matters?
Technology is impacting every dimension of the enterprise and its ecosystem, regardless of its location, size or industry. Technology also impacts every individual in the company, from the operator to the CEO. Digitalization has enabled a new, real-time and data-driven business decision environment, which has created a variety of benefits, including increased competitiveness.
This data-driven environment boosts productivity, performance and speed while reducing costs across all business functions, and ultimately to the customer.
Every corporate function is challenged by developing the new:
• Strategy 4.0
• Finance 4.0
• HR 4.0
• R&D 4.0
• Sales and marketing 4.0
• Supply chain 4.0
• Manufacturing 4.0
• Logistics 4.0
Digitalization has not only impacted products, processes and technologies, but also employees, skills and methods. A digital transformation brings a lot of change and requires change management agility.
While the need to further the modernization and evolution of your company is a top priority, to do this, you must understand the logical building blocks of a new engineering and architecture. With good planning and design—for example, utilizing “digital twins” to test simulations before making expensive changes—you can avoid spending millions of dollars with little or no return on investment.
Assessing the maturity level and status quo of your company
I4.0 won’t happen on its own; it requires equipment 4.0, materials 4.0, processes 4.0, and people 4.0. Like in real life, a logical sequence of events is necessary for individuals and organizations to progress. Before obtaining a PhD, a student must obtain a bachelor and a master’s degree.
Organizations and companies should respect this philosophy and perform step-by-step advancements before attacking a digital transformation towards I4.0 and Industrial Internet of Things (IIOT). Human and organizational intelligence comes before artificial intelligence, not the other way around. Do not start I4.0 initiatives if your lean management maturity level is low, as failure could have devastating impacts on your company.
There are numerous challenges around I4.0, as it is a complex topic impacting every aspect of the business, from business modeling, product life cycle management, E-commerce, to manufacturing and supply chain. Decision makers, owners, and business leaders will face a multitude of questions, including:
• What’s all the buzz and hype with I4.0?
• What are the essential elements of the discussion?
• Where should I start?
• How do I start?
• What is the best strategy and approach to follow?
• When is evolution (incremental steps) right, or revolution (leap) required?
• Isolated pilots or holistic roadmaps and architectures?
• What works and what doesn´t?
• What will it cost, and what ROI should I expect?
• Who should I partner with?
• How can I build a compelling business case?
The bad news is that there is no silver bullet. The good news is that you are not alone. Proven methods and approaches can deliver great results with high probabilities of success, providing you are surrounded by the right people and partners.
Roadblock and hurdles
Companies embarking on an I4.0 journey will face multiple and diverse constraints. In our practice, we see many different root causes that can create hurdles, roadblocks, and make it difficult for companies to start. Learning to identify and resolve those constraints will allow you to make progress before your main competitor leaves you in the dust. A short list of hurdles includes:
• Political nature and leadership consensus (governance, strategy and direction)
• Financial nature (financial constraints, business modeling, proper ROI calculation)
• Technical nature (product design, product life cycle, production and automation design, industrial engineering)
• Process nature (project approach, organization and sequencing)
• Human nature (skills, experience, seniority of internal or external resources, culture and change)
Transformation is complex and painful, but if you want to play in the top league, there is no way around it.
Summary and conclusions
Staying ahead of the game in modern industrial environments requires any industrial champion to play the game with advanced skills and mastery. Most companies need to implement a modernization and evolution strategy. However, business leaders must take the time and allocate resources for research and analysis before developing and implementing a strategy. Invest in an assessment before embarking on a complex transformation with substantial logistical and financial commitments. A best practice project would include, in addition to an early diagnosis and assessment:
• Developing a roadmap and a holistic architecture
• Starting with small pilots within the defined framework
• Measuring success with clearly defined KPIs
• Building your I4.0 strategy on solid foundations
• Maintaining your commitment to your mastery of lean management as a critical base for your investment in complex and advanced technologies
• Sharpening the skills of the leadership team, making sure you have a prepared team before investing in a large-scale program
As in Formula 1, You need to make sure you have a qualified pilot and team before investing in the latest car technologies. Champions are not born. They are trained!
At times, you and your team will need the guidance and expertise from experienced professionals. Altix’ team of seasoned industry executives will bring you the expertise, and the tools of methods of industry leaders to help you boost your company’s performance.