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Steve Gansen
National Manufacturing Manager
Industry Digitization Team
Date
Cisco Digitalization Strategy and Vision for Manufacturing
Customer
Steven Sasson
invents the
Digital Camera
while working at
Kodak in 1976
Disruption…Change and Keep Changing!!
To Better Understand the State of Digital Disruption & Industry Outlook, Cisco Conducted a Detailed Study
Assessed industries’ vulnerability to digital disruption:
Interviews with 941 business leaders across 12 industries and 13 countries
Analysis of market data, looking at investment, timing, means, and impact
Ranking of industries according to their proximity to center of the “Digital Vortex”
8
1
Source: Global Center for Digital Business Transformation, 2015
Technology
Products &
Services
Pharmaceuticals
Oil & Gas
Utilities
Healthcare
CPG &
Manufacturing
Hospitality
& Travel
2 Media &
Entertainment
4Financial Services
5Telecommunications
Education
11
10
9
6
Digital
Vortex
7
12
3
Seismic Changes Will Displace Nearly 40% of Top Incumbents, and It Will Happen Soon
*Disruption = Substantial change in
market share among incumbents
Source: Global Center for Digital Business Transformation, 2015
Expected time to
disruption*:
3 Years
In your industry, how many
companies will lose their
place in the top 10 due to
digital disruption (over next
five years)?
However, Most Companies Are Not Responding to the Threat
45%of respondents
say digital disruption
is NOT
a board-level
concernDoes not
recognize
or is not
responding
appropriately
Taking
“follower”
approach
Actively
responding
by disrupting
our own
business
43%
32%25%
Responses to Digital Disruption
In general, what is the attitude of your
company’s leadership toward digital disruption?
Digital Disruption…Who Cares?
Some thoughts…
“Our next phase of investment in the factory of the future includes a more transparent manufacturing model. … not
only to advance our cost competitiveness, but to drive a different conversation with our customers and suppliers.”
- Rob Goldiez, Scott Fetzer, a Berkshire Hathaway company
"If you went to bed last night as an industrial company, you're going to wake up today as a software and analytics
company.”
- Jeff Immelt, CEO, GE
“…the lines between hardware, software, and services are blurred or are disappearing”
- Tim Cook, CEO, Apple
“Two-thirds of CEOs (66%) see more threats facing their businesses today than three years ago.”
“All CxOs identified the risk of industry disruption caused by an unlikely competitor outside their
industry as a primary competitive threat.”
- IBM Global C-Suite Survey, 2016
- PwC 19th Annual Global CEO Survey
A New Industrial RevolutionLeveraging the IOE/IOT to Digitize Manufacturing
18th Century
Steam
20th Century
Mass Production70’s
Robots
Today
Digitization & Smart Automation
Technology
Progress
Smart
Devices
Priority Investments: #1 Analytics | #2 Connectivity | #3 Automation | #4 Mobility
Source: SCM World/Cisco “Smart Manufacturing & the Internet of Things 2015” survey of Manufacturing Business Line Executives and Plant Managers across 17 vertical industries.
Cisco Confidential 11© 2013-2014 Cisco and/or its affiliates. All rights reserved.Big Data => Open Data for Business, Customers, Consumers
More Important
Less Important
0101010010101010101010101010
1010101010100010101001010101
0101110101010101010101
IoE Transforms Data into Wisdom
Wisdom (Scenario Planning)
Data
Information
Knowledge
Digital Manufacturing Enablers and Focus Areas
#1 Analytics
#2 Connectivity
#3 Automation
#4Mobility
Source: SCM World/Cisco “Smart Manufacturing & the Internet of Things 2015” survey of 400 Manufacturing Business Line Executives and Plant Managers across 17 vertical industries.
