Executive panel discussion on manufacturing

Siemens held an executive panel discussion on manufacturing at Hannover Messe discussing topics ranging from challenges in the industrial sector to energy efficiency to connected technology and big data.

By Siemens April 27, 2016

Siemens held an executive panel discussion on manufacturing at Hannover Messe discussing topics ranging from challenges in the industrial sector to energy efficiency to connected technology and big data.


  • Raj Batra, president, Siemens Digital Factory Division USA
  • Anne Cooney, president, Siemens Process Industries & Drives Division, USA
  • Del Costy, vice president/U.S. country manager, Siemens PLM
  • Joris Myny, country lead, Siemens Canada
  • Kevin Yates, president, Siemens Energy Management Division, USA

Question: What are the main challenges that the industrial sector is facing today, and what role can digitalization play in addressing them?

Raj Batra: The main challenge is time to market and shortening product lifecycles. It’s not enough to come up with a great product idea, you have to design the manufacturing very quickly. Digitalization is the key to doing this. For example, you can eliminate the need for physical prototyping, which can be an expensive and time-consuming process. Another example, 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.

Anne Cooney: In the process industries, companies also care about speed,but are very urgently focused on high utilization and safe, environmentally compliant operations. Yet the same kind of digitalization tools that Raj just mentioned will also address these challenges. Virtual design tools are most often focused on the design of the plant or processing site, rather than on the product itself. The end result is the ability to virtually design a plant or process component that meets its operating requirements before physically building it. Importantly, this applies to safety as well, where the ability to have a virtual worker walk through a virtual factory can expose pinch points, trip hazards, and other risks. And along the way engineering time can be reduced by 20-30% or more.

Kevin Yates: Across the industrial market, customers are facing the need to:

  • Minimize production costs 
  • Ensure their processes are as safe, reliable and efficient as possible
  • Continue to add value to their brand 
  • All of which impact their ability to deliver value to their shareholders. There is a lot that can be done within a company’s walls to achieve these goals. A new, digitized production process can cut go-to-market times significantly or more efficient motors that require less up-time.
  • But, we also see energy as an important means to achieving each of these goals. Flexible production capacity requires flexible energy systems.
  • Managing energy usage efficiently and finding new ways to harness opportunities in today’s energy marketplace can have a significant impact on company’s bottom line and an industrial customer’s ability to successfully serve markets.

Joris Myny: Challenges include the right market–am I developing a product my customers will like? Time to market–will I be the first to market? Efficiency–will I make money with my innovation? Digitalization is pivotal and enables the creation of a digital twin. It also provides manufacturers the best opportunity to innovate at less cost.

What are the starting points, and how do companies embark upon a digital strategy?

Del Costy: First, start by defining digitalization? Value from the digital assets; new business opportunities. Example: Kona Cranes stopped selling cranes and transitioned to selling the lifting service. How to embark: Assess current maturity. Looks opportunities to add requirements, traceability, closed loop quality/manufacturing, systems level design/simulation… and so on.

Digital twin on design side and manufacturing side.

Myny: There is a perception that U.S. industry has not kept pace with innovation,squeezing as much as possible out of a fleet of aging assets while holding onto historically large capital reserves. What will cause manufacturers to embrace deploying new hardware and software technology across their enterprise?

Cooney: While there is certainly truth there, I don’t agree with that perception as a blanket statement, at least when I look at our customers in the process industries. In process, we see a strong appetite for our newer technologies in a number of areas. For example, we have customers that have already invested in remote monitoring & diagnostics and are beginning to embrace increasingly predictive condition monitoring. Analytical tools from 3rd parties can, among other things, predict impending faults and failures in pumps. Some of our midstream O&G customers are already incorporating this.

In addition, we have been actively working with customers to bring innovative electric driven products to the oil field. I can’t go into specifics here, but there are some investment patterns developing that will provide breakthroughs in operating cost and environmental impact, and we are in the middle of that. But there are also factors that retard the adoption of newer technologies. As I mentioned in my earlier comments, utilization is extremely important in process industries. When the operation goes down, process customers can lose a great deal of money very quickly. They won’t make changes on a whim, so new and innovative products have to offer compelling value, and be seen as having a high probability of success.

Batra: The perception is correct. Capital investments have been lagging. There’s a disconnect between the record cash reserves of almost $2 trillion on the balance sheets of major U.S. corporations and the fact that investment as a percent of cash flow has been diminishing. Our manufacturing infrastructure is becoming obsolete. Even digitally mature manufacturers admit that parts of their operations still rely on PCs with floppy disk drives running DOS. The U.S. manufacturing sector has a growing gap–as McKinsey & Company recently put it–between industry’s digital "haves," "have nots" and "have mores."

Myny: Let me speak to Canada. Canada has tremendous potential to take a leadership role in this 4th industrial revolution. We have the educated workforce, existing manufacturing hubs and support from all levels of government. What will cause it? If all stakeholders work together toward the same Industrie 4.0 vision.

Question: What will cause this perception to change?

Batra: At the heart of U.S. industry is the desire to be trend-setters.Companies that have embraced digitalization stand out. Others will follow. The key is not to wait so long that there’s an insurmountable digitalization gap between you and competition. The consumer world is full of examples of companies that waited too long. Why would industry be different?

