TRANSFORMING A DIGITIZING GROWING UP DIGITAL GERMAN …€¦ · fuel consumption by 2.5 liters per...

MAN,MACHINEAND THEFACTORIESOF THEFUTURE

SUPPLÉMENT GRATUIT AU #22816 DU QUOTIDIEN«LES ÉCHOS» DU 5 NOVEMBRE 2018NE PEUT ÊTRE VENDU SÉPAREMENT

TRANSFORMING AGERMAN GIANTQ & A WITH HENKEL’SCHIEF DIGITAL OFFICER

DIGITIZINGLOGISTICSA $4 TRILLIONOPPORTUNITY

GROWING UP DIGITALWHAT INDUSTRIALCOMPANIES CAN LEARNFROM STARTUPS

#8 – November 2018 - Special Edition for Founders Forum x IndustryIn Partnership With Henkel Conference

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LETTER FROM THE EDITOR

It was welcome news to learn that five out of nineof themost advanced factories in the world named by theWorldEconomic Forum and McKinsey are European. The factorieswere chosen out of an initial list of 1,000. And, as illustrated inthe stories in this magazine, there are other signs that Europeis holding its own in the Fourth Industrial Revolution. France’sSigfox is a global powerhouse in Internet of Things connecti-vity. Germany’s arago, backed with an investment of $55 mil-lion from the private equity fund KKR, is offering corporateswhat it claims is a neutral alternative to AI solutions offered bybig American and Chinese platform companies.And big European companies and entrepreneurs are collabora-ting through Henkel X, an open innovation platform created byHenkel, a 142-year-oldmaker of chemicals and consumer goods.As members of the Henkel X network gather with Sigfox, ara-go and other startups in Düsseldorf November 8 and 9, they willbe reminded that there is no place for complacency in this fast-paced digital world. As Brent Hoberman, executive chairmanand co-founder of Founders Forum and Rob Chapman, CEO ofFounders Intelligence write in their guest essay: “Startups havelearned discipline from industrial companies. It is time for in-dustrial companies to learn creative chaos from startups.”

ByJenniferL.SchenkerEditor-in-Chief, The Innovator

THE BRIEF

THE FACTORIES OF THE FUTURE

FLEXIBLE MANUFACTURING

Q &A WITH HENKEL’S CHIEF DIGITALOFFICER

THE SEARCH FOR NEW MATERIALSINNOVATIONS

LAUNDRY & HOME MEET INDUSTRY 4.0

CYBERSECURITY AND THE INTERNET OFTHINGS

FAST FASHION TAKES ON A WHOLE NEWMEANING

FACTORY-IN-A-BOX

TOP 25 IIOT STARTUPS TO WATCH

A WAZE FOR FACTORIES

HOW 3D PRINTING IS IMPACTINGMANUFACTURING

SPOTLIGHT ON AN ADVANCEDPHARMACEUTICALS PLANT

MAN AND MACHINE

AN APP STORE FOR THE FACTORY FLOOR

IIOT: EVERYTHING IS CONNECTED

IGNORING THE HERD

HOW BLOCKCHAIN IS CHANGING SUPPLYCHAIN MANAGEMENT

GOING DIGITAL

A STRATEGIC PERSPECTIVE ON AI

A $4 TRILLION OPPORTUNITY

WHAT CAN INDUSTRIALS LEARN FROMSTARTUPS

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TABLEOF CONTENTS

P.4 — THE INNOVATOR

THE BRIEF

The changing nature ofeconomic competitiveness in aworldthat is becoming increasinglytransformed by new, digitaltechnologies is creating a fresh setof challenges for governments andbusinesses. That is the key findingof the World Economic Forum’s2018GlobalCompetitivenessReport.According to the report, which usesa brand new methodology to fullycapture the dynamics of the globaleconomy in the Fourth IndustrialRevolution,many of the factors thatwill have the greatest impact indriving competitiveness in the futurehave never been the focus of majorpolicy decisions in the past.These include idea generation,entrepreneurial culture, opennessand agility.The tool maps the competitivenesslandscapeof140economies through98 indicators. For each indicator,using a scale from 0 to 100, itindicates how close an economy isto the ideal state or “frontier” ofcompetitiveness.When combiningthese factors, the United Statesachievesthebestoverallperformancewith a score of 85.6, ahead ofSingaporeandGermany. Theaveragescore for the world is 60, 40 pointsaway from the frontier.Oneof the report’smost concerningfindings is the relative weaknessacross the board when it comes tomastering the innovation process,

THE CHANGINGNATUREOF COMPETITIVENESS

from idea generation to productcommercialization. Some 103countries scored lower than 50 inthis area of the index, which istopped by Germany, followed bythe United States and Switzerland.The report notably finds that theattitude toward entrepreneurial riskis the most positive in Israel andtends to be negative in several EastAsian economies. Canada has themost diverse workforce andDenmark’s corporate culture is theleasthierarchical,bothcritical factorsfor driving innovation.

INNOVATIONINDEX1 — Germany 87.52 — United states 86.53 — Switzerland 82.54 — China & Taiwan 80.85 — Sweden 79.86 — Japan 79.37 — United Kingdom 79.28 — South Korea 78.29 — Netherlands 77.510 — Finland 76.311 — France 76.112 — Denmark 75.413 — Canada 75.014 — Singapore 75.015 — Austria 74.3

Source: World Economic Forum

Some 78% of humanresources departments expect to usemachine learning in at least oneHR process within two years,according toanewsurvey conductedby Bain & Company, which polledhuman resource executives andmanagers at 500 large companiesin theU.S., Germany, and theUnitedKingdom, including publicly tradedand privately owned companiesacross a broad range of industriesfrom manufacturing to retail tohealthcare.Somecompaniessurveyedare already seeing success fromusing the technology.Unilever, for example, is using AItohelpwithscreening jobcandidatesand the technology has cut theaverage time it takes to hire newpeople by 75%, according to Bain.But news of the Bain survey comesasnewsreportsrevealedthatAmazonhad to scrap an AI system that itwas using for recruiting purposesbecause it founditwasbiasedagainstwomencandidates.“Everyonewantedthisholygrail,” anAmazonexecutivetoldReuters. “They literallywantedit to be an engine where I’m going

to give you 100 resumes, it will spitout the topfive,andwe’ll hire those.”But the company realized its newsystem was not rating candidatesfor software developer jobs andother technical posts in a gender-neutral way.That is becauseAmazon’s computermodelswere trainedtovetapplicantsby observing patterns in resumessubmitted to the company over a10-year period. Most came frommen,a reflectionofmaledominanceacross the tech industry.The Seattle company ultimatelydisbanded the team by the start oflast year because executives losthope for the project, according tothe Reuters report.Amazon’s experiment offers a casestudy in the limitations ofmachinelearning. Italsoservesasacautionarytale to the growing list of largecompanies including HiltonWorldwideHoldings andGoldmanSachs Group that are looking toautomate portions of the hiringprocess.

HR’S USE OF AI ISGROWING AND SO ARECONCERNS

— P.5

THE BRIEF

A group of prominent male business leaders are stepping uptobecomeMaleChampionsofChange foranewgroupcalledAccelerateHER,which was formed to address the under-representation of women inthe technology industry.AccelerateHER, a part of the Founders Forum group, a private globalcommunity of successful technology founders and investors, is workingwith a network of technology leaders to accelerate change through bestpractices and promote the value of gender parity. Its work focuses onthree core areas: events, strategy and innovation, andMale Championsof Change.Its global AccelerateHER events shine a light on accomplished femalefounders, (such as ex-Google andYahooexecutiveMarissaMayer, picturedhere) providing the crucial visibility the groups says female foundersneed to raise capital, access new networks or partner with collaborativecompanies. The group says it is evaluating and mapping best practicesacross technology companies, providing partners with guidance andadvice on the latest innovative diversity technology. TheMale Champions

of Change Global Technology Group is an exclusive, action-based globalnetwork ofmale leaders in technology aiming to accelerate their diversitylearning and programs. The leaders are committed to standing upalongside women to share responsibility and reinforce accountabilityfor addressing gender inequality within their organizations and theindustry at large. Seventeen global leaders have committed to beingMale Champions of Change, including:— Steve Demetriou,Chairman and CEO, Jacobs— Mark Read, CEO, WPP— Tony Hall, Director General, BBC— Bob van Dijk, CEO, Naspers— Wendell Brooks, President, Intel Capital— Gavin Patterson, CEO, BT Group— Jonathan Newhouse, Chairman/CEO, Condé Nast International— Ambarish Mitra, Co-Founder and CEO, Blippar— Nagaj Kashyap, Corporate Vice President and Global Head, M12— Rahmyn Kress, Chief Digital Officer, Henkel and Founder,

Henkel X— Brent Hoberman CBE, Co-Founder, Founders Factory/first minute

capital/Founders Forum— David Jones, Founder/CEO, You & Mr Jones and One Young World

Founder— Damian Bradfield, President, WeTransfer— Philippe Chainieux,CEO, Made.com— David Eun, President, Samsung NEXT and Chief Innovation Officer,

Samsung Electronics— Frédéric Mazzella,Co-Founder and President, BlaBlaCar— Nicolas Brusson, Co-Founder and CEO, BlaBlaCar

Each Champion is conducting leadership assessments and focus groupswithin their organizations leading up to the inaugural Global TechGroupmeeting in January 2019 in Davos, Switzerland. The Global TechGroup will meet again in London next June around AccelerateHER’sand Founders Forum’s flagship events.

To get technology news in context every week, subscribe to our newsletter : http://innovator.news

ACCELERATINGCHANGE


THEFACTORIESOFTHEFUTURE

Haier, a Chinese home appliance manufacturer, has linked itsconsumers and suppliers in a mass customization platform that automateseach step of production. The automated process allows a customer topersonalize orders for appliances such as washingmachines or refrigeratorsthen designs the specifics, calls for relevant components from the suppliers,manufactures the appliance as the parts arrive (there are no warehouses),delivers it to the end-user, and arranges for monitoring and service when itis in use.Welcome to the factory – and the supply chain – of the future. It’s digital,it’s connected, it’s smart, it’s flexible, it’s customizable. And it’s here now.Fourth Industrial Revolution technologies, such as robotics, Internet of Things(IoT), artificial intelligence (AI), augmented reality (AR), robotics and additivemanufacturing, are spurring new techniques and business models that arefundamentally transforming the global production systems that havetraditionally served as an engine for growth and innovation in economiesaround theworld. Capgemini projects that smart factories have the potentialto add $500 billion to $1.5 trillion in value to the global economy withinfive years. And nearly every manufacturing vertical including autos, homeappliances, consumer goods, electronics, apparel and pharmaceuticals willbe impacted. Here is a glimpse of what the future holds :

Collaborating With Mechanical Co-WorkersThe roles ofman andmachine are changing. For years robots used in factorieswere stationary and set apart in cages to protect workers. Now they areworking side by side with humans. (See the story on pages 32 and 33.)To keep up, humans are acquiring some new superpowers. Workers whoused to have to follow long, complicated paper-based changeover instructionsnow work more efficiently because they can see each step projected ontoa surface using AR technology. (See the story on page 31.) And exoskeletonsare being tested to reduce worker injuries and increase productivity. FordMotor company is deploying them at 15 of its factories around the world.(See the picture.)Nonetheless, robots are replacing humans in somewarehouses and factories.The clothing manufacturer Uniqlo recently replaced 90% of its employeesat a warehouse in Tokyo’s Ariake district. The robotic system is designed totransfer products delivered to the warehouse by truck, read electronic tagsattached to theproducts andconfirmtheir stocknumbersandother information,according to press reports.When shipping, the systemwraps products placedon a conveyor belt in cardboard and attaches labels to them. Only a smallportion of work at the warehouse needs to be done by humans. Meanwhile,the Chinese phone part maker Changying Precision Technology Company

COVER STORY

— Fourth Industrial Revolution technologies are spurring new techniquesand business models.

