The Power of Going Digital: Q&A With Siemens' Raj Batra
Raj Batra, president of Siemens’ Digital Factory Division, is presenting at the MAPI Executive Summit (May 24-25 in Chicago) on digital enterprise platforms. In this interview, Raj describes how digitalization helps attract new talent, argues that simulations of production will become the “largest productivity driver in manufacturing,” and explains how going digital can be game-changing.
Raj joined Siemens in 1993 and built experience in automotive and aerospace before becoming automation division president in 2007. He serves on multiple boards, including MAPI’s Board of Trustees. In his current position, he oversees Siemens USA’s automation portfolio, which includes integrated hardware, software, and technology-based services.
How much of what we read about the connected digital enterprise is hype vs. reality?
As with any major new development, there’s hype but there’s genuine substance, too. The internet revolution is hitting the factory floor and bringing with it a host of challenges for manufacturers. Mass customization is being driven by consumer demand for individualized products. The hunger for the next new thing is shrinking product lifecycles. And even if your company has the good fortune of inventing the next revolutionary new product, if you can’t manufacture it quickly enough, you might just miss first-mover advantage.
Companies are beginning to realize that they need to do things differently and that starts with embracing digitalization. Most can’t gut their plant floor and install 2016 technology overnight. So moving to the digital enterprise will be an evolution, not a revolution. But progress is being made. I’ve seen incredible results among the early adopters in our own customer base. They’ve cut time to market by up to 50% and engineering time by up to 30%. And as a result, they’re able to add market share, increase profit, and build their brands. In one of our own factories in Amberg, Germany, we produce 12 million automation components per year at a quality rate of 99.98%.
What are some of the biggest cultural barriers that you see manufacturers encounter in creating a digital enterprise?
Some companies tell me they like the promise of digitalization, but they’re just not ready to start implementation. You’d be surprised how many factories—even from well-respected brands—still have PCs with floppy disk drives running DOS. The assets in the U.S. manufacturing installed base are 35 years old on average.
There is a reluctance to modernize and invest, as the MAPI Foundation has documented. Many companies would rather buy the outdated automation solution that they know for the simple reason that they don’t want to try new technology. The problem is, they’re spending money but they’re not modernizing or improving their operations. They’re also missing out on important gains in functionality that will help them increase speed, flexibility, and efficiency.
Which functions have you found are most passionate about the opportunities presented by the digital enterprise?
The passion far outweighs the skepticism when it comes to the benefits of digitalization. When I share the Siemens approach with manufacturers, they quickly understand the power of going digital. They also understand that modernizing their operations will help them attract, develop, and retain millennial talent. With 27% of the manufacturing workforce eligible to retire in the next decade, filling the talent pipeline with the right skillset is on the mind of every manufacturing executive.
According to a recent survey by the MIT Sloan School of Management, all generations, but especially millennials, want to work for digitally enabled companies. Millennials are often called “digital natives” because they were born into the internet world. They are accustomed to living in a time of rapid technological change. They don’t want to work with tools that look like they were designed for electricians. Modern automation software tools that offer drag-and-drop editing, wizards, and iPhone-style ease of use will help manufacturers attract talent and address the well-documented reluctance of millennials to work in manufacturing.
For many manufacturers, innovation is slow and incremental. What successes have you seen when companies include digital tools in their innovation and product development processes?
Digitalization yields definite advantages in terms of accelerating innovation and shortening time to market. First, it eliminates the need for physical prototyping, which can be an expensive and time-consuming process. Second, simulating production allows you to start making your product virtually even before your factory is operational. This simulation also allows you to detect production problems early—problems that might be avoided with a small change in product design. This is incredibly valuable to manufacturing because 80% of its production costs are determined in the product design phase, according to McKinsey. And third, your information is always up to date. As your product moves from the design stage to full production, you’re compiling more and more information about the design as well as the production process. Experts agree that simulating product design, engineering, and production will be the largest productivity driver in manufacturing going forward.
Manufacturers are always looking for new ways to be more agile. Some approaches (lean) have become more tried and true than others (JIT). Where do you see the digital enterprise evolving over the next decade?
We’re living in the age of disruptive new technologies—including the iPhone, Tesla, and autonomous vehicles, to name just a few. Innovation is a strategic priority for anyone in business today. It’s the key to capturing market share, minimizing operational costs, and maximizing profitability. If you’re a manufacturer, what keeps you up at night is how to turn groundbreaking ideas into winning products and services ahead of the competition. This is where digitalization can be game-changing.
Digitalization is not a fad. Based on the pace of change we’ve seen in the last few years, I’d subscribe to the view that we’re living in the age of exponential technology gains. I recently heard Andrew McAfee liken this progress to the old tale of doubling the grains of rice on the squares of a chessboard. At first, the doubling seems manageable, but by the second row of squares, you’re quickly becoming overwhelmed. By the final square, your gains are so exponential that you have accumulated a pile of rice larger than Mount Everest. We’re now on the back half of the chessboard in terms of where digitalization is taking us. It’s an incredible time to be in manufacturing.
Take the Next Step in the Digital Evolution
To join Raj at the MAPI Executive Summit in Chicago and learn more about making your digital enterprise a reality, visit mapisummit.com.
Session abstract: Whether you’re the world’s leading chemical producer or sending rockets to space, today’s production environment is as challenging as ever and combines digital and virtual realities. New technologies in software and automation are connecting production systems for increased transparency and flexibility. The new digital enterprise platform overcomes issues such as scalability and open standards while serving as the backbone for truth in data.