• By Hans Thalbauer
  • Executive Corner

By Hans Thalbauer

InTech had the opportunity to connect with SAP's Hans Thalbauer, senior vice president, digital supply chain and IoT, to explore digital manufacturing questions:

What should manufacturers focus on to start their journey in the new digital world?

There's no doubt we're in the midst of a fourth industrial revolution driven by large scale integration between digital and physical assets, IoT, and digital twin technologies. With manufacturers under increasing pressure to execute with speed, precision, and personalization, digital transformation is shifting from a forward-looking initiative to "mission critical" for the manufacturing industry.

But, implementing innovative technology like IoT [Internet of Things] to streamline operations isn't an easy task. According to Sikich's Annual Manufacturing Report published in 2018, only 10 percent of manufacturers are using IoT, and almost a third don't have a clear understanding of the technology. With a cluttered market, extensive hype, and uncertainty about true business impact, we recommend organizations start small and focus on attaining measurable, business-driven results before widespread implementation.

Digital transformation initiatives require organization-wide buy in (especially from key stakeholders), skilled talent for implementation, and often a shift in IT department structure. Change won't happen overnight, but identifying a few areas where technology adoption will align with key business initiatives and derive true ROI will help create the building blocks to develop a digitally driven organization.

How are technologies like digital twin and blockchain reshaping the manufacturing industry?

Digital twin, or digital representations of physical assets, such as a compressor or motor in a plant, can give operations managers unprecedented insight into the behavior of physical assets. They reduce the need for physical inspections and replace them with "digital inspections," meaning maintenance checks can be done regularly and efficiently, helping ensure that equipment is functioning at its best with reduced maintenance costs, increased asset availability, and improved customer satisfaction. With real-time data showing the current condition of the asset, managers are able to predict and remedy functionality issues before they even happen-eliminating setbacks and costly shutdowns.

As businesses implement IoT, digital twin, or other digital technology, they're generating a wealth of information and the ability for greater insights and transparency. Blockchain is one example that has the potential to lessen the burden of these challenges by creating a secure digital ledger that eliminates inefficiencies or inaccuracies in manufacturing operations, automation processes, and financial calculations. With blockchain, operations managers will have an accurate record of a product's entire life cycle.

How do you see the manufacturing space evolving in the next few years?

According to research firm Gartner, 20 billion connected "things" will be in use by 2020. While we're already seeing vast global adoption of the IoT, in the next few years, we're going to see a proliferation of organizations implementing connected technology to become truly intelligent enterprises. Further, as customers increasingly expect fast delivery times, organizations are going to need to adopt more distributed manufacturing models to shorten transportation time and ensure products get to consumers as quickly as possible. We're in a critical time where companies need to evolve their strategies or risk losing valuable customers. Outdated manufacturing processes will prevent organizations from thriving in our increasingly customer-centric world.

In addition, with demand for personalized products and faster delivery times growing rapidly, more manufacturers will turn to 3D printing to deliver on customer expectations. Three-dimensional printing enables businesses to create personalized products in small batches and to decentralize inventory, so there's no need for mass production, and products can be made to meet the customers' unique needs, and often, printed closer to the delivery location.

While it's an exciting time in the manufacturing space, it can also seem daunting as technology innovation quickly reshapes traditional processes, and operations managers are forced to rethink the way things have always been done. Digital transformation in manufacturing is inevitable, and it's what will allow organizations to compete in today's consumer-driven world.

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About The Authors

Hans Thalbauer is the senior vice president for extended supply chain and IoT at SAP. He is globally responsible for the strategic direction for all solutions that are relevant for COOs and chief supply chain officers. Thalbauer has been with SAP for more than 16 years and has held positions in development, product, and solution management. He holds a degree in business information systems from the University Vienna, Austria.