Executives from Dow, ExxonMobil, Audi, Microsoft, and Intel Share Thoughts on Digital Transformation (Part 1)

By Paul Miller

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ARC Report Abstract

 Overview

In their joint keynote presentation at the 2020 ARC Industry Forum, Peter Holicki, Sr. Vice President, Operations, Manufacturing & Engineering at Dow; and Melanie Kalmar, Dow’s Corp. VP, CIO, and Chief Digital Officer; discussed the close collaboration between their respective manufacturing operations and corporate IT groups.  In that same session, Dr. Henning Löser, head of the Audi Production Lab, discussed Audi’s efforts to help shape the future of auto production.

Thoughts on Digital TransformationIn this, the first of a multi-part ARC Insight, we’ll share some highlights from the executive panel discussion that followed those keynotes. 

Participating in the panel from the technology users’ side were Billy Bardin, Global Operations Technology Director at Dow;  Don  Bartusiak, Chief Engineer of Process Control at ExxonMobil Research and Engineering; and Audi’s Dr. Löser.  From the technology supplier side, were Christine Boles, VP of the IoT Group at Intel; and John Kovac, Director of Microsoft’s Manufacturing business unit.  ARC’s Andy Chatha moderated the panel discussion.

Breaking Down Organizational Barriers to Successful Digital Transformation

To kick off the discussion, Andy asked Billy Barden to comment briefly on the previous keynote presentation by his colleagues at Dow.

“I think they gave a good perspective on the historical journey that we've been traveling on [at Dow] for the last several years,” Mr. Bardin said. “And for those of you that have been at this conference before, you know I've talked about some of the issues that Melanie and Peter covered around culture and understanding in similar panel discussions.” 

According to Mr. Bardin, to deploy a digital strategy within the production organization and across R&D, supply chain, and logistics you need both manufacturing and digital expertise. You need both the IT organization and infrastructure and the knowledge of how to deploy that accurately.  And, of course the production operations organization must first be willing to accept that technology.  “You also have to understand how this changes the work process.  Peter and Melanie understand that.  They work hand-in-hand, day after day to make sure that happens.  Melanie sits in our tech reviews, we sit in their tech reviews, and it's one team. I think that really gets to the underlying approach of which we're trying to do at Dow in terms of pushing the envelope in the digitalization arena.”

Mr. Bardin also stressed the importance of having senior leaders in the Dow organization as strong advocates who  can help drive this approach to other parts of the organization and gain further support within the company’s C suite.  Support from senior leadership also helps unlock the needed resources when the team wants to try something new.

IT/OT Convergence Expands the Automation Ecosystem

Next, Andy asked Don Bartusiak to provide a brief update on the status of the open process automation initiative that ExxonMobil has initiated in conjunction with a variety of other automation end user organizations and with the support of several leading technology suppliers. 

Mr. Bartusiak began with a brief comment on digital transformation as it relates to the OPA initiative.  As we saw in the morning keynote session, “One characteristic of the transformation is our ability to leverage IT technologies in the process control and OT space and the entrance of the big IT companies like Intel and Microsoft.” According to Mr. Bartusiak, this also opens the door for many of the small, innovative companies to further expand the supplier ecosystem.  A key objective of the OPA initiative is to develop a standards-based, vendor-agnostic automation architecture that would enable end users to freely plug in and use hardware and software from any supplier that complies with those standards.

He then mentioned that several sessions at the 2020 ARC Industry Forum would be providing a comprehensive update on the current status of the Open Process Automation Forum (a Forum of The Open Group) and the next steps planned or already under way for this important, largely end user-driven  initiative.  These will be discussed in more detail in a future ARC report.  

How Technology Suppliers Help End Users Succeed with Digital Transformation

Before fielding any questions from the audience, Andy first asked Christine Boles from Intel and John Kovac from Microsoft to explain how, as leading technology suppliers, their respective companies are helping their customers succeed with digital transformation.

Ms. Boles, along with many others in the industry, consider that workforce issues will be the biggest challenge associated with digital transformation.  She used an example from Intel’s own manufacturing operations“We have petabytes of data flowing off our fabrication facilities that we have to act upon. You can't do that with traditional approaches to manufacturing.”   She commented that this requires the right IT infrastructure and making the right data available to a workforce that knows how to handle the data.  “Since IT and manufacturing groups have been separated for so many years, it's critical for that cross-work to happen. So how do you bring those IT capabilities into the industrial space?” According to Ms. Boles, deterministic networks are one way, but since they weren't built that way, this requires some focus if an organization is going to be able to move toward some of the more open IT capabilities.  “How do we have the right solutions that utilize the goodness [of IT], but also have the industrial features required when bringing them into an automation and control [OT] type of space.” The takeaway here is that suppliers can help their industrial clients by providing technology that supports the goodness of IT (openness, flexibility, scalability, orchestration, etc.), but does so “in a way that is ready for the industrial infrastructure space.”

