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From a buzz to biz lever: How new technology is becoming central in a post-Covid world

Industry 4.0, robotics, artificial intelligence — all were thought of more as buzzwords than necessary business interventions until recently. But the coronavirus pandemic has forced us to reconsider not just how we consume things but also how we produce them. The Economic Times got together the leaders of four companies at the forefront of the adoption of automation and artificial intelligence in manufacturing. Fast-changing business realities are forcing manufacturers to innovate and rethink age-old conventions, they said at The Economic Times-Back to Business Dialogues – Automating Business, Accelerating Growth: Increased role and impact of automation in manufacturing. The session’s moderator, Daisy Chittilapilly, set the tone for the conversation around the fourth industrial revolution and Covid-19 by quoting Lenin: “There are decades where nothing happens; and there are weeks where decades happen.” Excerpts:

DAISY CHITTILAPILLY, MANAGING DIRECTOR, DIGITAL TRANSFORMATION OFFICE, CISCO INDIA & SAARC

What are some of the new behaviours, habits and rules that are shaping your industry today and will have a long-lasting impact on the manufacturing industry in the country post-pandemic?

SANJEEV SHARMA, MD, ABB INDIA

Our ability to adapt and to be able to serve our customers with the kind of restrictions these circumstances have put on us has increased. And, for us, the ability to service customers remotely with the expertise they used to get at their plant is one of the crucial factors. And that’s where we are seeing quite a strong shift in behaviour, both on the customer side in accepting it and in our abilities to deliver it.

SUNIL MATHUR, MD, SIEMENS INDIA

We are in an environment that is getting more and more volatile every day. At the same time, customers are becoming even more demanding. The challenge that most manufacturing companies are facing is how to balance these two.

As you move towards meeting the demands of the customers, you are tending towards trying to figure out how to manufacture a batch size of 1. On the other hand, it has become painfully obvious during Covid-19 times that you need to be watching your costs and capex and be able to adapt very quickly.

All that put together, I think this is exactly the right time to be discussing how automation and digitalisation can provide these benefits of greater efficiencies, greater cost competitiveness, productivity and shorter time to market.

PAWAN GOENKA, MD, MAHINDRA & MAHINDRA

Anytime there is a crisis, all organisations and customers go through a behaviour change. But if I go back to the last 3-4 crises, the changes reverted to what it used to be before, after some time. I think that’s a big difference this time — the changes are here to stay. And the reason is that we have realised that it is all for the better. Coming to the consumers, there is going to be the digitalisation of everything, whatever we do. Touchless selling is going to be the big thing where customers want everything sitting at home — not just for convenience but for safety and for maintaining social distancing. How we sell things will go through a complete overhaul. For example, with cars, the need for physical dealerships, salespeople or test drives — all of that will go through a change.

The impact of that on business will be that the way we do planning, going all the way back to the tier-III supplier, would be a lot more efficient. Since everything is digital, a lot more artificial intelligence (AI) can come in and we’ll be able to predict demand much more precisely. Therefore, the whole supply chain will get compressed. The kind of inventories we carry today, which in the auto industry from end-toend would be about two months, could come down to one month. If the inventory is half, you are taking out a lot of working capital, space requirement, and a lot of loading-unloading that happens.

Automation is going to benefit the most out of this whole thing because of the need for social distancing at our plants. Automotive plants are never designed for social distancing. How do we maintain distancing there? By replacing a human with a robot in some places. And that’s the reason automation will become a lot faster than the normal speed at which it was going to grow.

CHITTILAPILLY:
When you talk to clients, are there any new points and considerations with regards to the automation conversation?

MILAN SHETH, EXECUTIVE VICE PRESIDENT, IMEA REGION, AUTOMATION ANYWHERE

We always assume that the physical goods which get delivered have to be coupled with a physical process. One fundamental shift that we see across customers is that digital solutions are now being thought first and then where physical touchpoints are needed is thought later. At least in the services industry that shift has happened. They are talking about whether to keep branch offices and distribution offices.

