Volume 4 Issue 5 May 2022
In this Issue
Welcome to Industree 4.0 for May, 2022, exclusively sponsored by SAP.
By Mike Lackey and Kai Aldinger, SAP
How my college days prepared me for the new norm in paper and packaging manufacturing
Remember your college days when you just spent 3 hours in an Advanced Lab and arrived back to your apartment with a headache and your energy spent. With hunger calling, you go to the fridge and pull together a meal based on whatever is there – beans on toast or maybe a mystery meat chili. You did not think about a gourmet meal. You focused on solving your hunger with the ingredients available. With the current disruptions in Supply Chains, mystery meat chili may be becoming the norm. Let me explain…

In the past 24 months, we have had supply disruptions, port closures, canal blockages, plant shutdowns, soaring energy prices, a paper shortage, missing transportation capacity and political unrest, all causing major material shortages, price increases and product stockouts. To survive in this environment, we must rethink our supply chains to be more resilient to ensure we have the ability to support customers. If we do not figure it out, our competitors will.

This unprecedented level of disruption has challenged the way paper and packaging companies act and think forever.

From just-in-time to “take what you can get”

Last week, I met with an executive from a printing company with whom I discussed the impact of changes on supply planning. In light of the current paper shortage, he explained, "Securing paper supply has become an essential part of planning, and we are struggling not only with shortages of products but also with delivery delays. No longer can we rely on the well-established just-in-time inventory approaches, which are more and more being replaced by scouring supply, planning ahead and rationing inventory."
This shift in purchasing behavior then often hits oversold paper mills as global supply is restricted in some parts of the world like Europe, where strikes caused by the changing economic conditions or energy problems forced European mills to cut production. In addition, they are struggling with a lack of transport capacity and primary products and, as far as possible, are trying to offer their customers alternatives to the products they normally order.

That made me think how this completely changes business dynamics. It goes beyond how we sell the products available. It drives the way we must operate to survive.

Who would have thought that my college experience would have prepared me for the new norm of running manufacturing operations?

Manufacturing in the “New Normal”

Leaders in the paper and packaging industry are paying attention to the increasingly complex circumstances they face with renewed commitment. They are focused on how to manage business performance in the current environment while at the same time, planning for the future. In this changing environment, the focus is no longer on capacity, but on the ability to respond quickly to customer needs and market changes while still controlling costs and quality.

Until recently, supply chains were mainly measured by efficiency metrics. Today, it is about resiliency and responsiveness.

Beyond labor productivity and asset-efficiency, the next performance leap in paper mills will be through end-to-end effectiveness of collaborative supply chains. A closer integration of manufacturing with upstream and downstream processes will become the new norm, with circular economy aspects also gaining in importance, for example through the collection and environmentally friendly processing of wastepaper.  Your production processes must evolve to support the complexity of the current norm and dynamic future demand and customer requirements.

Lessons Learned

Recent years have challenged manufacturers with unprecedented levels of disruption, but not necessarily to the detriment of business performance. For many manufacturers, the pandemic accelerated innovation, adaptation and transformation. So, I think my college experiences all those years ago, where out of necessity, I used what was available, has come to reality in business life. In some cases, we do not have the luxury to make to order and give the customer exactly what they want. We need the flexibility to have to think out of the box and the agility to maximize what we have available, to still give customers a great experience.
To learn more about how manufacturers have applied digital technologies to improve plants, processes, and production performances, download the recent MPI Industry 4.0 Research for Manufacturing.

The McKinsey Report
By Pat Dixon, PE, PMP

Vice President of Automation, Pulmac Systems International (pulmac.com)

On April 4, McKinsey & Company released “Perspectives on paper and forest products in 2022: How can CEOs navigate today’s era of transformational change?” It includes the statement “The immediate future of the paper and forest products industry will be characterized by two principal dimensions of change: sustainability and digital and analytics.”

Digital and analytics has been the theme of this article since its inception. Specifically, the connectivity available in Industry 4.0 will differentiate those that survive from those that fail. Those that embrace the security and reliability challenge of the Internet, invest in the Industry 3.0 infrastructure to build a foundation for Industry 4.0, and invest in comprehensively connected systems from the pipe to the corporate headquarters will be the winners. 

Particularly, the report states:

  • Data analytics can increase productivity and throughput by 15%. In order to do that, you can’t just assume a dataset and Excel will do it for you. Excel provides incredible value for its price, and the data analytics available in Excel far exceed the ability of most to use them. However, Excel is limited to 1,048,576 rows by 16,384 columns. That is a lot of data, but if you extract 6 months of data from your historian for a single tag at 1 second resolution, that’s 15,552,000 rows. For big data, you need bigger and better tools in many cases. The most time intensive and exhausting work in data analytics is pre-processing the data, which is the process of identifying the data that is meaningful and useful for analysis and modeling. Once the analysis is done, you want to be able to share and collaborate easily. Investing in these tools can yield McKinsey’s predicted 15% increase.

