Industry 4.0: Making It Real In Southeast Asia

Teck Ch’ang Lim

Industrie 4.0. The fourth industrial revolution. Digital manufacturing. Whatever it is called, one thing’s for sure: We have heard a lot about it over the past year, not just from global sources, but also right here in Southeast Asia (SEA).

Rightfully so.

Industry 4.0 is not merely a buzzword. It has the potential to reinvigorate SEA’s manufacturing, potentially delivering productivity gains worth $216 billion to $627 billion. But with so many saying so many different things about it, what exactly is Industry 4.0?

Is it really the “magic pill” that will increase competitiveness of companies in the region? Is it just a leap in productivity? Or does it have a deeper meaning beyond increasing output divided by decreasing input?

And importantly, how do we make it work for businesses in Southeast Asia?

The larger perspective: Societal transformation

My colleague Masahiro Furusawa recently published a blog about Prof. Dr. Henning Kagermann’s keynote address at SAP Now. Kagermann describes Industrie 4.0 as an initiative for social transformation that transforms society, allowing communities to deal with the challenges of climate change and Malthusian pressure on resources.

Clearly, this is way beyond the basic understanding of productivity improvement. It positions Industry 4.0 as a strategy for transforming society.

There are various concepts of Industry 4.0 that are pertinent in Southeast Asia, which I will explore in future blogs. In this post, I will focus on the basic components of Industry 4.0 to help businesses better grasp and apply it.

The basic building blocks of Industry 4.0: The DNA

To help you understand the basic building blocks of Industry 4.0, I want to share a concept I found useful.

In a forum by the Ministry of Industry of Indonesia that I recently attended, Pak Putu, the moderator of the forum, introduced the concept of devices, network, and applications; in short, DNA. He equated the DNA in Industry 4.0 with its biological equivalent: This DNA is regarded as the basic building block of Industry 4.0.

Why is that so? That’s because in any Industry 4.0 scenario, you need the devices to be connected through a network to applications. Applications interpret the data coming from the devices and add the intelligence needed for the scenario to work well.

A DNA example: Creating a digital twin

Let me explain with an example.

First, let’s visualize a piece of equipment on the shop floor. This is the device. The equipment will be connected through the network (using standards like OPC) to applications such as manufacturing execution systems or ERP. So, we have the basics set up.

The equipment typically has a number of sensors that gather data on its status. The sensors stream data on a few fronts: On the machine (e.g., how old it is; how long it has been running; its production capacities last year, last month, and last week; etc.), on the production process (e.g., how quickly, number of interruptions, anomalies, etc.), and on the product (e.g., amount produced, number of defective units, etc.). This data is sent through the network to the applications. The applications make sense of the raw data, turning it into intelligence and actionable insight, such as “if we tweak this part of the process, defects are likely to decrease by 15%.”

With all this data and intelligence, what you now have is a digital equivalent of the equipment and the processes it is performing. This is what we call the digital twin.

You often hear the term “vertical integration.” Vertical integration is the same as DNA in Industry 4.0 jargon.

Power of the digital twin

Having a digital twin allows you to perform powerful analysis on the data. This includes getting deep insights on any or all the following:

  • Condition of the machine
  • Production process status
  • Current performance
  • Associated financials (costs, resource usage, etc.)

And that’s just the tip of the iceberg!

Empowering manufacturing by suggesting or taking predictive actions to decrease defects is only a tiny aspect. There is an ocean of opportunities where Industry 4.0 is concerned.

We are talking about the fundamental building block for Industry 4.0 on the shop floor. Imagine extending this building block to other equipment in the plant, to other plants, and to supplier and customer entities. You will get the DNA for the entire production value chain.

The outcome? The ability to manage the factory intelligently.

Beyond the shop floor

The basic concept of DNA extends beyond the factory shop floor.

Let’s look at a service and maintenance scenario. Here, the equipment (device) is connected via a wide area network to an application in the cloud. The application predicts equipment breakdown based on real-time data on the condition of equipment coupled with its past history.

Obviously, the ability to know this live – at the instant it happens – gives us the ability to preempt and mitigate breakdowns with predictive maintenance. Rather than being reactive, it could also work proactively to not merely halt breakdowns but also improve productivity.

Here’s a real-life example:

A customer in the Philippines manufactures industrial air conditioning compressors. The business faces an issue with maintenance due to the geographical spread of the business across 7,000+ islands. A compressor breakdown can last anything from four hours to a few days. This is due to the time required for travel (flying to the equipment site) and diagnosis (time spent on diagnostics). The downtime is protracted if the spare parts are not available onsite. What that means is a shopping mall or office building could be without air conditioning for that entire duration – a huge negative impact on business.

To mitigate this, the customer started a pilot: It installed a device to extract data from industrial air conditioning compressors. The intent is to understand the issue and thereby resolve it. This data is transmitted through the network to the central application. The application then analyzes – in near real-time – the condition of the compressors.

To allow us to predict compressor failure, we knew we needed to identify the combination of data parameters that result in failure, so we used machine learning. With that in place, the DNA integration is now ready to start sending alerts on a potential failure before it happens.

What does this mean in terms of business benefits?

The customer gains the ability to send a maintenance team ahead of time to conduct maintenance to prevent failure; in other words, predictive maintenance.

The data from the air conditioning compressors can also indicate the parts most likely to be affected so the maintenance team can bring them – saving time and cost.

The result: A potentially huge leap in ensuring compressor uptime, lowering costs, increasing reliability to customers, and improving company image. And that’s just the tangibles! We haven’t talked about the intangibles such as positive word-of-mouth from their customers and the downstream effect.

This is the start of Industry 4.0 journey for this customer. With the DNA integration in place, the business can extend beyond what it is currently offering and transform its business model to provide air conditioning as a service.

Industry 4.0: Practical steps for Southeast Asia

When we look at Industry 4.0 from the DNA perspective, it is simpler and no longer seems like a lofty ambition. And the beauty of the analogy is that any (and every single) Industry 4.0 scenario needs DNA – just like a functioning body.

So, rather than thinking about how to transform your manufacturing business into Industry 4.0, which sounds like a colossal exercise only the big boys can afford, try using the DNA approach. This way, the pertinent question becomes: How can we identify the best areas in the business to test this?

In Southeast Asia, we tend to want to be sure about the wins before we move on a massive scale. These questions provide useful guides:

  • How can we do this in one factory?
  • Which business process would most benefit from a pilot test?
  • What are our benchmarks for a successful initiative?
  • When do we start rolling out successful pilots across the business?

These are good starting questions and bring me back to the beginning, where I highlighted the importance of Industry 4.0: It is not a buzzword. Rather, it is imperative that SEA manufacturers start thinking about it now, if plans are not already underway.

Watch this space for the next blog on horizontal integration, what it means in Industry 4.0, and how it can be tapped to work for Southeast Asia manufacturers.

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Teck Ch’ang Lim

About Teck Ch’ang Lim

Teck Ch'ang Lim is passionate about helping industries in Southeast Asia transform through the use of leading-edge technology. He particularly likes to simplify complex concepts into practical, digestible actions that businesses can take. He covers the discrete industries sector as part of the Industries and Digital Leadership team and brings with him more than 20 years of consulting experience across multiple industries in the region.