0% 10% 20% 30% 40% 50% 60% 70% 80%
Wearable Devices
Additive Manufacturing/3D Printing
Social and Collaboration Technology
Collaborative Robotics
Plant Floor Video
RFID and Location Technology
Wireless Networks
Cloud Computing
Modern Plant Floor IT (PLM, MES)
Mobile Devices
Factory Automation
Connectivity Technologies
Big Data Analytics
Primary Barriers
Relate to Information
Visibility
0% 10% 20% 30% 40% 50% 60% 70% 80%
Plant floor security threats or fears
Insufficient investments to modernise plant floor IT
Unable to justify the investment / ROI
Lack of clear manufacturing strategy
Primarily Manual Processes
Lack of reliable plant floor network, linking production…
Lack of understanding what plant floor data represents
Inflexible automation
Complexity of manufacturing operations
Employee skills gap
Siloed Plant Floor IT Applications
Lack of common metrics across plants
Inability to access data within production equipment
Lack of visibility of plant floor KPIs
Lack of supply chain visibility
What are the key barriers that prevent your company from solving its manufacturing challenges?
Source: SCM World/Cisco “Smart Manufacturing & the Internet of Things 2015” survey of 418 Manufacturing Business Line Executives and Plant Managers across 17 vertical industries.
Digital business transformation is organizational change using digital technologies and business models. It requires:
CHALLENGING ASSUMPTIONS that delivered past successes
STRESS-TESTING the ways you deliver value to customers
CHANGING THE ORGANIZATION
ITSELF: operations, culture, revenue models, and more
What is Digital Business Transformation?
Manufacturing Digitization Across the Value Chain
Connected
R&D
Connected
Factory
Supply Chain
Security &
Visibility
Connected
Customer
Connected products providing
innovate insights
Global, Virtual, 3D, Collaborative
Plant-floor platform providing
converged connectivity
Advanced capabilities to
streamline process
Visibility enabling informed
and fast decision making
Security to enable traceability
and confidence
Intelligent customer care through
connected products
Empowered sales to reach the right
customer at right time
Protect and Enhance
Brand Value
Drive Operational
Excellence and ProductivityGlobal and Collaborative
Product Development
Accelerate Development and Scale
of New Products and Services
Connected
Assets
© 2017 Cisco and/or its affiliates. All rights reserved. Cisco Confidential
CiscoDigital ManufacturingIoT Strategy
Manufacturing Trends –Disruption Across the Value Chain
Shifting Landscape
for Workforce
Changing Customer
Expectations &
Demands
Agile Innovation &
Performance Insight
Disruptive & Accelerated
Technology
Developments
• Shifting Job Landscape
• Globalization & Localization
• Increasing Supply Chain
Complexity & Risk
• Performance Economy
• Personalization
• Maker Movements
• Hyper Analytics,
• 3D Printing
• IOT & Industrie 4.0
• Robotics
• Marketplaces
• Digital Inventories
• Collaborative
Consumption
Copyright © 2015 Rockwell Automation, Inc. All Rights Reserved.PUBLIC INFORMATION
These generations will work differently…
WorkforceTalent Shortages & Skills Gap
Copyright © 2015 Rockwell Automation, Inc. All Rights Reserved.PUBLIC INFORMATION 19
Copyright © 2015 Rockwell Automation, Inc. All Rights Reserved.PUBLIC INFORMATION 20
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21
• Efficiency: 20% reduction of
breaker component tire loss
• Productivity: 21% increase
in tire production
• Return: Payback in less than
6 months
“The combined Cisco, AeroScout and Global Data Sciences solution (using Cisco wifi) provides real-time visibility into the inventory on the plant floor and allows us to drive lean manufacturing without the risk of running out of material.”
Greg Pemberton, MIS Director
Current Situation: Tire production in 11 global facilities, but
NA producing 1000 SKUs in 60 acre facility. Today have long,
manual, search times for inventory needed in assembly line,
often missing components and causing delays..
IoT Innovation: Using RFID tags connected to WiFi,
Continental was able to allow materials
handlers/truckers/mgrs to integrate with inventory tracking
system and search for components by ID, tread number, etc
and alert low inventory
Cisco Confidential 22C97-731884-00 © 2014 Cisco and/or its affiliates. All rights reserved.