By Jennifer L. Schenker

has created anunmanned factory. Everything in the factory— frommachiningequipment to unmanned transport trucks to warehouse equipment — isoperated by computer-controlled robots. The technical staff monitors activityof these machines through a central control system, according to a CBInsights report.Where it once required about 650 workers to keep the factory running,robot arms have cut Changying’s human workforce to less than a tenth ofthat, down to just 60workers. A general manager said that it aims to reducethat number to 20 in the future, the report says.

Moving From Factory Floor tothe Consumer’s DoorThe factory floor is not the only thing that is changing. The way productsget to market is also being transformed. On-demand decentralizedmodularequipment and custommachines like 3D printers are enablingmanufacturersto handle increasing demand for personalized products while movingproduction closer to consumers. (See the stories on pages 23 and 28-30.)

— P.7

MANUFACTURERS ARE TOP CORPORATER&D SPENDERSTrailing 12 months R&D spending (as of 6/16/17)

AmazonAlphabetSamsungIntelMicrosoftRocheHuawei*AppleMerckToyotaNovartisJohnson & JohnsonDaimlerGeneral Motors*Robert Bosch*PfizerFacebookCiscoOracleHondaAstra ZenecaIBMSanofi

Source : company filings, Bloomberg*indicates R&D spending reported annually

$17.4B$14.5B$12.8B$12.8B$12.7B$11.7B$11.2B$10.8B$10.3B

$9.6B$9.2B$9.1B$8.8B$8.1B$7.8B$7.8B$6.4B$6.2B$6.1B$6.1B$5.9B$5.8B$5.7B

The merger of man and machine:A factory worker wearing

an Ekso Bionics exoskeleton

Ekso

Bion

ics


Blockchain, an immutable digital ledger technology, is easing the complexitiesof integrating suppliers and making the supply chain more transparent,helping businesses like Walmart to more quickly identify problems andavoid recalls. It also gives consumers a means to gain quality assurances,building brand trust. (See the story on pages 40 and 41.) And autonomousships, vans, trucks and drones are changing last mile delivery. (See the storyon pages 46-48.)

The Shift to Outcome-Based ServicesAs if all of these changes were not enough, manufacturers are increasinglyexpected to move from providing products to providing outcomes, saysEric Schaeffer, senior managing director and head of industrial practiceat Accenture. For example, Michelin, one of the world’s largest tiremanufacturers, has shifted its business model from selling tires as a productto a service guaranteeing performance. It works like this: Michelin placesIoT sensors inside trucks to collect data, like fuel consumption, tire pressure,temperature, speed and location. This data is then processed in a cloudsolution and analyzed byMichelin experts, who provide recommendationsand training in eco-driving techniques. By encouraging the right handlingof the truck equipment, the company can help truck fleet owners reducefuel consumption by 2.5 liters per 100 kilometers, representing annualsavings of €3,200 for long-haul transport travelling over 120,000 km,which works out to reducing total cost of ownership at least 2.1% andCO2 emissions by eight tons. The service helps Michelin achieve highercustomer satisfaction, increase loyalty and raise EBITDAmargins, accordingto a World Economic Forum report.Other manufacturers are starting to sell uptime, i.e. a guarantee that theproduct sold will be up and working a certain amount of time. If it doesas promised the customer will pay an agreed-upon price. If it doesn’t themanufacturer pays a penalty.Delivering such outcomes will require new levels of collaboration acrossan ecosystem of business partners, bringing together players who combinetheir products and services to meet customer needs, according to a Forum

report preparedwith Accenture. Software platforms are expected to emergethat will better facilitate data capture, aggregation and exchange acrossthe ecosystem, helping manufacturers create and monetize new productsand services. The big winners will be platform owners and partners whocan harness the network effect inherent in these new digital businessmodels to create new kinds of value, the report says.Going forward “any industrial manufacturer should be part of one or moreecosystems, and this has implications for the way they operate theircompanies,” says Accenture’s Schaeffer. “It means having to open up tothe outside, but industrial manufacturers are not very comfortable withecosystems.”A number of other issues still have to be resolved. Cybersecurity remainsa serious concern. As machines operating critical infrastructure becomeconnected they become more vulnerable to cyber attacks. (See the storyon pages 18, 19.) And a majority of manufacturers have stalled in theirefforts to embrace Industry 4.0 technology. A study conducted by theWorld Economic Forum found that over 70% of manufacturers investingin technologies such as Big Data analytics, artificial intelligence or 3Dprinting do not take projects beyond the pilot phase.That is why the Forum is building a network of experts to help, says Helena

HOW FOURTH INDUSTRIAL REVOLUTIONTECHNOLOGIESARE CHANGING FACTORIES

ROBOTICSFactories and warehousesare becoming more and moreautomated

AUGMENTED REALITYTechnology is makingchangeovers on productionlines and maintenancemore efficient

COVER STORY

— P.9

have to multiply that.” The process gets bogged down because seniorexecutives decide to start by experimenting so “they say ‘let’s do robotics,let’s do a proof of concept around machine learning’ and so on,” saysSchaeffer of Accenture. “To cover the entire field you could do this forever.”Manufacturers need to develop a strategy for digital and figure out howthey want to tie it to their business, then put the right architecture andskill sets in place. “I would say manufacturing is the hardest spot on earth,if you want to put together all the technologies – IoT, AI, robotics – all thedisciplines and get them all to work seamlessly with your system,” saysSchaeffer.That said, “there is a lot of cutting-edge stuff to be done in manufacturing,”that can interest top talents such as data scientists and systems engineers,he says. It is up to management to create the environment to attract andkeep the right talent. They will not be able to do it all externally, he says,so they will have to build the existing skill sets in their employees andteach them new skills.“If I have one message it is CEOs really need to understand this, take itseriously and stop tiptoeing around with pilots,” says Schaeffer. “It is timeto move forward. China is embracing the Fourth Industrial Revolutionfaster than other regions and the gap is getting bigger.”

Leurent, head of future of production at the World Economic Forum.Concluding a year-long study with McKinsey, the Forum named the world’snine most advanced factories in September, recognizing the strides thewinners had made in embedding Industry 4.0 technologies. Haier’s factoryin Qingdao, China was among the winners, as were two other factoriesin China. A network comprised of the winners was officially launched inSeptember. They have all agreed to share their knowledge with othermanufacturing businesses.

Pilot PurgatoryThe manufacturing industry could use the help. “There is a reason for thepilot purgatory,” says Enno de Boer, partner and head of globalmanufacturingat McKinsey. “It is literally the complexity they are facing. When you tryto move to Industry 4.0 you are immediately confronted with 10 or 12different technologies that you need to master, from IoT to robotics andAI all the way to blockchain. You not only need to be at the forefront ofthe art of the possible, in order to drive impact you need to go beyond thetechnologies and think in use cases. Typically you need 15 to 30 use casesin a single factory. We have clients with over 200 factories so then you

ADDITIVEMANUFACTURING3D printing technology is beingused to manufactureeverything from orthodontics toairplane parts

INTERNETOFTHINGSIoT technology allowsfactory machines to communicate

THEOUTCOMEECONOMYManufacturers like tire-makerMichelin are leveraging thetechnology to sell outcomes aswell as products

ARTIFICIALINTELLIGENCEManufacturers are usingAI to reduce equipment downtime,spot production defects, improvethe supply chain, and shortendesign time


FLEXIBLE MANUFACTURING

controlled by around 700 SIMATICcomponents, is recorded,monitored,analyzed and optimized digitally.Machines and robots handle some70%of the value chain independently.Digital twin technology creates aholistic virtualmodel of the integratedproduct and production lifecycle –from product design to productionplanning, engineering, and execution,and service. A fully autonomouslogistics system is used during theproduction execution cycle to ensurea regular supply of materials andcomponents forcontinuousproduction,with 100% traceability. A cloud-basedInternet of Things (IoT) operatingsystem connects sensors throughoutthe factory. And flexible technologyenables different products to bemadeonthesameproduction line to increaseefficiency. Digitalizing production

A manufacturing plant inthe heart of China’s SouthwesternSichuan province owned by Germanconglomerate Siemens makesProgrammable Logic Controllers thathelp factories all over the worldcontrol and automate their facilitiesand machinery. It pumps out eightmillion such devices a year. Thatequates to about one every twoseconds. The ability to efficientlysupply theworld’s factorieswith over800 variants of Siemens’ SIMATICcontrollers and other electroniccomponents hinges on the fact thatthe plant is not only a consumer ofits own equipment but has alsosuccessfully implemented a wholearray of Fourth Industrial Revolutioncutting-edge technologies.Production at Siemens ElectronicsWorks Chengdu (SEWC), which is

has led to greater flexibility, shortertime-to-market, higher efficiency andbetter quality, enabling a four-foldincrease in output and a processquality rate of 99.999%, says SEWCGeneral Manager Li Yongli.It has also earned the Chinese plantrecognition as one of the mostadvanced factories in the world.

Lessons LearnedNine factories, including SEWC anda Bayer Pharmaceuticals plant inItaly, were recognized in Septemberby The World Economic Forum andMcKinsey for their strides towardembedding the technologies of theFourth Industrial Revolution intomodern production, improvingoperational performance in theprocess. (See the story about Bayer’sfactory on page 31.) Like the BayerPharmaceuticals plant, the Chengduplant has agreed to share what ithas learnedwith othermanufacturingbusinesses, to aid the adoption oftechnologies as part of anewprogramlaunched by the Forum.SEWC’s secret for success? “We atSiemens are also going through ourown digital transformation in ourown factories,” says Li. “We are abig manufacturer ourselves, withmore than 250 factories worldwide.We not only use our own softwareand automation tools but also takeadvantage of the insights we gainindailyusageandtake this informationback toR&D to continuously optimizeour products.” SEWC has adoptedsome of the digitalized productionprocesses that Siemens operates atits electronics plant in Amberg,Germany, where it has beenmanufacturingSIMATICProgrammableLogic Controllers since 1989. Andthe Chengdu plant has eagerly

anticipated and embraced newtechnologies as they develop. “Wefollow an agile concept andmethodology in the R&D andimplementation of new technologies;and usually start with pilot projectsbefore scaling up,” says Li.What’s more, he says, the plant hastaken the necessary steps to helpemployees andmanagement prepare,both mentally and physically, forgoing digital.To that end Siemensoffers an online program calledApplyDigitalization to Our BusinessTraining, to help all employees havea “digital mindset,” orient them tothe new digital environment andestablish one digital language. “Weencourage every employee of SEWCto take part in such a trainingprogram,” says Li. TheChengduplantalso continuously invests in theresearch and application of futuretechnologies by setting up learningcenters. More than 10 technologyknowledge-sharing teams have beenestablished at SEWC to imparttechnical know-how, best practices,and the results of research into cutting-edge technologies to employees. Thedigital age requires digital talent,says Li.So factories need to focus not juston how to motivate managementbut also employees. “Digitalizationis a journey rather than a result,” hesays. “A holistic view is needed todefine the long-term roadmap forthe digital upgrading of amanufacturing enterprise.Digitalization should not happenindependently, but rather have asynergy effect across all departmentsof the plant and be interpreted andsupportedbyeachandeveryemployeeof the company.”J.L.S.