Question: According to the U.S. Energy Information Administration (EIA), industry accounts for about one-third of energy used in the U.S., with an estimated $60 billion in energy consumption wasted. What can the industrial market do regarding energy usage to make the most of a shifting landscape, and how will this change over the next 10 years?

Yates: Today, there is a tremendous shift in how energy is created,transmitted and delivered due to trends toward the availability of renewable energy, low natural gas prices, the need for greater power reliability and regulatory dynamics. And though the challenges of this changing landscape often focuses on utilities or independent system operators, the industrial market can also pursue the opportunities offered by a 21st century power mix.

So, even though this shift may seem focused outside of a plant’s walls, today’s energy mix not only can, but is already significantly impacting the way industrial and commercial markets manage and consume energy.

We’re already seeing industrial customers look at energy indifferent ways in order to better manage their operations, minimize costs,and add value to their brand and shareholders.

For example, Orangeburg, SC is home to the world’s largest Ibuprofen factory, which serves as an economic anchor for the region and has over 300 employees. But, the plant was continuously plagued with power outages due to sub transmission system issues.

Each time the power went out; the plant was required to shut down production, a costly process that resulted in serious production losses and waste generation. The options amounted to either looking for a new site, or working with the local utility to improve power reliability on the grid.

Siemens partnered with Orangeburg Department of Public Utilities to develop a Distribution Feeder Automation System for the city’s power system that transfers power during an outage event so electricity can continue to flow. The technology was successfully installed and even after a severe ice storm hit the Orangeburg area, Siemens technology helped transfer power in 90 milliseconds to an alternative source. The Ibuprofen plant didn’t experience an outage and was able to avoid costly production shutdowns and keep operations flowing.

Cooney: While various studies place energy costs at 5-10% of production costs, across all industries, in process-based industries, energy costs may comprise the single largest component of total costs, ranging up to 40% or more. Consequently, energy efficiency is always on the initiatives list for most of our customers in the process industries. One of the most easily deployed ways that we can help them with that is through energy efficient motors and drives, which can deliver 30% or greater efficiency over older equipment. Depending on the scenario, the gains can be almost astronomical, reaching even 70%. This has been repeatably proven.

Myny: Can industry face high energy cost as part of the total cost of doing business? The use of state of the art technology to drive energy costs down is mission critical to be globally competitive.

Question: Connected technology, which generates tremendous amounts of data, is fast becoming one of the most valuable assets for modern manufacturing. What growth opportunities exist for manufacturers that maximize the use of their data?

Costy: Digital Twin predicting the future. Data from the factory today… collect, analyze it… feed it into our factory tools, along with forecasted orders and determine how the plant will operate with the future production. Siemens has some great examples as well where we’ve connected multiple factories as one system. Instead of a herculean effort at one plant to produce, given the one system concept across multiple facilities. 

Batra: Big data is indistinguishable from the Industrial Internet of Things (IIoT) and Industry 4.0 We’re on open industrial backbones now. Industrial Ethernet is very pervasive in the Internet of Things (IoT). So it’s extremely important when we look at services that we look at how data is being generated, moved around and analyzed. Industry has a tremendous opportunity here. Think about companies like Google and Amazon that have become cross-sector giants based on data that they have built from scratch. Google knows a lot about me, but they’ve had to reconstruct me, so to speak, based on my data. If I’m not a human being and instead I’m a PLC or even a factory, nobody has to reconstruct me. The data is already there. Our machines are already willing partners transmitting far richer data–they aren’t worried about their privacy! The key is to generate smart data and use it wisely. Siemens is working with customers through its Sinalytics platform with 300,000 connected devices to do just that.

Myny: The rules have changed. Where manufacturers were once investing in machine assets at high capital cost, data technology allows new business models where manufacturers pay for machinery per usage.

Question: Due to legacy systems at many manufacturing and production facilities, fragmentation exists–from machines, cells, systems, processes, IT/OT infrastructure, sites, vendors and supply chains. How can technology be used to overcome this lack of compatibility?

Batra: Environments are fragmented for all of the reasons you just mentioned but also because many companies have taken a decentralized approach to automation. There’s one standard for their factories in China, another for Europe, and another for the U.S. The result is a lot of unnecessary complexity. Interfaces and standards don’t match, so there’s a lot of manual integration. And trying to make these systems work together means increased engineering and commissioning time and costs. That’s why we’ve put so much emphasis on making every automation component fully interoperable based on global, open standards, as well as uniform hardware and software interfaces. This includes everything from the field level to the management level and beyond. We understand it’s not practical to change everything overnight–there’s too much invested in your automation assets. 

Cooney: I would just add that this is the same kind of scenario that we often see in the process and hybrid industries. And I agree with Raj’s comment that you do not have to go after this in a big bang approach, but you do have to create a vision for where you want to end up and then get started. We are ready to work with our customers starting at the field level–process instruments, analytical equipment and so on–or the operations management level–distributed control systems (DCSs)–and work that in either direction.



– Edited by CFE Media. See additional Hannover Messe 2016 coveraged linked below.