People and partnerships lead digital transformation

Industry has been on the digital journey for some years, and while some have made big strides, many have yet to start. In big industry, like automotive and tire manufacturing, the opportunities for growth seem limitless, as are the risks of failure. During the Automotive & Tire Industry Forum at this week’s Automation Fair 2021 in Houston, industry leaders discussed what advances these industries have made with digital, what has inhibited scaling at the company level and industry-wide, and what the industry can do to encourage digital transformation and support its long-term growth.

Use cases exist in many industries and real change has been realized through digital technology, but those special cases here and there aren’t leading to wider implementation across industry just yet. Many are just beginning.

Chad Markle, global director of industrial and high tech at Kalypso, a Rockwell Automation company, said the first step for any company is a change-oriented champion. Additionally, companies need an empowered team to understand the vision and drive it forward. Markle noted that there is a rational and emotional human element to the process. “We’ve got to think about how we engineer that path to success,” Markle said. Celebrate the wins and use the momentum to carry it forward, he added. “It’s really important when you get the use cases to make sure you nail it; then you’ll have champions in the plant,” Markle said.

For Dennis Hodges, chief information officer at Inteva Products, a global supplier of engineered components and systems for the automotive industry, his company is willing to take a little bit of a risk on advice from a trusted supplier when it comes to digital advancement or new equipment. Sometimes innovation requires a leap of faith, or pushing old ways off the cliff, he said. “We’ve got to get away from patchwork solutions to keep 40-year-old equipment on the floor,” Hodges said.

Courtney Cannon, senior manager of digital strategy at tire manufacturer Bridgestone Americas, acknowledged a certain lack of willingness to explore new technologies and a corporate fear of letting equipment suppliers dictate internal innovation. “Culturally, I think not hand-cuffing ourselves is important. Assigning resources to understand how we can leverage new technology is the most beneficial thing we can do at this point—simply because technology is changing so quickly. We have to stay open-minded,” Cannon said.

Each industry faces its own challenges with change. In the automotive industry, Udo Panenka, president of industrial automation at ATS Industrial Automation, still sees old standards in the automotive industry, for example, based on the old powertrain business, standing in the way of digital transformation. Scaling digital infrastructure is also challenged by these old internal standards, where specifications don’t work in the new digital world. “In the end, if you want to scale things, you get to a point where you need to work more with modularization and standardization,” Panenka said.

Newcomers to industry bring a dramatically different openness, Panenka said. For example, if industry wants to leverage digital tools, like the digital twin of a product assembly line, “You will not be able to get there if you try do it for every OEM from scratch.” Instead, more standardization and modularization and moving OEMs away from old specs will lend support to solutions that are proven to work, he added.

Scaling: empowered by data

For certain segments of the automotive industry, digital technology might be necessary to support the rapid scaling needed to meet demand. With tremendous growth in demand for batteries and fuel cells, Panenka said his company can’t build factories fast enough. “We need to think dramatically differently,” he said.

How do we generate bigger output per square foot of floor space? How do we shrink new product line lead times from two years to six months? “This can only be empowered by digital,” Panenka said. “Making more out of our assets empowered by digital is something that helps us to also drive the topic in the right direction.”

Where will the automotive industry be on this digital transformation in the future? Cannon focused on technical talent and people. The industry is already very dependent on talent that is experienced with data and automation, she said. “Leveraging platforms so that we have a connected worker mentality across the globe will help drive further standardization and optimization across our portfolio of plants,” Cannon said. Her answer was deliberately on the people side of this issue, because that tends to be overlooked in terms of digital strategy, but what companies do in the digital space will impact its workers' skill sets and ultimately driving company performance, she said.

Panenka had somewhat of a warning for the future: “If we continue as is, there will not be enough automation equipment,” he said. Through some industry analysis, ATS predicts that at the latest by 2024 or 2025, the demand for certain technologies will be higher than what industry can deliver. “That is certainly something which keeps us up at night. How do we keep this scalable?” he asked. His answer lies in designing more modular and standardized solutions, which can be rapidly adjusted to customer needs and delivered much faster.

Design for upgradability is also paramount. As an example, in 2020, the industry sold three million electric cars. By 2025, that number is likely to jump to 11 or 12 million, and experts also predict that solid state technology will be in batteries by that time.

Will we throw away all current production lines? Can industry instead design them with the next generation in mind? “If we need to throw all these lines away and rebuild them, we have totally screwed up and lost. It’s not sustainable. Design for upgradability for us will be a dramatic driver,” Panenka said. “This will only be possible if we form strategic partnerships.”

Digital breeds new business models

Across the board, the panelists agreed that strategic partnerships would be integral to the advancement of digital operations for manufacturing, collaboration between suppliers, and suppliers and end users, and collaboration within organizational groups like IT and engineering.

Collaboration will finish the race, but individual leaders will start the journey for the automotive industry. Cannon said formalizing a digital strategy role can be an important step for a company to support the digital journey and help to elevate the initiative. “Transition takes some leadership. You really have to help teammates understand how they fit in the journey and how this work will change the work that they do,” Cannon said.

At Inteva, Hodges said it has been a challenge to get workers to understand the digital impact on their roles. “I think as we’ve started smaller projects, people start seeing the possible and that has really helped a lot,” he added.

Markle pointed toward how leading with strategy can change how a company functions in the market. Digital is opening up new business models and lines of service for many companies, which could in turn help drive industry adoption of more technology. “Methodologies make us all look like software technology companies,” Markle said. “The implications for the practices that we adopt, the way we’re organized and flat, the decision-making and time to market around this all can’t be overestimated.”

“Digital is a lifestyle,” Panenka said. If that lifestyle is not driving the whole organization, the initiative will go nowhere. “It needs to become something that is really part of your DNA,” he added. Equipment suppliers are helping their customers realize that company culture, with the new ability to quantify what the equipment can deliver, in data and models. “Our folks really became super good at talking to customers around real KPIs,” Panenka said, “and really being able to quantify things.”

ATS is wrestling with new business models to help propel this digital culture. For some the capital expenditure needed to go on the digital journey will be a struggle. “I’ll be looking at user-based models, output-based models, performance-based models,” Panenka said. “The quantification of what you’re driving, the quantification of your ROI is the key pillar that drives all of that.”

To be successful, digital strategies need company champions to drive initiatives forward. Digital needs collaborative partnership across the industry, in order to scale solutions in a way that is economical and sustainable. With the proper pieces in place, digital technology will be the means to that future.