GoingDigital— Fourth Industrial Revolution technologies enablehighly efficient flexible production at Siemens’ Chengduelectronics plant.

Siemens’ Chengduelectronics plant.

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DIGITAL TRANSFORMATION

TransformingaGermanGiantAnInterviewWithRahmyn KRESS,ChiefDigitalOfficerandChairmanofTheDigitalExecutiveCommitteeatHenkel.

Rahmyn Kress is chief digitalofficer and chairman of the digitalexecutive committee at Henkel, a142-year-oldmaker of chemicals andconsumer goods headquartered inDüsseldorf, Germany.Prior to joining Henkel, Kress wasmanaging director of technologyecosystems and ventures at the globalconsultancy Accenture. Kress alsoserved as the CEO of Digiplug, adigital technology company in Parisacquired by Accenture that provideddigital services to the world’s largestmedia giants.Earlier in his career hewas executivevice president of physical and digitaltransformation, supply chain andoperations at UniversalMusic Group.He first gained experience in dealingwith exponential changewhile there,when the first wave of digitaldisruptions hit the music industry.He recently spoke with Jennifer L.Schenker, The Innovator’s editor-in-chief, about Henkel’s digitaltransformation and the launch ofHenkel X, a new operating unit and

dedicated platform he designed forHenkel’s entrepreneurial journey.

You joined Henkel 17 months ago tolead its digital transformation.Where are you on the trajectory?R.K.: I think the better way to frameit is to ask “what are the goals thathave been set for the journey? Andare we executing well and at theright speed?” The first phase of ourdigital transformation is structuredaround three core pillars. The firstis digital technology. There the ques-tion is “Do we have the right toolsand capabilities to drive our businessforward?” The second pillar concernsour ability to become a more da-ta-driven organization. Are we ableto run analytics effectively to havethe right visibility on our operations?Can we create digital experiencesfor consumers and our businesspartners in B2C and B2B and B2B2Cenvironments? The third pillar cen-ters on digital innovation and ouroverall strategy. How do we buildinnovation and eventually transfer

this to our business units? One ofthe things that is very important tounderstand is that Henkel has threedifferent business lines: adhesivetechnologies, beauty care and laun-dry, and home care.In all of the business units we haveto look at thematurity of the techno-logies but also the skill sets of the in-dividuals driving the businesses. Inthe short term the goal is to act as acatalyst of change and use the entireactivity as an upskilling exercise.Have you been able to put the righttechnologies in place?R.K.:We agreed across the group atthe beginning of the year on theinitiatives we would be launching.We selected our global partners fordigital technology and data analyticsand after that we issued tenders tothemarketandwestartedimplementingthe digital architecture that will getus to where we want to be. That isan ongoing process, a process thatyou need to continuously fine-tunebecause technology isalwayschanging.When you deal with data analytics

the most important thing is not thedata itself but what are the problemsyou are looking to solve. What is thedata you require to support yourhypothesis?We started that process at the endof 2017. We are now working withour partners on extracting data outof our organization and are readyfor our first proof-of-concepts. Wehave aligned the processes, thegoverning structuresand theoperatingmodel across the group globally. Sowe are at the moment where wehave ideatedandbuilt,wehave testedand now – at the end of the quarter-- we can transfer responsibility fordigital tech and data analysis as wellas thedigital experience formarketingand customer engagement over toall of the business units. It is atremendousachievement inarelativelyshort period of time.What about changemanagement?R.K.: Digital innovation and thestrategy around it is a core initiativethat any organization needs to do


to transform itself. It is aboutamindsetshift. Many corporates try copyinga model where they say “we wantto act like a startup.” That is justimpossible. Large corporates, whilethey are undergoing the digitaltransformation process, have legacybusinesses that need to be run anddaily challenges that need to beovercome. That doesn’t mean theycan’t take what works very well atstartups and identify how to obtainan innovation culture by followingtheir own path. That is what led tomy thinking in creating Henkel X inFebruary.What is Henkel X?RK: Henkel X is an open innovationplatform that distinguishes itself bybeing very open to collaborationwitha number of different players. It isabout dropping the guard rail andworkingandcollaboratingwithothers.That is one of the biggest changesfor an organization – the shift fromthinking about products to thinkingabout services andmarketplaces. Tostop thinking about competitors and

start thinking about collaborationand peers. Henkel X helps us toachieve that through three “e’s”: itis about creating an ecosystem; it isabout creating experiences to fosternew ways of thinking, and differenttypes of activities and formats thatfoster innovation; and it is aboutexperimentation, i.e. new ways ofworking. From those three pillarswe are building a number of differentproducts and programs.Our Henkel X Mentor program isone of the areas. The members ofthe Henkel X mentorship club arethebrightestminds inentrepreneurshipand industrial thought leadershipwithdiversebackgrounds.MentorshipDays offer a unique chance for ourinternal colleagues to discussentrepreneurial ideas with thesementors, get their advice on a currentbusiness challenge or have anexchange on any digital topic thatthey are currently facing.Weattractedover100mentors inonly threemonths.For our first mentorship day one-third of the mentors flew in from all

over theworld andHenkel employeesfrom all different levels got to talkand share experiences with them.In addition to the mentorship clubwe have also introduced partnershipswith academic institutes ofentrepreneurship such as ESCP, a topbusiness school in Europe, whichallowus topresentbusiness challengeswhich the faculty then take on board.We will have further partnershipsin Europe and the U.S. to announcesoon. We are a founding partner ofAccelerateHER, an initiative inwhichmales in leading positions step upto encourage more women intechnology. I havebeenveryprivilegedto be elected to become an activemember of the World EconomicForum’s platform economy initiativethat focuses on the importance ofthat for Europe and its businessesand its overall future economy.Wehave partneredwith the FoundersForum to bring – for the first time –their conference to Germany toencourage founders and C-Suiteexecutives from big corporates towork together. Our “experience”initiatives include regular firesidechats and briefingswithmentors andindustry leaders. So far we have hadseven, and from there we havelaunched 18 ongoing live projectsin which our business units areworking together with startups tobuild proof-of-concepts. We havelaunched our first live version of theHenkel app which our employeescan access on their mobile phoneand tablets for daily news orinformation on innovation topics andwe have done a number of otherthings that allow us to get digitalfeedback from our employees.When it comes to experimentationwe are working with H-FARM [aglobal innovationhubon the outskirtsof Venice, Italy that combinesinnovation, entrepreneurship andeducation]. H-FARMallows us to tapinto a global network of startups andit gives us a place – outside of ourown environment – to go with our

partners and employees to innovatecooperativelyandbuildMVPs[minimalviable products], new businessopportunities and services. It helpsus install amindset of build,measureand learn.Last, but certainly not least, I havetakenover the responsibility of drivingtheHenkel venture business, togetherwith the business units, to look atwhat does venture really mean fora corporate and set the right levelof expectations.Where do you go from here?RK: My focus will shift in 2019 tofuture opportunities inmarketplacesand platforms, in deep tech and innew digital technologies with a focusonretailB2B2CandB2Cenvironmentsthat are not asset-based. To makethat plain it will be all about, on adaily basis, how to identify areas thatcould disrupt Henkel’s business aswe know it today. My job as CDOwill be tobecome theChiefDisruptionOfficer so that instead of beingdisruptedwe can anticipate and buildand invest in new areas and turnthe threat of being disrupted into aproactive “innovate or disrupt fromwithin” culture.What advice do you have for othercorporates?RK: No matter how visible it is forthose of us who have been involvedin digital transformation for a while,you should never underestimate thatit is still very new to many andtherefore you should not ignore thefear and discomfort of people. It isvery important therefore to be veryplainspoken in your communicationsand inclusive. It is paramount tobring as many people on board aspossible. The second point is thatthe biggest and the most importantpart of digital transformation is cultureand the cultural change required,which includes different ways ofworkingandgivingmore responsibilityto individuals so that they really feelempowered tomake a difference andbe a part of the change.J.L.S.

“Henkel X is an openinnovation platform thatdistinguishes itselfby being very open tocollaboration with a numberof different players.It is about dropping theguard rail and working andcollaborating with others.“

— P.13


In the Silicon Valley it is sometimes hard to differentiate theventure capitalists from the entrepreneurs. Both often wear hoodies andAllbirds sneakers and are obsessed with what’s trending. That’s not the caseat Henkel Ventures, the venture capital arm of the 142-year old Germanconglomerate, which specializes in adhesives, laundry and home care andbeauty products. “Wedon’t do cool or hip,” says Paolo Bavaj, head of corporateventuring at Henkel Adhesive Technologies.It all depends on one’s perspective. In themovie about themaking of Facebookthe character based on the American Internet entrepreneur Sean Parkerfamously says “You know what’s cool? A billion dollars.”The adhesives business unit, whichmakes adhesives, sealants and functionalcoatings for consumers, craftsmen and industrial applications, reportedrevenues of€9.38 billion in 2017, representing 47%ofHenkel’s total companysales. And Bajav’s mandate is to build new businesses in advancedmaterialsfor the adhesives business that could have a turnover of hundreds ofmillionsof euros in five to eight years.To feed those effortswith the right technologiesHenkel Adhesive Technologiesconducts its own R&D but is also reaching out to universities and startups.When Bavaj first starting interacting with entrepreneurs in early 2014, “Iwas impressed at how scientifically savvy the people in the startups were,”he says. “Theywere doing things thatwewouldnever be able to doourselves.”Henkel created its own company-wide venture fund in 2016, setting asidea total of €150 million for direct investments by all of its business unitsbetween 2016 and 2020. As a first step, Henkel invested in the followingventure capital funds: China Materialia, which specializes in investing inadvancedmaterials startups in China and adjacent Asian markets; Emerald

CORPORATE VENTURE

Technology Ventures, which has offices in Zurich, Switzerland and Toronto,Canada, and focuses on industrial innovation, including advancedmaterials;Pangaea Ventures, an advancedmaterials fund which has offices in the U.S.and Canada; and Firstminute Capital, a pan-European seed fund.