  • The report states that data analytics can be extended to optimize the end-to-end value chain. Such tools integrate Enterprise Resource Planning (ERP, the financial system) taking orders with the Manufacturing Execution System (MES) to dispatch orders with the SCADA/DCS to put those orders into product and send results back to ERP. This is closed loop manufacturing using realtime data through Industry 4.0 connectivity.

  • McKinsey states that e-commerce will fundamentally change how consumers demand output. Imagine customer orders to a grocery store going directly into the manufacturing ERP, which then creates a supervisory closed loop on top of the one described above.

  • The report says the historical revenue model of an annual contract with price levels negotiated for the entire period need to be replaced with mixes of spot and contracted business. The prices and contract lengths will be based on a data driven understanding of costs by machine, product, and customer. This means Overall Equipment Efficiency (OEE) is needed in realtime for every asset and needs to be integrated through Industry 4.0 connectivity.

This report is further confirmation of the imperative of keeping up with your competitors in the implementation of Industry 4.0. It is not only a matter of commitment. It is a matter of having the right tools and finding partners that understand what Industry 4.0 is and how to get there.

The harder I run, the behinder I get
You have heard the stories about back in the dark ages, when I started in industry, all that we had were telephone lines and US Mail. Really sophisticated companies had a telex connection. United Parcel Service was around, but small. FedEx was several years in the future and fax machines were at least a decade away.

Not only does age give one the perception of speed (I am in my eighth decade), but technology moves it from perception to reality.

The two feature articles leading us off this month are both about speed and efficiency. The message is clear: you are behind if you are not well into Industry 4.0 by now.

It wasn't so long ago that there was a disconnect between your internal business (and process controls) and outside your fence--your suppliers and customers. This is no longer--you must have connections throughout.

The challenge today if you are going to keep up is making this system seamless, secure and most of all, accurate.

I was advising a client recently concerning the size of the finished goods warehouse they will be building at their new greenfield mill. They asked my opinion. I told them that their accounting department would want it as small as possible and their sales department would want it as big as the state in which their mill is located.

In reality, the size is not as important as the warehouse's connectivity to the customers. Their long term customers need a secure and accurate view of what material they have in the warehouse ready to ship. Additionally, each customer will want assurance that they and the manufacturer (that is, my customer) are the only parties that can see their unique inventory.

These attributes will drive speed of service in the new, warp speed environment we are experiencing today. Phone calls and fax machines don't get it any longer.
How Manufacturers Supercharge Massive Supply Chain Advantage With Industry 4.0
By Susan Galer, SAP
Buffeted by all manner of disruptions – the pandemic, geopolitical conflicts, and trade wars to name a few, manufacturers have elevated Industry 4.0 from shop floor tactic to business-led strategy. While automation may have begun in the factory, in an ultra-dynamic market where anything can and does happen, intelligence has kickstarted the next digitalized revolution across industrial manufacturing.
For Manufacturers, Storage Is an Opportunity for Automation and for Industry 4.0
By Peter Zelinski
Storage unintentionally creates drains on time and effort. The best thing to do with bulky resources that are not required immediately for production is to get them out of the way, and the most natural way to do this is to store them on shelves. But then, when the resource is again needed — whether the resource is a tool, raw material, a set of fasteners or other supplies — the one who needs it will have to go to the shelves to get it; search the shelves to find it; and likely enlist the aid of someone with a towmotor in order to retrieve it.
AI Drives the Industry 4.0 Transformation
By Hasan Selman
Manufacturers are integrating new technologies into their manufacturing facilities and operations, including artificial intelligence and its subdomain machine learning, as well as the Internet of Things (IoT), cloud computing, and analytics. In addition to making production more agile and flexible, Industry 4.0 enables the capture of variables and parameters that have been hidden until now in production operations. This is exactly what makes factories “smart,” providing unprecedented scope and granular control over the entire manufacturing operation.
Instrument Training Enhances Industry 4.0 Implementation
By Jerry Spindler
Process manufacturers are pursuing the efficiency enhancements and increased automation provided by the Industrial Internet of Things (IIoT), digitalization, edge computing, and the cloud. But these are merely buzz words unless users understand how to collect and analyze data from modern instrumentation, and leverage insights gained to optimize operations. Many of today’s instruments provide up to hundreds of data points, but effectively using this data for operational outcomes requires extra effort.

Industree 4.0 is exclusively sponsored by SAP