When more than 600 of the brightest minds in the metals industry recently convened in Prague to discuss how digital innovations can grow and improve business across the Metals, Mining, Building Materials, Paper, Packaging and Chemicals industries a common theme soon emerged: Company borders will continue to blur and future success will depend on deep collaboration while tapping the power of digital networks.
With more than 25 customers presenting on topics like How to use IoT and Digital to Become an Intelligent Enterprise, Cementing the Foundation for a B2B and B3C Commerce Network and Extended Supply Chain for Enterprise Asset Management, here are five key takeaways that could easily apply to any industry.
How to meet customer expectations? More flexibility and information.
True customer centricity means understanding the ultimate end-customer, how their behaviours are changing and then make every business decision based on this insight. Today’s dilemma for many metals companies is that they are disconnected from the customer as these relationships are typically owned by metal traders or fabricators, who apply services like material cutting, forming or coating before it is used by the final manufacturing customer.
But thought leading companies are working more collaboratively and directly with customers — to interchange data and find joint approaches to improve the delivery, implementation and use of metals materials and products.
One customer talked about their customer order process and how they are working to make it much more responsive. Orders arrive centrally from the customer and not directly to a specific mill. They must decide which mill, which fabricator and how to deliver. Thankfully, they are using network optimization technology and processes to make the best decision on how to get the order to the customer — based on costs, capacity, production plan, etc.
Digital Twins and Machine Learning for smart factories and digital networks
This is not new — that metals companies are focus on increasing automation and communication throughout all processes on the shop floor. What is new is the expanded focus and ability to work with the network outside the company to make this happen.
The increasing use of the Digital Twin concept is making this a reality. Essentially, a digital twin establishes a direct connection between the physical product or asset and its designed, manufactured, and deployed digital representation. This relationship can be used to intelligently assess design integrity, operational characteristics, and maintenance projections for each uniquely defined product or asset. Visibility at this level can lead to improved and accelerated product design, more effective maintenance operations.
Metals companies are talking about increasing machine to machine connectivity and collaboration, allowing autonomous decisions based on sensor data and machine learning algorithms. Intelligently connecting manufacturing, logistics and supply chains — including deeper cross company collaboration — allows companies to quickly address short term demand impulses, supply fluctuations and changes to customer orders.
Intelligent machines will be part of the network and order material for re-stock or spare parts for maintenance automatically. One of our mining customers came in to discuss a brilliant new concept to apply supply chain planning thinking to improve the improve asset availability and reliability. Intelligent machines will be part of the network and order material for re-stock or spare parts for maintenance automatically. This concept will help ensure that companies can deliver on time, in full because their assets will always be working.
Individualize my order, please
As metals are highly flexible and can be formed and used in many different ways, customers are interested in products and solutions that are made exactly to meet their requirements. Often, these requirements are requested specifically to have a clear differentiator in the market. The need to meet these exact requirements forces metal manufacturers to move from large lot sizes, which can serve many customer orders at low cost, to smaller lot sizes.
As customers expect not to pay more than for a standard solution, manufacturers have to control cost of manufacturing and distribution to stay competitive and profitable. Multiple customers talked about projects using Internet of Things (IoT) for asset health monitoring, vibration sensing to monitor asset status and use of sensor data to monitor and track product quality in detail. All of this type of data can help in being able to produce and deliver individualized products.
New business models and services will continue to disrupt
Metals companies talked about looking for new revenue streams from products or services. Many think differentiation can come from adding additional services such as information from the digitalization and interconnection of products and services. This is becoming more possible with additional sensors and the means to collect and analyze data.
For example, being able to provide additional data on products shipped or advice on the best use of a complex product. One company talked about “smart steel” that could prolong the life cycle of steel by adding in as much information as possible about its properties, best use, etc. They talked about having “fingerprints” for steel. Another steel company talked boldly about a “commercial reshaping of the industry” with its offering of a new service model that operates an entire pipeline and charges per cubic meter transported.
Producing for Purpose
Many of the metals companies talked about how to address growing expectations from customers, investors, employees, and society. Topics include efficient production and logistics that contribute to lower emissions and energy use and reuse of materials that is part of the “circular economy and a closed-loop of material circulation. One company talked about a breakthrough they are working on in their production process. This is a longer term (20+ years) but it would not need a blast furnace, would replace coke with hydrogen with an output of H2O instead of CO2.
Worker health and safety remains a top priority for metals companies and technology is providing lots of improvements here. Multiple companies talked about testing remote assistance wearables such as smart glasses and helmets that track worker health. Another company talked about reducing incident significantly by scheduling more training directly after vacations. Research and analysis found that a higher percentage of workers forgot safety procedures and steps after extended vacations and a simple process of refreshing the training brought down incidents.
To learn more about what SAP is doing in the metals industry, check out our white paper.