New MarketsThrough these four funds Henkel’s adhesive business has access to 2,500startups. “We check which ones are strategic to our core business, usuallyaround 200 per year, and we do detailed evaluations of 50,” says Bavaj. Sofar Henkel Adhesives Technologies has invested in five startups.Among them is Israel’s Copprint Technologies, which is in the field of printedelectronics, one of the key areas in which Henkel Adhesive Technologies issearching for innovations. Copprint, an advanced materials startup, hasdeveloped a novel technology for producing conductive copper inks that hasthe potential to replace silver-based ink methods and provide substantialcost benefits for a variety of printed electronics applications. Based on theincreasing demand for printed electronics, themarket for conductive inks isprojected to reach $2.8 billion by 2020, according to a recent IDTechExresearch report. Copper-based technologies have the potential to significantlyreduce costs. Today all solutions are still silver-baseddue to technical challengessuch as copper oxidation and expensive production processes.“Copprint has found a way to switch from silver to copper inks,” says Bavaj.“Silver is super expensive so if you can incorporate copper-based tech youcan substantially lower the cost of ink.” Copprint has demonstrated that itscopper ink can be applied without oxidation and it has already achieved

WhyHenkelAdhesiveTechnologiesisStickingWithStartups— The €9.38 billion unit is teaming with entrepreneursto build new businesses in advanced materials.

— P.15

technical product qualifications forprintedRFID(radio frequency identification)antennas. Such antennas are part of RFID tags that use electromagnetic fieldsto automatically identify and track objects such as products moving througha supply chain. Copprint says its printed RFID antennas offer significantadvantages in costs and sustainability compared to other existing methods.In addition to RFID and near field communication (NFC) antennas, itstechnology has the potential to be used in a broad variety of applicationssuch as 3D-printed electronics, wearables and smart clothing.“The applications are huge,” says Bavaj. “For example, this new type of inkcould be used for printing electronics systems used in next generationphotovoltaics, allowing us to enter into market segments that were notavailable to us before.” WhenHenkel takes equity stakes in startups it usually

takes less than20%. “Startups that acceptmoney fromHenkel expect somethingelse beside the money,” says Bavaj. “They want access to our footprint, ourbrand, our market channels and our customer base.”Henkel Adhesive Technologies is well-positioned to help the startups it workswith to scale, says Bavaj. It has 6,500 technical sales people on the groundandhooks into big industries such as automotive. “Very often large automotiveOEMs are reluctant to embrace cool tech from a young startup because theyare afraid the company could disappear in a few months,” he says. “But ifHenkel is behind the company as an investor it gives big clients some sortof security. This is why our brand is so important for them.”Henkel Adhesive Technologies only invests in an operating company if thereis sign-off froma relevant operatingunit. “Wealways involve them inevaluatinga startup because they need to provide the resources to help the startupsscale up,” he says. “If they are not excited about a particular investment itwon’t work.” When the unit works with startup companies “we work asclosely with them as necessary and as loose as possible,” says Bavaj. “Wedon’t want to tie them too tightly to Henkel because we recognize that theyhave their own business and their ownway of working. The point is wewantto support them but if we interfere toomuch it will be the end of that startupcompany.” The unit does not always take equity stakes. It has collaborationagreementswith some 35 startups. “Some of them are not looking formoneyand it is more about rolling their products out to our customers or reallyjointly developing a new technology,” he says.Regardless of the arrangement, he says the goal is to develop new lines ofbusiness for Henkel Adhesive Technologies out of startups’ technologies thatlook poised to be profitable and stick.J.L.S.

EXAMPLESOFSTARTUPSWORKINGWITHHENKEL

NBD NANOUNITED STATESWHAT IT DOES : Nano-materials thatcan repel water and oil on a variety ofservices such as glass, plastics, leatherand fabrics.

www.nbdnano.com

COPPRINT TECHNOLOGIESISRAELWHAT IT DOES : A copper-based inkplatform for printed electronics.

www.copprint.com

KRIYA MATERIALSTHE NETHERLANDSWHAT IT DOES : Nanoparticle-basedcoatings that can be used for a varietyof applications, including flexible filmand glass.

www.kriya-materials.com

Production of adhesivesat a Henkel factory


In 1876 Fritz Henkel founded the company Henkel & Cie in Aachen,Germany. The company’s first product was a laundry detergent based onsodium silicate called “Universal-Waschmittel” (universal detergent). TodayHenkel’s detergents are used worldwide to do about 25 billion wash loadsannually. The consumer goods business has grown into a globally activeunit withwell-known brands, such as Persil, Purex and Pril, and encompassesnot just laundry detergents but laundry additives, dishwashing products,hard surface cleaners, toilet care, air care and insect control products.These products — a €6.6 billion business — are produced in 31 factoriesaround the world that are filled with legacy equipment. So what is thecleanest way to digitize all of these plants? “We have deployed already ona global scale but we don’t have one single lighthouse factory,” says DirkHolbach, senior vice president of Laundry & Home Care and managingdirector of Henkel’s global supply chain. “Our approach is broader. Whenwe find something interesting we pilot it in two, three or four sites and ifit works then we scale-up fast globally.”The approach is structured around a “4+1” strategy that Holbach believescan help the company’s supply chain become “faster, better and cheaper”:Analytics, robotics/automation, sensors and visualization plus end-to-endconnectivity. “We are trying a lot of things,” says Holbach. “The speed ofchange is so fast we can’t always bet on the right horse. We have to fail alsoand not get lost in all the opportunities, so we are going with a portfolioapproach. This portfolio of application is constantly reviewed and adjustedover time.” The digitization process began in 2013 when the companystarted systematically connecting all of its sites. The digital backbone extractsdata about the production process worldwide, giving the company insightsthat it uses to build applications. The unit is using machine learning to

ManufacturingtheFutureofLaundryandHomeCare— Pilot first, then roll out fast globally.

CONSUMER PRODUCTS

improve processes continuously. And, legacy controller equipment is beingupgraded so that factory printers can produce serialized codes, using anapp that tells the company where a product is produced, which line, whichwarehouse and for which customers. “At the moment eight printers in ourEuropean factories are testing this and we plan to roll it out to more than200 production lines by the end of 2020,” says Holbach. The company isexperimenting with 3D printing in the production of its home care productsand with augmented reality (AR). AR is being tested in factories in SpainandNorthAmerica for changingproducts onproduction lines andmaintenance.Using AR headsets to digitize paper-based instructions is expected to reducedefect rates, decrease training times and increase yield. But “digitizing allof these different steps in the system takes a lot of effort,money and resourcesfor rather incremental benefits,” says Holbach. “At the moment it is not yetat the very top of our list.”Some 1,600 people working in Laundry & Home Care are using cloud-based, end-to-end analytics to visualize the supply chain. Machine learningalgorithms are being used to improve demand forecasting capabilities. Thebusiness unit is also testing digital twinning technology that involves creatinga digital replica of physical objects. It has run one pilot in the U.S. where itoperates some of its largest factories.Holbach says Laundry & Home Care is not yet ready to embrace digitaltwinning on a grand scale. “You have to pay six or seven digits just to licensethe technology and then pay seven-digit amounts to digitize a large numberof factories, so you need to have a real business case,” he says. “If you arebuilding a completely new digital plant for millions of dollars then theinvestment for a digital twin is worth it, but we don’t see the margin ofbenefit for this technology at themoment. We are not pursuing this activelybecause we think a smart startup will come along and figure out a fasterand cheaper way to digitize.” The Laundry & Home Care unit regularlyworks with startups. (See examples below.) “We are using a good mix oftraditional big industry players but also newcomers,” Holbach says.

Change from the Bottom-UpButgoingdigital “isnotonlyaboutbuying technologyandputting it somewhere,we have to take the entire organization along,” he says. “It is a big change-management endeavor. It is one of the reasonswedon’t have single lighthousefactories. We want to involve as many as possible. You can’t do this topdown. You have to have a bottom-up process that comes with training andskills assessment because the jobs of people will change. We usually recruitmechanical engineers, now it is more and more about systems and dataanalysts. We also need more systems engineers. We are hiring for theseprofiles but many others are too, so you have to be creative about how toengage good people.”Earlier industrial revolutions took several decades to fully materialize, notesHolbach. This one will happen faster but it is likely to take more than adecade. “I personally believe we have way more to learn,” he says. “We areonly at the beginning of what technology can bring us.”J.L.S.

— P.17

EXAMPLESOFSTARTUPSWORKINGWITHHENKEL

ONE LOGICGERMANYWHAT IT DOES : Provides a datascience platform and data analysisexperts to improve forecasting.

https://www.onelogic.de

MICRO-BIOLYTICSGERMANYWHAT IT DOES : Patented processdigitizes liquid substances such asdetergents while they are beingproduced. Data collected provides fast,reliable information on changes andimpurities.

https://micro-biolytics.com

DOKS INNOVATIONGERMANYWHAT IT DOES : Automatedstock-taking and inventory manage-ment based on smart multi-sensorsand different autonomous carriervehicles such as drones. Henkel istesting the technology in Serbia andSpain.https://www.doks-innovation.com

The production of Somat dishwashing soapat a Henkel plant.

AT A GLANCE: HENKEL’S LAUNDRY & HOMECARE BUSINESS

The company’s first product in 1876 was a laundry detergent. Today Henkel’sdetergent washes about 25 billion loads annually— The consumer goods business includes well-known brands Persil, Purex or

Pril, and also encompasses laundry additives, dishwashing products, hardsurface cleaners, toilet care, air care and insect control products.

— The Persil brand, sold in more than 50 countries globally, generated sales ofmore than €1 billion in 2017.

— Total sales generated by the Laundry & Home Care business were €6.651billion in 2017.

— The proportion of sales from products successfully launched in the last threeyears was around 45%.

