The following interview with Francisco Almada Lobo, CEO of Critical Manufacturing, is a translation from the original article in Portuguese by António Larguesa, published in Jornal de Negócios on April 12, 2016
The rapid changes in various areas related to industrial technology led the Germans to create in 2013 term "Industry 4.0", which has spread to several countries and dominated the Forum in Davos (Switzerland) in January. The role of information systems in this fourth industrial revolution is the theme of the annual conference hosted by Critical Manufacturing on Tuesday, April 12, in TecMaia. The founder and CEO, Francisco Almada Lobo, outlines grounds, effects and opportunities for Portuguese industry.
What are the drivers of the lndustry 4.0?
The first change is technological: there is a set of technologies, mainly information systems, which have been adopted at a rapid pace and will radically transform the way the industry operates. At the same time, consumers are asking for more customized and personalized products, which leads to smaller production series. It is less and less possible to manufacture very long series that are centrally planned and to reach the levels of efficiency and optimization with large quantities.
So what will exist in a smart factory?
Any element - a material, equipment or any other, will have attached an electronic low-cost component which can communicate, has computing power, and is intelligent and autonomous. In the future, instead of having a central planning system for equipment and materials production, we may have at the end [of the supply chain] the consumer asking for a specific product and the production line knowing what is needed [to produce it].
At the extreme, it’s a lot size one
Yes. The product is the entity that knows exactly what needs to produce itself. It will talk to the different equipment that are going to tell what their processing capabilities are; materials and machines will autonomously decide what to do next in order to deliver the product on time to the final client. This will be an absolutely brutal revolution, but it will not happen from one day to another.
But it is already underway...
Yes, it is already underway. It is called "self-fulfilling prophecy": everyone knows the reality will go in that direction, everyone invests in it, and then it ends up happening. But it’s estimated that it will take 10, 15, 20 years to reach a broad scope in different industrial areas.
Manufacturers should put it on the agenda already?
They have to take it into consideration now because soon it will be too late. Companies that do not anticipate this transformation will be out of business within a few years because they will not be able to be competitive. For example, with very small series they will not be able to achieve efficiency in the same way as previously.
And they should start looking where exactly?
The foundation of everything is digitization, to complement all operations with software systems to get an accurate visibility into what is happening in a production line, have traceability of everything that is being done. It is what is called a parallel virtual reality, to have everything that happens in a production line mapped in software systems. Only then is it possible to have all the information available instantly, to be able to respond. Now, all this is done with time, there are types of systems that can be applied at different times. Then – and this is another aspect of Industry 4.0 - there is an immense amount of data generated to be used to improve performance and to predict future situations.
What are the opportunities for businesses?
Those who can operate in this way, not only have the opportunity to not die in the transformation process, but will also be competitive and able to operate in the global market. Because all this will allow any company in Portugal, in any sector, to quickly become a supplier or part of a supply chain on a global scale. If someone from the other side of the world comes across looking for a product and there is someone in Portugal who can produce it, being completely connected and capable to react quickly is a huge business opportunity. Otherwise, they’ll have left the same classical production opportunities with large volumes that we have today, but over time these will eventually fade. That is not what the consumer wants.
The biggest alert goes to the "risk of adopting ahead of time" of immature technologies.
Manufacturers should prepare reasonable investment plans to join the revolution?
The days when these solutions were extremely expensive are gone. There is a democratization of information systems. What is difficult, in Portugal especially, is to envisage investments in software, compared with more tangible ones, like an investment in a machine. Even if it is a smaller investment and there is evidence that it has twice the profitability.
How to change the mentality?
There is a new generation of managers, that reach the top positions of the organizations with a different way of thinking, and they do what for some old fashioned businessmen is more difficult to do
And what are the risks of the procedure?
There are technologies at different levels of maturity. While 3D printing and the "big data" are taking the first steps in the industry, the "lnternet of Things" linked to the industrial area and cloud technology are more evolved. The risks are related with the adoption of some of these rising technologies ahead of time. And there is also the matter of organization and maturity of companies that are necessary for this digital transformation. If the company is inefficient and disorganized in the manufacturing process, then you will only digitize the lack of organization that already exists.