SugarCreek Food manufacturer expands with new Digital Factory of the Future
• Get real-time production
transparency
• Implement sensors everywhere for
Sous-Vide
• Identify emergencies and support
for first responders
• Gain better visibility to real-time
OEE for all users in all locations
• $100m annual energy bill
• Greenfield design & integrated
Cisco Connected Factory
architecture from IoE Services
• Unified network including Location
Based Services (AeroScout) &
Security
• Cisco Analytics to integrate
machine data with digital signage
and mobility
• On time implementation of new product and process capabilities
• Improved labor utilization to 90%
• Integrated visibility of all operations from one screen
• New sensors added predictive maintenance capabilities, lowering costs and increasing OEE by 25%
• Lowered relative energy costs (per sq.ft) at this facility by 15%
ResultsChallenge Solution
“With the help of the Cisco Services and Global Manufacturing Industry practice, we have been able to
expand our product portfolio, production capacities, efficiencies and capabilities with a new plant. We’re
able to achieve many new benefits with the additional insights into our operations not previously
available.” Rob Daley
CEO Sugar Creek
© 2013 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 23
• Detection: 24X7 abnormal
condition alarm detection
• Response: Workers can
now be found within 3 mins at
a cost of $1/worker hour
Consistency: 100%
reporting of exposuresCurrent Situation: In plant environments across oil and
gas, chemicals, etc, one of the biggest priorities for
management is to understand how to reinforce safe work
practices and support the safety of employees throughout
their shift..
IoT Innovation: A partnership between Cisco, Accenture,
AeroScout and Industrial Scientific led to the deployment of
a plant wide wireless infrastructure that can support
Portable Gas Detection, asset location, tracking and video
““This solution not only alerts individuals to potential gas hazards via a wireless network but also allows us to identify incidents and quickly attend to endangered workers. As a cost-effective solution, it can help to transform on-site safety in a wide variety of industrial plant situations.””.
Operations Manager
Immense Business Benefits Expected
What business benefits do you expect to derive from Digital Manufacturing?
Reduced
Downtime
48%
Unplanned
downtime down
from 11% to 5.8%
Reduction in
Defects
49%
Defect rate
down from
4.9% to 2.5%
New Product
Introduction
23%
New product
introduction cycle
time reduced from
15 to 11 months
OEE
Improvement
16%
Average OEE
improved
from 74% to 86%
Improved
Inventory
35%
Inventory
turns increased
from 14 to 19
Reduction in
Energy Use
18%
Annual energy
cost down from
$8.4M to $6.9M
Source: SCM World/Cisco “Smart Manufacturing and the Internet of Things 2015” survey of 418 Manufacturing Business Line
Executives and Plant Managers across 17 vertical industries.
Unleashing Digital Manufacturing Outcomes
Lower
Downtime
Reduce
Defects
Reduce
Energy
Faster
NPI
Maximize
OEE
Lower
Inventory
Reduce
Risk
• Factory
Network
• Analytics and
Big Data
• Factory
Wireless with
LBS
• Factory
Wireless
• Connected
Machine
• Factory
Network
• Energywise
• Factory
Network
• Plant Floor
Virtualization
• Factory
Wireless
• Factory
Collaboration
• Factory
Security
“Reduced labeling
error rateby 16%”
“Achieving 20% energy reduction
with real time visibility.”
“Shaved10-20% off NPI cycle
time”
“Increased OEE mid 70s to high 80s”
“Reduced breaker
component tire loss by 20%.”
Multi-National
Brewery
“$40 million downtime
reduction for customer”
Make Money Save MoneyStay out of
Trouble
“Significantly reduced factory vulnerabilities.”
Business Drivers Are Driving Changing Priorities
2 Exabytesof big data
generated by manufacturing
$65B global installed base of
legacy automation systems
Nearly ¾ of US plants are more than 20
years old
$20B annual cost of
unscheduled downtime
21% have had an IP loss
in last 12 months
<14%Manufacturers
have their machines tied to
the enterprise
SOURCE: Industry Week SOURCE: Kapersky (2014) SOURCE: McKinsey SOURCE: ARC SOURCE: Industry Week SOURCE: ARC
Christian HornerTeam Principal, Infiniti Red Bull Racing
“The network will play a crucial part in how we develop the car; gathering data, learning from it and adapting will ultimately determine our season.”