— 19% of Henkel’s 53,000 Henkel employees worldwide work in Laundry &Home Care

— Laundry & Home Care represents 33% of Henkel group sales (47% come fromAdhesive Technologies, 19% from Beauty Care)

— The Laundry & Homecare unit operates 31 factories worldwide

P.18 — THE INNOVATORP.18 — THE INNOVATORP.18 — THE INNOVATOR

In 2017 NotPetya ransomware caused an estimated $10 billionin damage as it shut down ports, disrupted shipping, infected factories andhit power grids. Such havoc is entirely predictable. The Industrial Internetof Things (IIoT) is expected to transformmanufacturing, energy, agriculture,transportation and other industrial sectors of the economy that, together,account fornearly two-thirdsof theglobalgrossdomesticproduct.Unfortunately,many of these companies are unprepared for the potential risk and liabilitythat may be brought on by connecting new technologies with old-worldsystems, includingnew threats to public safety, physical harm, and catastrophic

EnGarde— Industrial control systems are an easy, tantalizingtarget for hackers.

systemic attacks on shared public infrastructure, says a World EconomicForum report on secure market incentives for IoT.As today’s economy continues to prioritize time-to-market and the profitabilityof solutions over security, the threat of serious physical, financial andinstitutional harm grows, making factories and other types of criticalinfrastructure an increasingly tantalizing target for state-sponsored hackers,cybercriminals and political activists. “There is more and more need forsecurity,” says Philippe Duluc, chief technology officer, big data and security,at ATOS, the European IT services giant. “The surface of attack is increasingevery day because we have this convergence between IT and objects. Andwith this evolution of global interaction we havemore andmore risks.” Justhow big the risk is can be hard to quantify. But in September, Germany’sdigital association Bitkom released a study that gives a troubling windowinto the magnitude of the problem. It revealed that 66% of the country’smanufacturers have already been hit by some kind of cyberattack, resultingin $50 billion in losses to the German economy.Groups like Bitkomare calling onmanufacturers to take such threats seriously.As networks expand and more objects get connected, the ripples from anyattack can spread rapidly. Yet it’s easy to overlook such dangers.Manufacturerslook out over factory floors filled with machines and control systems thatin some cases have been in place for decades and are dazzled by the potentialto revolutionize that equipment by packing everything full of sensors, installingrobots, harvesting rich data sets, and using artificial intelligence to optimizeit all. The problem, say security experts, is that the old equipment never

— P.19— P.19

CYBERSECURITY

required much security, since it was manually operated, or only connectedvia internal networks. Critical infrastructure providers such as factories arethen adding sensors, robots, or other types of IoT equipment that also lackbasic security, introducing yet more weak entry points for hackers. “Whenyou have a large volume of operating systems, it creates vulnerabilities,”says Adam Kujawa, director of malware intelligence at Malwarebytes.The older Industrial Control Systems, or ICS, make the security industryespecially nervous. ICS refers to the technology that triggers a machine toperform a task or operate in some way. Such controls were at the center ofan infamous hack on a steel mill that Germany’s federal agency for digitalsecurity disclosed in great detail four years ago.In that case, hackers launched the attack by sending “phishing” emails thatlooked legitimate, but which included an attachment that installedmalwarewhen opened. This got them into the office network, and from there theywere able to navigate into the software inside the steel mill. Once there,they seized the control systems and were able to stop a blast furnace fromactivating security settings, which caused systems to fail and damaged themill. Those tactics have evolved, leading to themore recent attack that shutdown a Middle East plant late last year. Security firms said they detected apiece of malware called TRISIS that was optimized to attack ICS. Whileother attacks had targeted controls, TRISIS targeted the safety systems,meaning that the systems thatmight trigger alarms or emergency shutdownshad been compromised.

Mitigating MischiefMore than twodozen companies, governments, organizations anduniversitieshave been collaborating with the World Economic Forum to co-design theIndustrial IoT Safety and Security Protocol. This first-of-its-kind policyframework generates an understanding of how insurance might facilitatethe improvement of IIoT security design, implementation andmaintenancepractices. It also sets forth a universal set of security best practices thatshould be incorporated in all IIoT deployments. The next steps are to pilotthese incentive structures with governments, insurance firms and otherprivate sector companies, refine the underlying operatingmodels, and thenshare these outcomes to scale-up adoption internationally and across sectors.In themeantime this complex security puzzle has led traditional cybersecurity

leaders to develop specific solutions and expertise for Industry 4.0. TrendMicro of Japan, for example, offers extensive guidance to industrial customerson how to design their networks to limit access and potential fallout bysegregating some operations. The company has also developed computingequipment that can be installed on ICS networks to monitor traffic as wellas software to continually scan for vulnerabilities and mischief.“The exponential growth of highly-available wireless networks coupledwithan equal growing market of cheap and commercially available IoT devicesis changing the risk equation,” says Ed Cabrera, the chief cybersecurityofficer for Trend Micro. “The threat landscape is changing, making it moreprofitable for cybercriminals to hold factory floors and hospitals for ransom.”Unfortunately, cybersecurity firms face the challenge of explaining theseissues to executives in industries where the knowledge base and experienceis low.Christian Polster, chief strategy officer for theVienna-based cybersecurityfirmRadarServices, says the company has developed awide-ranging platformthat allows industrial customers to monitor operational and informationaltechnology from a single security center. But reactions vary widely whenPolster explains to a factory owner why such a comprehensive approach isneeded. “Very often they are in the stagewhere they say they have a scannerand a firewall, and that’s it,” Polster said. “And then it’s very hard to convincethem. But if they have a CIO and compliance programs, then it’s a signalthat they are on their way to understanding what they need to do.”Urgencymay be growing as Industry 4.0 adoption accelerates. San Francisco-basedNozomiNetworkswas founded in2013 to focus specifically on industrialsecurity. It has developed a comprehensive industrial security platform thatmonitors all aspects of the network for vulnerabilities andmalicious traffic,and pulls it all together into a central management console. The companyhas raised $54 million in venture capital, including a new round of $30million at the end of September. Investors were no doubt responding to thehuge market opportunity.“Next year is going to be thefirstmainstreamyear for industrial cybersecurity,”says Edgard Capdevielle, Nozomi’s president and CEO. “We have passedthe tipping point. People want more integration and a lot more intelligencein the production process, which creates more risk. Everyone has to careabout security. If it’s connected, it’s exposed.”Chris O’Brien

INDUSTRIALCYBERSECURITYSTARTUPSTOWATCH

CYBERXUNITED STATESWHAT IT DOES : Provides an industrialcybersecurity platform for ongoingrisk assessment that has the ability todetect unusual traffic sent betweentwo machines, or M2M. Behavioranalytics model industrial controlsystems to determine whether thereis suspicious activity.www.cyberx-labs.com

NOZOMI NETWORKSUNITED STATESWHAT IT DOES : Monitors networkswhich blend Industry 4.0 connectivitywith traditional machinery controls.Its SCADAguardian appliance scans ITand operational technology networksfor unusual traffic, pulling data into itsCentral Management Console.

www.nozominetworks.com

CLAROTYUNITED STATESWHAT IT DOES : : Specializes in securitysoftware to protect critical infrastruc-ture such as electric grids, transporta-tion networks and factory floors fromcyber attacks. Customers includeelectric utilities, oil and gas companies,chemical manufacturers, watercompanies, and manufacturers.www.claroty.com


The clothing retailers Zara, Forever 21 and H&M improved supplychain management, famously reducing product cycle times fromninemonthsto nine weeks. It is called Fast Fashion – or in industrial parlance just-in-time – which means the fabric from the mill doesn’t sit in a warehousebut shows up at the factory precisely when it is needed.Bombsheller, which claims to be theworld’s first fully-programmable clothesfactory designed to deliver customized garments, cuts nine weeks to ninehours. It is an example of how traditional business-to-consumermanufacturingis set to shift to faster, more-personalized manufacturing, largely drivenby consumer demands.“We literally never make a product until someone clicks ‘buy now’ andtells us what color they want. Usually, within 24 hours it is on its way toyou. That’s the model,” says Pablos Holman, a hacker, inventor and futurist.He now works for former Microsoft Chief Technology Officer NathanMyhrvold at the Intellectual Ventures Laboratory on the West Coast of theU.S., where a wide variety of futuristic invention projects are under way.Holman built Bombsheller a little over five years ago on his own time andon his own dime – to prove it was possible and would likely be the futureof manufacturing. Holman’s hunch proved to be prescient. Customizedmanufacturing is moving from possible to probable and looks poised todisrupt the $2 trillion apparel industry as well as the production of manyother goods. Jack Ma, executive chairman of Alibaba, calls it “the new

FastFashionTakesonaWholeNewMeaning— Going forward, robots will speedily make customorders for people in the color, shape and size they want.

RETAIL

manufacturing.” “In the past, it would be impressive if an assembly linecould produce 2,000 of the same garments in five minutes,” Ma said in aspeech in September during Alibaba’s annual cloud computing conferencein Hangzhou, China. “Today onwards, making 2,000 different garmentsin five minutes will be more impressive,” Ma said, adding that modernconsumers aren’t satisfied with mass-market fashion and are demandingunique outfits.Closely related to Alibaba’s NewRetail strategy, a consumer-centric approachthat merges online with offline for seamless shopping experiences, NewManufacturing will greatly impact traditional manufacturers in the next10 to 15 years, Ma said. “New Retail seeks to redefine the retail sector,”Ma said in his speech. He added that new manufacturing “will soon bringa wave of threats and opportunities to the manufacturing industry inChina, and around the world. We must be prepared.”According to Ma, the lines between different industries will be increasinglyblurred, and the manufacturing, tech and service sectors will becomemoreinterconnected. “You can’t have one without the other,” he was quoted assaying. “Data analysts and algorithm engineers of the future will not beworking in-house at Internet companies, but in manufacturing facilities.”

Upending an Entire IndustryHolman is blunt about why he launched Bombsheller: “We started thecompany to upend an entire industry.” “That is what disruption is,” hesays. In Silicon Valley the attitude is “we are not going to try and fix yourindustry. We are going to start from scratch and we are going to create aparallel industry using all the superpowers we get from our computers.”The apparel manufacturing industry is ripe for disruption, he says. “Whenwe show Bombsheller [to traditional retailers] they all wish they had thiscompany,” says Holman. The reason? Inventory management. “They allhave to guess nine months ahead what will sell and send back orders toChina. And they always guess wrong,” he says. That leads to liquidationsales, which “devalues their brands.” On the other hand, if they don’torder enough, “they are spending money to market things that have soldout… The winners are the companies that have lost the least.”Bombsheller usesmicro-production technology tomake only one customizedproduct so no one is expecting it to overtake the likes of Zara or H&Manytime soon. But the fact that it can make customized products fromquality fabric and turn them around in a day at a price within reach formany people underscores the changes that Industry 4.0 will bring.Bombsheller automates a lot of what both factories and retailers do. Patternsuploaded by designers go on sale online within one hour. People still dothe sewing but Holman suspects that will not be the case for long. For themoment producers of robots are focusing on automating high-value tasks

— P.21

like surgery. But, he says it makes more sense to focus on automatingsewing. “It is a two trillion dollar industry and nearly every human onEarthwill come back every year for something new,” he says. Going forward,robots will increasingly make custom orders for people in the color, shapeand size they want, he says.