Mr. Kovac elaborated on some of these points.  “I see it consistently when we go to meetings and try to help clients.  The common theme we hear is, ‘look, we're an old company.  This factory is 50 years old. Some of our equipment is that old, or a little bit newer.  So how do we get data out of it and how do we utilize that data?’”

He then discussed some examples of how Microsoft has helped its customers do just this.  An old-school, 150-year-old company in Germany that makes steel-cutting bits has highly experienced, 40-year veteran workers, called “yellow jackets,” who understand speeds, feeds, temperatures, and such and could feel a machine, immediately understand if something was wrong, and identify the problem.  The real problem was that these veteran “yellow jackets” with all that institutional knowledge are getting set to retire.  According to Mr. Kovac, the company decided to transform because they were seeing those veterans exit and “the new kids on the block weren't necessarily getting into manufacturing as a career.”  So the company created an AI-based model that takes the knowledge of these experienced workers and combines it with data from the machines, the tools themselves, etc., into a combination of solutions where the manufacturing process is managed by a central hub or nervous system and monitored remotely. Now, the company sells this remote monitoring capability to its customers as a service.

In another Microsoft customer example, Mr. Kovac mentioned Cummins Engine, which installed some new machinery in its manufacturing plants and now manages those assets remotely using analytics, algorithms, and visualization techniques. So, when an issue comes up, the company’s experts can see it on the screen, evaluate the problem, then send off a signal to somebody and have them go do the repair.  According to Mr. Kovac, this represented a new business model for the company.

“Refilling the Hopper with New Ideas”

At this point in the session, Andy fielded a question from the audience about how the panelists’ respective companies “refill the hopper with new ideas.”   The panelists responses had many similarities, but each had a slightly different take.

According to Mr. Bardin, Dow “uses multiple pathways to find and identify partners or potential partners with whom we want to work.” The company’s Digital Operations Center, discussed in detail in the keynote presentation, is just one of those pathways.   For example, to look at startup companies, “In Houston, we have the Greater Houston Partnership and Houston Exponential with which we're heavily involved.  We also reach out to incubators across the different regions, so we have a hook into some Asia-Pacific incubators. We're also starting collaborations with a couple of locations in Europe as well as in Israel.  Dow is a global company. We have global reach, so we use that global presence and our local offices to help identify potential collaborators.”  The company also pushes out some challenges in certain ecosystems: “Here's a problem we want to solve; bring us your proposals. So, we use a number of different methodologies to try to identify whatever seems to work best in the local area.  We adapt.”

According to Dr. Löser, this is similar to the approach Audi uses.  “We always do active scouting, of course.  A lot of companies approach us with new ideas with cool features.  For me, the critical part would be to determine if those would be useful for us and, if so, how would we get solutions that may work really well elsewhere implemented into our [brownfield] factories?”  He explained that that’s where the Audi Production Lab comes in.  It provides a lab environment in which the company can evaluate new ideas.

“With the classical technologies, if you tell us you have a new machine to stamp metal sheets with more power, more pressure, more speed; we know exactly what that means and whether or not we need it. But with the new technologies, that's something different. And so, one of the key things is to actually try it out; get our hands on those new technologies and experience ourselves to determine whether they’re helpful for us.”  This provides Audi with another way to evangelize the company’s “graybacks,” while pushing new automation and other technologies out into its factories.

Mr. Kovac then mentioned that Microsoft identifies new technology ideas and partners in two ways: one as a natural work process either in its own engineering group or in conjunction with a customer’s engineering group or a university.  “The first step in the process is to understand the state of the art, which frequently involves identifying small companies that have great ideas.“  Microsoft also has many partnership relationships with universities, which is another source of new technology for the company.

“The second thing I'll highlight is that, a couple of years ago, we started a technology sourcing and ventures organization within our research organization that does the same thing. It goes out and finds innovative solutions for our problems.”  

Ms. Boles then commented that Intel focuses on three organizations to identify new innovations.  “Our Intel Labs work with the business groups like mine, but also with our factories.   We also have Intel Capital, an investment arm.” Intel Capital supports all the company’s businesses by “looking at where we could invest for the future and identifying some of those new innovators and how we might work with and/or invest in them” to help move them along. “And then, of course, we do research in the various areas, funding projects, especially in the industrial space.” The company “supports some of these consortiums that are driving the next generation of paths for innovation.”

 

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Keywords: Industrial Digital Transformation, Organizational Silos, Open Process Automation, OPA, Dow, ExxonMobil, Audi, Microsoft, Intel, ARC Advisory Group.

 

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