Cisco Confidential 28© 2013-2014 Cisco and/or its affiliates. All rights reserved.
Electrical Equipment Manufacturer Car Manufacturer
Plant Uptime and Asset Utilization
Rapid Fault Isolation, Predictive Maintenance, Connected Machines
• Lower downtime
•Mobile visibility to robot diagnostics
Machine-as-a-Service
Factory Security
•Rapid fault isolation / 50% downtime reduction
• Improved Quality
Network Mgmt in HMI
Machine to SAP Integration
Connected Factory Solutions
Visual Factory
Collaboration
Connected Factory
Automation
Connected Factory
Wireless
Connected Factory
Energy
Shifting Landscape
for Workforce
Agile Innovation &
Performance Insight
Disruptive & Accelerated
Technology
Developments
Average Cost of a breach = $1.57M USD
Security…..
Gartner estimates that IT security spending will soar from $75 billion-plus in 2015 to $101 billion in 2018. Research firm Markets and Markets sees the cybersecurity market hitting $170 billion by 2020.
Manufacturing is targeted in nearly 1/3 of the attacks
IP is the prize!
2016 Ransomware Attacks:Manufacturing - 54% Healthcare – 44% Education - 35%Tech - 29% Banking - 28%
IoT Cyber Security & Business Concerns:Growth Risks & Vulnerabilities in Industrial Technologies
Source:1 Cyberattacks against critical manufacturers nearly doubled in 2015: Government report - The Washington Times in Jan 20161“The FBI estimated that $400 billion of intellectual property is leaving the US each year because of cyberattacks” - Dark Reading 2016
A Targeted Environment with Accelerating Incident Growth
2000
Australian water utility
released sewage into
water ways via remote
access by former
contractor.
Software bug in alarm system
control room at First Energy corp in
Ohio cause a northeast blackout
that left 50 million American and
Canadian residents without power
for 2 days.
2003
2005
Data on Several Japanese
nuclear plants and electric
utility companies was
released on the Internet in a
data breach, after a virus
infected an employee’s
computer.
2008
A 14-year-old Polish boy
hacked a local tram system,
disrupting traffic, derailing
trams, and injuring 12
passengers
2010
Stuxnet – geopolitical
attack - first proven case
where a cyber attack
caused physical damage.
2012
Malware in Saudi
Aramco hit 30,000
employees and
impacted
operations.
2013
Multiple OT tool
vendors had their
firmware images
hacked /
compromised on
their websites
2014
German smelter
damaged – second
known cyber attack
with proven physical
damage.
2015
Ukraine power grid
shut down
impacting 225,000
people during
Christmas time.
2016
Hackers shut down
Hollywood Presbyterian
Medical Center IT
systems, demand $3.6M
ransom.
2016IOT devices used
as botnets to bring
down Krebs site
and large portions
of web (Oct 22
2016)
Cybersecurity Vendor SprawlSecurity Vendor Sprawl
Source: Momentum Partners
NEIL F. HERSHFIELD Deputy Director, ICS-CERTU. S. Department of Homeland Security
Neil Hershfield is the Deputy Director of the U.S. Department of Homeland Security’s (DHS)
Industrial Control Systems Cyber Emergency Response Team (ICS-CERT). ICS-CERT operates within the National Cybersecurity and Integration Center (NCCIC), to bring a control systems focus to the mission of protecting the Nation's critical infrastructure from physical and cyber threats.
Examples: Alcoa Spear Phishing, Off shore oil platform, WWTP in Wisconsin…etc
“What used to take hours or
days to triage and troubleshoot
problems now takes seconds.”
- David Gutshall,
Harley-Davidson Motor Company
1200 possible BTO
configurations
A new
motorcycle
produced
every
79seconds
Factory Network at Harley Davidson
Watch Video
Start Your disruption….or Someone Else will
You can’t change the world through your rear view mirror…
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