Customization is ComingThat’s radically different from the way manufacturing is done right now.But soon, say pundits, no manufacturer anywhere in the world will beunaffected by Industry 4.0. This new industrial revolution is driven bychanges in consumer expectations – they want customizable productsdelivered in Internet time – as well as the convergence of new technologiessuch as The Internet of Things, collaborative robotics, 3D printing and thecloud, together with the emergence of new business models. To remain

competitive industry observers say factories will have to accommodatecustom designs and be able to make rapid changes to the products beingproduced. To do that they will have to: use the Internet of Things andother technologies to digitize the entire process; reduce time to market;integrate their supplier and production networks through Internet-basedproduct lifecycle management so that employees throughout the networkcan collaborate; have semi-autonomous robots working alongside humansto accelerate production while ensuring quality; and analyze data collectedabout customers to offer a plethora of new digital services. “Customizationis a key trend,” says Olivier Scalabre, a senior partner and managingdirector at the Boston Consulting Group (BCG). “And with new Industry4.0 manufacturing it will be possible to satisfy this demand.”Early examples includeAdidas’ high-tech Speedfactory,which uses automationand 3D printing technology to support small-batch production of customizedrunning shoes tailored to-consumers near the production sites. The firstSpeedfactory was opened in Ansbach, Germany in early 2017, and anotherhas since opened in the U.S. Clothes and shoes are not the only itemsbeing personalized. BCG has opened 10 innovation centers around theworld to showcase how production lines will change. Among them is afacility near Paris that produces customizable scooters. “We are doing this

A model wears made-to-order leggingsproduced by U.S.-based Bombsheller,which claims to be the world’s firstfully-programmable clothes factorydesigned to deliver customized garments.


to demonstrate the impact of Industry 4.0 to our clients,” says Scalabre.During the third industrial revolution factories were designed accordingto a few guiding principles: make a lot of one product and get better andbetter at doing it while decreasing costs. The objective was to specializefactories by product and move them offshore, where labor costs are lessexpensive. So the world ended up with mega factories, specialized byproduct, far away from consumer markets.Technology is changing that. In the old system, switching a productionline from one product to another required stopping the line, cleaning it,and resetting all the tools and the parameters. Thanks to collaborativerobots and augmented reality tools, manufacturers can switch productsat almost no cost, Scalabre says. What’s more, the introduction of IoT anddigital twinning can boost productivity by 20% to 30%. Manufacturersnow have a lot more flexibility. They don’t need to go offshore to obtainproductivity gains because the new factories are much smaller so they canbe closer to consumer markets. All this means that whereas products wereonce made to specifications, now they can be made to order, says Scalabre,driving the trend toward personalization.Take beauty products. Now, a consumer can go into a shop, have theirskin analyzed and order a special blend that a small, nearby factory deliverswithin a few hours. Or running shoes. Consumers can go into a Nike orAdidas store, have a 3D model made of their feet and order customized3D-printed sneakers. While today such orders only represent a smallpercentage of global production there is a clear demand from consumersfor “my cream, my shoes, my clothing,” Scalabre says. “Every industrialcompany that is making a choice about a design of a new factory in the

next 10 years is basically thinking about this at this very moment,’ he says.“There will not be 100%mass customization – it will likely impact maybe15% to 30% of the market -- but it is happening. The traditional valuechain will be broken apart and all the downstream manufacturers willmove closer to the consumer market.”China is among the fastest to embrace Industry 4.0 technologies, saysScalabre. “It will be one of the few countries in the world that will leadthe way,” he says. “It will no longer be the factory of the world. It willbuild local factories for local customers.” Given that the next billion consumersin China are projected to inject more growth into the economy in the nextfive years than the top five mature European markets together, targetingtheir home market will make economic sense.

A Lesson in DisruptionSo what can other industries learn from the disruption of manufacturing?“You may not care at all about apparel but you should consider this as aroadmap for technology-based disruption,” says Bombsheller founderHolman. “If we have surgical robots and self-driving cars then we willhave self-driving sewing machines that allow us to re-engineer the apparelindustry. That is what we are trying to show people.”He warns industry leaders, “you are not immune. Don’t fixate on sewingmachines because with the adoption of machine learning there will besomething analogous in your industry and people you never heard of whohave just dropped out of college will do an end-run around you.”J.L.S.

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A robot holds a customized shoe in anAdidas Speedfactory

“Inthepast, itwouldbe impressive ifanassembly linecouldproduce2,000ofthesamegarments infiveminutes.Todayonwards,making2,000differentgarmentsinfiveminuteswillbemoreimpressive.”

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with the launch of Nokia’s DigitalCreativity Lab in Munich, Germany,toward the end of 2017. The finalstep in the proof of concept was thecreation of a moveable minielectronics factory that was able tocomplete the full manufacturing ofa printed circuit board as well asrobotic assembly and testing. ANokia-led group – which includesFactory-in-a-BoxpartnersBeta Layout,DHL, Fuji, HARTING, Isel, Isolec,MTEK Consulting, Mycronic, RehmThermal Systems, Viscom and 42Q– showcased this application atHannoverMesse, aGerman industrialtechnology trade show, in April.

Industry AgnosticManufacturing inside the containersis not limited to making electronics,says Giloth. “We started withelectronics due to the specific needsof that industry but the Factory-in-a-Box is industry agnostic,” he says.Manufacturers can’t use the portablefactories for die casting, a metalcasting process that involves forcingmolten metal under high pressureinto a mold, but they can make

Traditionalmanufacturersare under market pressure to to workfaster and be more flexible at thesame time they are making the slow,and sometimes painful, transitionto digital. Enter Nokia’s Factory-in-a-Box, which turns cargo containersintomini-manufacturing sites, repletewith high-speed Internet of Things(IoT) connectivity, robotic assemblyand other Industry 4.0 technologies.The factory-in-a-box can be packed,transported and brought into serviceat a new location within a matterof hours.ResearchfirmGartnercalls it “acreativeway to decentralize manufacturingcapacity into smaller, portable sitessupportedbyanecosystemofpartners.”Nokia’s idea originated as it lookedtoward the supply chain of the future,with the introduction of robotics,IoT solutions, and the cloud. It ispart of Nokia’s Conscious Factoryproject, the company’s vision of howfactories and networks should worktogether, says JohannesGiloth, seniorvice president of global operationsand chief procurement officer atNokia.The project was accelerated

anything that requires 3D printersto be connected together.“There are endless use cases,” Gilothsays. Among them:— Assembly in country of origin:

A container can be driven orshipped to a location, build therequired volume locally, and thenbe moved again.

— New product introduction: Timeto market is a competitiveadvantage. The Factory-in-a-Boxcan be used for fast prototypingof new products and quick fixes,services that could appeal tostartups as well as traditionalmanufacturers. When they areready for mass production, theycan go elsewhere.

— Disaster recovery:When a naturalor man-made disaster strikes a

business a portable plant can helpdeliver critical customer orders.

— Ramping up and down: Factory-in-a-box can be a handy standbysolution, helping enhance capacitywhen needed.

— Training: The portable unit canbe used to train factory workers.

— Limited trials: Universities coulduse the mobile units for specificprojects or experiments.

The containers are Lego-like somanufacturers can easily configuremore than one on-site. Pricingdepends on use cases, Golith says.Nokia expects that bigmanufacturerslike FoxConn or Flextronics mightbe interested in buying 10 or moreof the portable factories and keepthem on hand to enhance capacityas needed, Giloth says. Smallermanufacturers, startups oruniversitiesare likely to rent them. The rentalfee will depend on what kind ofequipment and connectivity isrequired for particular applications.Giloth says Nokia expects to signits first commercial contracts for itsFactory-in-a-Box in the comingmonths.

Factory-in-a-Box— Nokia and its partners are offering an agile – andportable – form of Industry 4.0 production.

A robotic assembly lineinside Nokia’sFactory-in-a-Box

P.24 — THE INNOVATORP.24 — THE INNOVATOR

TOP 25INDUSTRIALINTERNET STARTUPSTO WATCH

MAANAUNITEDSTATESWHAT IT DOES: Maana’s knowledge graph, coupledwith advanced AI algorithms, semantic searchand deep learning, help industrial companiesmake faster and more relevant decisions.Investors include Shell, Aramco and Intel Capital.

www.maana.io

FETCH ROBOTICSUNITEDSTATESWHAT IT DOES: Develops autonomous mobilerobots that provide on-demand automation forwarehouses, factories and distribution sectors.Cloud-based software allows robotsto be operational within 24 hours.SoftBank and Sway Ventures are among itsinvestors.www.fetchrobotics.com

CARBON 3DUNITEDSTATESWHAT IT DOES: This 3D printing company hasdeveloped a system of connected manufacturingunit operations that enables repetitivemanufacturing of end-use products at any scale. Itstechnology is used to produce Adidas’ 3D sneakersas well as electronics, industrial components andmedical devices.www.carbon3d.com

FOGHORN SYSTEMSUNITEDSTATESWHAT IT DOES: An Internet of Things applicationplatform for remote monitoring and diagnostics,predictive maintenance, anomaly detection, alarmmanagement, and asset and yield optimizationsolutions. It targets the manufacturing, mining,energy and utilities, transportation, healthcare,retail, oil and gas, and aviation industries.www.foghorn.io

SEEGRIDUNITEDSTATESWHAT IT DOES: Self-driving, vision-guided robotsthat handle and deliver materials for warehouses,factories and the distribution sector.Clients include Amazon, GM, Whirlpool, Boeing,Jaguar, BMW and Daimler.

www.seegrid.com

KONUXGERMANYWHAT IT DOES: Offers an end-to-end IndustrialInternet of Things solution combining smartsensors and AI-based analytics to enablepredictive maintenance for industrialand rail companies.It raised $20 million series B financing last April.

www.konux.com

3DSIGNALSISRAELWHAT IT DOES: Developed a predictivemaintenance platform using acoustics. Hardwarethat includes wireless ultrasonic sensors ismounted near industrial rotating equipment. Itssoftware technology collects and processes thesound signals in order to detect issues beforemachines break down. Global research firm Gartnernamed it a cool vendor in June of this year.www.3dsig.com

DESKTOP METALUNITEDSTATESWHAT IT DOES: Developed a 3D-printing systemthat can mass produce metal components,allowing teams to go directly from compu-ter-aided design to rapid prototyping and volumeproduction.

www.desktopmetal.com

MNUBOCANADAWHAT IT DOES: Developed an IoT insights platformthat helps companies rapidly transform theirconnected equipment data into actionablebusiness outcomes. Investors include HSB Group, apart of Munich Re.

www.mnubo.com

TULIPUNITEDSTATESWHAT IT DOES: It has developed a manufacturingapp platform that introduces Industrial Internet ofThings (IoT) and advanced analytics into theworkflow. An intuitive drag and drop interface letsprocess engineers build apps, connect to the IoT,integrate with their systems and collect real-timedata, without having to write any code.www.tulip.co

SCADAFENCEISRAELWHAT IT DOES: Protects Industrial IoT/Industry4.0 networks from cyber threats. Customersinclude Global Fortune 500 companies in theautomotive, pharmaceutical, chemical and energyindustries.

www.scadafence.com

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COMMONSENSE ROBOTICSISRAELWHAT IT DOES: : Develops urban warehouses andoperates the sites with autonomous mobilerobots and a cloud-based software.The idea is to enable retailers to more easilydeliver products in city centers. It recentlylaunched its first automated center in Tel-Aviv.

www.cs-robotics.com

ELECTRIC IMPUNITEDSTATESWHAT IT DOES: A hard-and-softwareplatform-as-a-service purpose-built for theInternet of Things that enables commercial andindustrial applications. The aim is to empowermanufacturers to manage and quickly scale theirconnected products and services to millionsof users.www.electricimp.com

UPSKILLUNITEDSTATESWHAT IT DOES: UpSkill has developed Skylight, anaugmented reality platform for industrial use thatpromises to cut production time by25% and reduce errors to nearly zero.Customers include Boeing and GE.

www.upskill.io

PROGLOVEGERMANYWHAT IT DOES: Connected gloves that enablemanufacturing and logistics staff to work and scanproducts at the same time. Its integrateduser-friendly scanner enables users to gain timeas they work. Clients include BMW, Thyssenkruppand Lufthansa.

www.proglove.de

ACTILITYFRANCEWHAT IT DOES: Manages Internet of Thingsconnectivity for large corporate clients. Actility’slow-power, wide-area networking technologyallows long-range communications betweenconnected devices while promising to optimize bothcosts and power-consumption requirements.