The rapid changes in various areas related to industrial technology led the Germans to create in 2013 term "Industry 4.0", which has spread to several countries and dominated the Forum in Davos (Switzerland) in January. The role of information systems in this fourth industrial revolution is the theme of the annual conference hosted by Critical Manufacturing on Tuesday, April 12, in TecMaia. The founder and CEO, Francisco Almada Lobo, outlines grounds, effects and opportunities for Portuguese industry.
What are the drivers of the lndustry 4.0?
The first change is technological: there is a set of technologies, mainly information systems, which have been adopted at a rapid pace and will radically transform the way the industry operates. At the same time, consumers are asking for more customized and personalized products, which leads to smaller production series. It is less and less possible to manufacture very long series that are centrally planned and to reach the levels of efficiency and optimization with large quantities.
So what will exist in a smart factory?
Any element - a material, equipment or any other, will have attached an electronic low-cost component which can communicate, has computing power, and is intelligent and autonomous. In the future, instead of having a central planning system for equipment and materials production, we may have at the end [of the supply chain] the consumer asking for a specific product and the production line knowing what is needed [to produce it].
At the extreme, it’s a lot size one
Yes. The product is the entity that knows exactly what needs to produce itself. It will talk to the different equipment that are going to tell what their processing capabilities are; materials and machines will autonomously decide what to do next in order to deliver the product on time to the final client. This will be an absolutely brutal revolution, but it will not happen from one day to another.
But it is already underway...
Yes, it is already underway. It is called "self-fulfilling prophecy": everyone knows the reality will go in that direction, everyone invests in it, and then it ends up happening. But it’s estimated that it will take 10, 15, 20 years to reach a broad scope in different industrial areas.
Manufacturers should put it on the agenda already?
They have to take it into consideration now because soon it will be too late. Companies that do not anticipate this transformation will be out of business within a few years because they will not be able to be competitive. For example, with very small series they will not be able to achieve efficiency in the same way as previously.
And they should start looking where exactly?
The foundation of everything is digitization, to complement all operations with software systems to get an accurate visibility into what is happening in a production line, have traceability of everything that is being done. It is what is called a parallel virtual reality, to have everything that happens in a production line mapped in software systems. Only then is it possible to have all the information available instantly, to be able to respond. Now, all this is done with time, there are types of systems that can be applied at different times. Then – and this is another aspect of Industry 4.0 - there is an immense amount of data generated to be used to improve performance and to predict future situations.
What are the opportunities for businesses?
Those who can operate in this way, not only have the opportunity to not die in the transformation process, but will also be competitive and able to operate in the global market. Because all this will allow any company in Portugal, in any sector, to quickly become a supplier or part of a supply chain on a global scale. If someone from the other side of the world comes across looking for a product and there is someone in Portugal who can produce it, being completely connected and capable to react quickly is a huge business opportunity. Otherwise, they’ll have left the same classical production opportunities with large volumes that we have today, but over time these will eventually fade. That is not what the consumer wants.
The biggest alert goes to the "risk of adopting ahead of time" of immature technologies.
Manufacturers should prepare reasonable investment plans to join the revolution?
The days when these solutions were extremely expensive are gone. There is a democratization of information systems. What is difficult, in Portugal especially, is to envisage investments in software, compared with more tangible ones, like an investment in a machine. Even if it is a smaller investment and there is evidence that it has twice the profitability.
How to change the mentality?
There is a new generation of managers, that reach the top positions of the organizations with a different way of thinking, and they do what for some old fashioned businessmen is more difficult to do
And what are the risks of the procedure?
There are technologies at different levels of maturity. While 3D printing and the "big data" are taking the first steps in the industry, the "lnternet of Things" linked to the industrial area and cloud technology are more evolved. The risks are related with the adoption of some of these rising technologies ahead of time. And there is also the matter of organization and maturity of companies that are necessary for this digital transformation. If the company is inefficient and disorganized in the manufacturing process, then you will only digitize the lack of organization that already exists.