Probably the manufacturing industry will take a while to follow. There is also the thought process to bring automation to improve productivity in the entire cycle and not just the manufacturing process. For example, a shipment reaching from port to the factory involves three days of processing time at the port, two-days of trucking and then some time for offloading. While automating these processes doesn’t add to manufacturing productivity, it helps in reaching faster to the customer.

And finally, the conversation on technology is no longer a CTO/CDO-only domain. People involved in operations and the business leaders now have a strong view about this.

CHITTILAPILLY:
If automation is a subset of Industry 4.0, how easy is it to embrace the fourth industrial revolution and how ready are we?

GOENKA: We first need to take a step back and define what is industry 4.0. Many people think that it simply means automation, which is not true. Industry 4.0 is to put the end consumer at the centre of everything. The roadblock is that the competitive advantage of being an industry 4.0-enabled company is not so easily seen yet. The moment a company sees this, they will work on achieving it.

There is also a perceived sense of it not being affordable. The costs that it (industry 4.0 implementation) saves are sometimes unseen costs, it doesn’t go into the cost of supplying a product.

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CHITTILAPILLY:
Where do you see the adoption of AI/ML for automation in the manufacturing space?

SHARMA: We have about 8,000 robots globally working at customer locations. We are connected with them online and we monitor them out of the India centre. This equipment is giving us a lot of data and so we are able to analyse what kind of issues can come in different equipment. By using AI and ML routines on top of the data that we have gathered for the last 5-6 years, we are able to predict certain reliability issues for the customers. We can predict when they need to plan routine maintenance or maybe do a small intervention so that there is no outage and the availability of the production line is higher. That is one example.

CHITTILAPILLY:
Are the talks on industry 4.0 and automation equally applicable to small and medium businesses?

MATHUR: If anything, it is even more applicable to small and medium businesses. Everyone is talking about how industry 4.0 takes a lot of capex and how it is very complicated. We decided to do an experiment. We have a factory in Mumbai where we were manufacturing 80 variants of conductors. We needed to do many more, but there just wasn’t a business case for it as an additional business line was needed to put in and it needed a lot of capex. We instead decided to implement automation into the process. We went from doing 80 variants on three lines to 180 variants on one line. Production time went from 21 seconds down to 9 seconds and a lot of space was saved too. We used the same labour to produce three times as much. That is the real benefit for small and medium enterprises who don’t have the money to expand.

SHETH: It is unfortunate that only larger industries are where technology and digital changes are being adopted. One of the reasons other than capital is also the talent. The talent pool in an SMB (small and medium business) is either focused on revenues or operations. Where the digital or technology element occurs, there is a talent gap. In Germany’s SMB ecosystem, there are a variety of cloud-based service providers for SMBs to consume. Unfortunately, today we don’t have a similar ecosystem in India.

CHITTILAPILLY:
If you were to go back a year, would automation help you to deal with Covid-19 better than it is being dealt with now?

GOENKA: I would probably say that if I had known Covid-19 is coming, I don’t think we would have done anything much differently. Because we were already on a path of automation. In some sense, we are lucky that Covid-19 didn’t happen two years ago. The kind of digital tools available today are a lot more and a lot better than they were two years ago. I think we did very well as a country. The way the Government of India has digitised is mind-boggling.

CHITTILAPILLY:
We are challenged by an economic downturn. Do you think automation has a role to play in addressing cost as an outcome?

SHARMA: Most of the time, automation leads to a reduction in cost, but not all the time. That is why it is very important that when you deploy automation as a process or a plan, you should be very clear what kind of return you will be expecting out of that investment. If you keep customers as the centricity of the organisation, automation makes a lot of sense.

You make the processes more predictable, repeatable and measurable so by the time you finish producing the product, you have not only manufactured it within the assured standards, but you also have captured the data about it. In case an issue props up, you can do the root cause analysis and overwrite it with customer experience.

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