www.actility.com

SEEBOISRAELWHAT IT DOES: Process-based Industrial AIsolutions for predicting and preventingmanufacturing disruptions.Customers include Decathalon and Ralph Lauren.

www.seebo.com

PRESENSOISRAELWHAT IT DOES: : Uses AI and machine learning todeliver predictive analytics for industrial systems.Its technology collects data at high speed andprovides real-time asset failure predictions basedon the monitoring of sensor’ signal data in thecloud.

www.presenso.com

CLAROTYUNITEDSTATESWHAT IT DOES: Specializes in security software toprotect critical infrastructure such as electric grids,transportation networks and factory floors fromcyber attacks. Customers include electric utilities, oiland gas companies, chemical manufacturers, watercompanies and manufacturers.

www.claroty.com

MOV. AIPORTUGALWHAT IT DOES: A software framework for mobilerobots used in warehouses and on productionlines. Features such as easy mapping,autonomous navigation and obstacle avoidanceenable industry-grade deployment of robot fleets.

www.mov.ai

ELEMENTAL MACHINESUNITEDSTATESWHAT IT DOES: This spinoff of MIT uses the cloud,Internet of Things and machine learning technologyto model and understand how processes in alaboratory or factory work. It then uses thatknowledge to help obtain consistent, repeatableresults, saving companies time and money.

www.elementalmachines.io

By Esther Attias

A contributing writer at The Innovator.Attias works as a freelance journalist forLes Echos and Les Echos START

NEXDEFENSEUNITEDSTATESWHAT IT DOES: Originally funded by the U.S.Department of Energy, it develops cyber securitysoftware for automation and control systemsused in factories or energy grids. Utilities andcompanies in the oil and gas, defense,manufacturing, water/wastewater andpharmaceuticals industries use its technology.www.nexdefense.com

SIGFOXFRANCEWHAT IT DOES: Aleadingglobal, low-power,wide-areanetworkthatpowersthe InternetofThingsbyenablingobjectstocommunicate.Thecompany isaboutto launchanewservicefortrackingobjectsbasedonbattery-lessstickersandhotspotscalledBubbles.

www.sigfox.com/en

KITOV SYSTEMSISRAELWHAT IT DOES: Uses computer vision, AI, advancedrobotics and Big Data analytics to conduct visualinspection of industrial manufacturing plants.It just raised $10 million in a Series A round, led byHAHN Group.

www.kitovsystems.com

UWINLOCFRANCEWHAT IT DOES: The Toulouse-based startupcreated an indoor location system that trackslarge volumes of assets with connectedbattery-less tags. Applications includemanufacturing, healthcare, logistics ande-commerce. In July it won a Volkswagen andSiemens Startup challenge.www.uwinloc.com


drugstore chain, as a customer.AgaMatrix went on to create the firstmedical device (a glucose meter)that could be plugged into an iPhone,andwas bought out by Sanofi. Next,Iyengar founded Misfit Wearables,together with John Sculley, the ex-CEO of Apple. The company’s healthtrackers created a data-rich, globallydistributed sensor network. ForIyengar it was an “aha” moment.Why not create a Fitbit for machinesand use that data to improve theyield of R&D trials in biotech andlife sciences aswell asmanufacturinganything requiring precision andrepeatable results?

No Waste, High YieldSo, Iyengar founded ElementalMachines, which uses the cloud,Internet of Things and machinelearning technology to model andunderstand how processes in alaboratory or factory work and thenuse that knowledge to help obtainconsistent, repeatable results, savingcompanies time and money. The

SerialentrepreneurSridharIyengar’sfirstexposuretoqualitycontrolproblems in manufacturing came notlong after founding his first company,AgaMatrix.Thestartup,whichcountedthe Frenchdrugmaker Sanofi amongits customers, specialized indisposabletest strips to calculate the bloodglucose levels of peoplewith diabetesor hypoglycemia. It contracted witha factory to make several millionstrips a day but quickly ran into batchyield issues. “I spent 53 nights in52 weeks in the same hotel in SouthKorea trying to fix the problem,”remembers Iyengar. He and his co-founder gathered all the data fromthe contractor, augmented that withsensors in the factory, and built theirown dashboard and predictionalgorithms. The yield went up tovirtually 100%, he says.“We were able to predict the qualityof output two to three months inadvance and if we saw a high riskwe were able to use our own techtools to pinpoint where the issueswere,” says Iyengar. That helped thecompany snag CVS, a large U.S.

WazeforFactories

Boston-based startup pulls data outof machines that aren’t currentlyconnected to anything, collates itwith data from equipment that isalready monitored, analyzes whatis happening in real time anddisplaysit on dashboards. The company,which has so far raised $11.5million,has 100 customers ranging fromsmall startups to big pharmaceutical,petrochemical and foodmanufactuers.“We are building the hardware andsoftware tools that allow companiesto model and understand howcomplex processes work and veryrapidly zero in onwhat went wrong,or right,” says Iyengar. “If things aredone correctly there is no waste andhighyield, and it canalsohelppreventdrugs and other products from beingrecalled.”When valves or other parts failmachines don’t always automaticallyreport the error. Many times errorsare only discovered after a beta trial,which can cost hundreds of thousandsof dollars, says Iyengar. Take thecase of a synthetic biology company,oneofElementalMachine’s customers.

— The slightest variable can lead to batch yield issues in factories and R&D labs.Elemental Machines is using a combination of Internetof Things and machine learning to ensure consistent outcomes.


shakes the mixtures. The shakingvibrations and the rate of aerationwere a little bit different so the cellsgrew at a different rate, expressedthemselves differently, impactingthe purity rate. “It took themmonthstofigure this out,” says Iyengar. “Nowthey are using our technology tomeasure all the variables that may

When it grows cells it warms themto 37 degrees celsius and the flasksare gently shaken to both blend andaerate the cell mixture.“The company was consistentlygetting bad results and couldn’tfigureout why,” says Iyengar. Finally, theydiscovered that a tiny screw wasloose in one of the machines that

affect their yields and outcomes.”Earlier thismonthElementalMachinesannounced it is partnering withPerkinElmer to allow scientists, aswell as lab and facilities managers,to access information at any timefrom a computer or mobile deviceabout what is happening inside theirlaboratories and be notified of

potential problems when conditionschange. While Elemental Machinesstarted by focusing on helping R&Dlaboratories control variables it hassincebranchedout intomanufacturing.One of its manufacturing customers,a materials science company, wasnotmeasuring temperature, humidityor light in the areas where it wasmixing chemicals.«Turns out the microclimate madea huge difference,» says Iyengar.Now the manufacturer is using thestartup’s technology tomeasure thoseelements and analyze the data.

Turn-by-Turn NavigationIyengar seesmanymore applicationsfor the technology. “Now that wehave a way to collect and analyzeall of this data it allows us to generatea numerical representation of qualityand use that to train our models onthe way the process is actually run,”he says. While it is still early days,Iyengar says he believes it will bepossible to develop a system for R&Dtrials andmanufacturing that wouldoperate much the same as Waze, aGPS navigation software that workson smartphones and tablets toprovidedrivers with turn-by-turn navigationinformation.Elemental Machines’ “Waze forfactories” could prove crucial notjust to traditional R&D labs andmanufacturers but to a variety ofemerging fields, such as personalizedmedicine and next generationmaterials like lab-grown leather andmeat, where precise and repeatableresults are crucial, he says.J.L.S.

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“Wearebuildingthehardwareandsoftwaretoolsthatallowcompaniestomodelandunderstandhowcomplexprocesseswork.”


How3DPrintingis ImpactingManufacturing— The technology is being used to manufactureeverything from orthodontic devices to cars and rocketengines.

By Chris O’Brien

MakerBotwasamongthefirst todevelopdesktopversionsof3Dprinters that put additivemanufacturingwithin reach of a newgenerationof entrepreneurs andproduct developers. Initially it saw sales grow fast butthey hit a wall when widespread consumer interest failed to materialize.Stratasys, a leader of industrial additivemanufacturing, acquired it in 2013for $604million.That’s not surprising because the industrial space iswhereanalysts believe the real potential of 3Dprinting lies. ResearchfirmGartnerprojects that by 2021 at least 40% of factories will embrace some kind of

additivemanufacturing technology, the termused to refer to industrial 3Dprinting. Some 1,768 metal additive manufacturing systems were sold in2017, up 80% from 2016, according to 3D printing analyst firm WohlersAssociates.The2018reportnotes therewere135companies selling industrial3D printing systems in 2017, up from 97 the previous year.Demand is particularly strong in industries such as medical devices,automotive, aerospace, defense and heavy industrial equipment. AlignTechnology, the orthodontic company that makes Invisalign aligners andretainers, a popular alternative to braces, manufactures every unit using a3D printing process. Last year Local Motors, a design startup, began 3Dprinting its self-driving shuttleOlli at itsKnoxvillemicrofactory.Thecompanysays 3D printing will cost half as much as traditional production whileallowing it to customize each shuttle to fit the needs of customers.SpaceX, founded by SiliconValley entrepreneur ElonMusk, has created theengine chamber for its SuperDraco rocket by 3D printing it from an alloythat combines nickel and iron. The company said 3D printing allowed it todramatically reduce the time fromdesigning tomanufacturing the chamber.At themore fantastic end of the spectrum, the European Space Agency hasannounced itwill create a village on themoon by placing 3Dprinters thereto “print” the various structures.

The Prospect of Lower Cost, Greater Flexibility andImaginative Designs3D printing has existed in some form for decades. Using plastics, resin ormetal, a machine reads a computer-design pattern and places layer uponlayer of material to create a three-dimensional object. As early as the1980s, large companies were turning to costly industrial 3D printing for

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prototyping. Later, in the ‘90s, 3D printing allowed mass customization ofitems such as hearing aids.Over the past decade advances in material science and design software,coupled with the falling cost of tools to power industrial printers, haveput the technology within reach of more corporate customers. The drawis the tantalizing prospect of lower costs, greater flexibility and customization,and imaginative new designs. Manufacturers eager to transition to industrial3D printing still face barriers such as material limitations, regulations, anda lack of awareness among industrial designers. But producers who areamong the first to find ways to overcome those challenges could gain amajor manufacturing advantage in the years to come. “When using itcorrectly, 3D printing can save money, reduce time to market, and resultin higher quality products,” saysWohlers Associates President TerryWohlers.“Using it for production volumes can result in new types of products andbusinesses.” The opportunities inspired the Obama administration to makeadditive manufacturing a critical part of the $1 billion plan announced in2016 to revitalize the American manufacturing economy. That initiativeincluded creating the National Additive Manufacturing Innovation Institute(NAMII) in Youngstown, Ohio to encourage further development of andinvestment in this technology. But a growing number of private industryplayers are making sizable investments on their own.

Airbus Helps Industrial 3D Printing Take-OffAeronautics giant Airbus has even created a position called Innovations’ALM (Additive Layer Manufacturing) Roadmap Leader to spearhead itsaggressive efforts, which include opening a material research laboratorynear Munich that focuses in part on additive manufacturing.Since that lab opened two years ago, Airbus has outfitted one of its airplaneswith a titanium 3D-printed bracket in the section between the wings andengines. It has also installed several other 3D printed products in variousplanes. The company’s Defense and Space Division in the U.K. has developedaluminum 3D printed components for its satellites. And APWorks, Airbus’3D printing subsidiary, has even built an electric motorcycle, called LightRider, made primarily from 3D-printed components including hollowedframes that are super strong and lightweight. More widespread 3-D printingcould massively reduce wasted material, generate big fuel savings withlighter aircraft and vehicles, and reduce the cost of replacement partswhich could be created on-demand rather than built in bulk and stored.“There are about 1,000 parts manufacturedwithin an aircraft,” says Gartneranalyst Pete Basiliere. “It really adds up.”

Chain ReactionGE has also invested heavily in additivemanufacturing, pumping a reported$1 billion into projects that span its business lines. One notable initiativeis a project to design 3D printed replacement parts for nuclear power

plants. In 2016, GE Hitachi Nuclear Energy was selected by the U.S.Department of Energy to spearhead this $2 million project. Fran Bolger,GE Hitachi’s Manager of New Product Introduction, says the nuclear groupwill try to take advantage of additive manufacturing already used in theconglomerate’s other businesses. With the nuclear project though, anynew 3D printed part would have to be reviewed by energy regulatorsbefore it could be deployed. Still, optimism about 3D printing runs highat GE. “We have to find the right opportunities and the right level of cost,”Bolger says. “The more complex the part is, the more savings you canpotentially get. There is work to be done in terms of qualifying the materialin a highly regulated industry. But we’re starting to think about applicationswhere we can deploy it.”

An Opportunity for StartupsThe surge in additive manufacturing has attracted a growing number ofentrepreneurs who are tackling issues like developing printers for differentindustries, as well as new materials, services and design software. “Whenwe started in 2013, we felt 3D printing was an amazing technology,” saysStephan Kuehr, CEO of 3Yourmind, a Berlin-based startup. “But the toolsyou needed to access the printers were way too complicated.” The company,which has created a platform to streamline 3D from the design stage toanalyzing materials and powering the printers, has raised $13 million inventure capital. Industrial 3D printing startups have attracted $1 billionin venture capital across 133 deals since 2013, according to research firmCB Insights. A large chunk is coming from corporations. GE Ventures, forinstance, has made six investments while its corporate parent has acquired

Airbus’ 3D printed mini plane THORwas designed to test the ability to use additivemanufacturing in aeronautics. All the parts exceptfor the engine were made by a 3D printer,Photo courtesy of Airbus.

“3Dprintingcansavemoney,reducetimetomarket,andresultinhigher-qualityproducts.”


ADDITIVEMANUFACTURINGSTARTUPSTOWATCH

CARBON 3DUNITED STATESWHAT IT DOES : Developed a 3Dprinting alternative that uses light andoxygen to allow users to produceproducts from resin. The company saysits combination of hardware andsoftware allows for more economicalprinting at a larger scale.www.carbon3d.com

3YOURMINDGERMANYWHAT IT DOES : Created a platform tostreamline 3D printing by speeding upthe workflow, from design to analyzingmaterials to powering the printers.The goal is to make 3D printing moreefficient and accessible to all teammembers.www.3yourmind.com

DESKTOP METALUNITED STATESWHAT IT DOES : HSystem can print 3Dmetal prototypes or small batches ofproducts. A larger version promises toprint metals at a pace and scale toreplace traditional manufacturingmethods.

www.desktopmetal.com

three related startups. BMW invested in 3D printing startups DesktopMetal, Carbon and Xometry. Siemens, the Germany-based industrial giant,has also been active, investing in startupMarkforged and acquiringMaterialsSolution.

Siemens’ and Henkel’s Roles in the MarketSiemens sits at an interesting crossroads in the additive manufacturingmovement. While the company sells a wide range of software and services,including additive manufacturing solutions, to other manufacturers tohelp them reinvent their factories, Siemens also uses additivemanufacturingacross a wide range of its own businesses. The company announced earlierthis year it was investing $35 million in a new manufacturing facility inthe U.K. focused onmaterials solutions. The facility will produce componentsfor aerospace, automotive and other industries. Yet Siemens still has plentyof challenges, says Heinz Neubert, who oversees additive manufacturingthere. The skills needed to design and conceive of 3D-printed productsare still in short supply. So Siemens created an internal design lab to helpdifferent divisions navigate the development process. Neubert notes thatthe technology is advancing so rapidly that adapting and staying currentrepresents a major challenge for manufacturers accustomed to evolutionsthat took decades.“Every year the machines are changing a lot,” he says. “You’re not talkingabout drilling machines whichmight remain the same for years. In additivemanufacturing, there is a tremendous amount of innovation happeningright now.” Other industrial players remain worried about the initial costsinvolved, unsure if the promised savings or design breakthroughs will reallymaterialize. The sprawling range of software, machines and materials can

also seem daunting. AndGartner’s Basiliere said there is still a limited choiceof materials that can be used in additive manufacturing. To address that,Henkel, the German chemical and consumer goods giant, earlier this yearannounced new 3D Printingmaterial solutions for industrial manufacturing.The materials, such as acrylic, silicone, epoxy and polyurethane adhesives,will increase the possible uses for additive manufacturing. The company isalso working to create customized materials for customers’ specific needs.

Enormous OpportunityFor Pat Dunne, vice president of advanced application development atRock Hill, South Carolina-based 3D Systems, this frenzy of activity andinterest in additive manufacturing is the realization of a dream. Foundedin 1986, 3D Systems was a true pioneer of 3D printers. Today, it providesadditive manufacturing systems used to produce artificial teeth, dentures,orthodontics, race car parts, replacement components for vintage autos,and even some parts of the Mars Exhibition Rover.For now, Dunne says his biggest challenge is educating industrial clientsabout the potential. “As more and more designers become aware of thecapability to use this to engineer products in a new way, that’s what’sreally going to drive adoption,” he says.


Local Motors, a design startup,began 3D printing its self-driving shuttle Olliat its Knoxville microfactory.Photo courtesy of Local Motors.

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PHARMACEUTICALS

employee laboratory scheduling, andaugmented reality (AR) devices toreduce changeover times whenswitching product lines. In each casethefront-endapplicationsareconnectedto 15 data sources and integratedinto the plant’s IT infrastructure.Ongoing operations are now moretransparent toemployeesonthe factoryfloor and they get real-time updateson performance, helping themmakesmarter decisions, react faster andutilize resourcesmore efficiently, saysHans-WalterHoehl, headof efficiency,innovation and projects within theproduct supply unit at Bayer’spharmaceuticals division.“The first results are very promising,”says Hoehl. “In certain areas, suchas coating tablets, we could furtheroptimize the manufacturing processandeliminate root causes for potentialvariations.Bayer’s pharmaceuticalsdivision plans to roll out the digitalinitiatives to other major sites in thenear future. And, it has agreed toshare what it has learned with other

Bayer’s pharmaceuticalsdivision, like units of most bigcorporations, generates lots of databut, until recently, managed toleverage only a small amount of it.Thanks to a pilot project – part of thecompany’s Advancing Digitaltransformation initiative – it’smakingbetter use of data, and its plant inGarbagnate, Italy has become a“lighthouse” factory teaching othershow to do the same.The plant, which produces andpackages pills, was named one of themost advanced factories in theworldin September by theWorld EconomicForum andMcKinsey. Nine factorieswererecognizedfor their strides towardembedding the technologies of theFourth Industrial Revolution intomodern production, improvingoperationalperformance intheprocess.The Garbagnate pilot, which waslaunched in September 2017, usesmachine learning and analytics toincreaseoperational efficiency, adigitaltwin (digital replica technology) for

manufacturing businesses, to aid theadoption of technologies, as part ofanewprogram launchedby theWorldEconomic Forum. The aim of theprogram is to build a network of themost advanced manufacturers toaddressproblemsconfrontingindustrieswhen they invest in advancedtechnologies. Earlier work by theForum found that over 70% ofcompanies do not take pilots beyondthe implementation stage due tounsuccessful implementationstrategies.Digitizing factories goes far beyondimplementing technology. “Whenthere is much more available data italso requires a change in the cultureof decision-making,” says Hoehl.

Making the Most of DataData scientists played a key role indigitizingBayerPharmaceutical’s plantbydeveloping thealgorithms that turndata into useful insights to enablemore efficient production of drugs.Three stepswere required to developthe algorithms. First, the data had to

be prepared: different data sourcesneed to be “cleaned” and connectedtobeapplicable foradvancedanalytics.Next, the algorithms had to be set upthrough amodeling process. Differentmachine learning techniques wereimplemented to enable the algorithmsto make predictions. Finally, thecompany needed to figure out howto visualize the insights in ways thatemployees on the factory floor couldinterpret easily.That is where technologies like thedigital twin come in. A machinelearning-powered digital replica of alaboratorynowtakes careof employeescheduling to maximize efficiency.“Output increasedby40%andpeoplelove it because it makes their workbetter and easier,” says Hoehl. “Wewant to make this readily availableto labs across the whole network.”AR,anothervisualizationtool, ishelpingsignificantly reduce the time it usuallytakes to change from producing oneproduct to another, increasing theutilization of factory machines, saysHoehl. Not only was the productiontime reducedbut employeesno longerhave to follow lengthy, complicatedpaper-based instructions, he says.That is not to say that digitizing afactory is without challenges.Structuring the data and putting thenecessary connectivity in place is alengthy process but competition forskilled data scientists is fierce. Digitaltransformation also requires lots ofemployee training. Internal expertson quality control, packaging andengineering need to be an integralpart of theprocess andmanagersmustlearn tomakedecisions basedondatarather than on prior experience only.Hoehl’s advice to factories embarkingonadigital journey?“Startbydesigninguse cases for the technology and thenselect a partner that can help yourather than trying to do everythingon your own.”J.L.S.

UsingDataasanAsset— A plant run by Bayer’s Pharmaceuticals division in Italy is considered one of theworld’s most advanced factories.

A worker at the Garbagnate plantusing augmented realitytechnology to reducechangeover times when switchingproduct lines.

P.32 —

ManandMachine— Robots are increasingly working next to humans,raising efficiency in warehouses, factories and labs.

By Chris O’Brien

ADDITIVE MANUFACTURING

At a warehouse in the French city of Bordeaux, Skypod, a robotcreated by startup Exotec Solutions, carries a bin that can hold up to 30kilograms as it wheels around using a laser scanner for navigation. Whenit reaches inventory racks, it grabs onto rails and glides upward until itfinds the correct shelf to retrieve the merchandise. The Skypod then zipsto a conveyor belt where a human uses a scanner to verify the goods.These robots save physical wear and tear on employees, who walk anaverage of 15 kilometers a day fetching goods. The robots can retrieve400 items per hour, compared to 80 for humans. They also allow Frenchecommerce retailer Cdiscount, which is trying to transform its logistics tostay ahead of competitors, to build shelves higher and pack items much

closer together, making better use ofspace in its existing warehouses.Vincent Valloir, head of supply chainplanning and innovation for Cdiscount,says using Exotec Solution’s robots ishelping it avoid the expense of buildingadditional warehouse space. It is alsoincreasing the number of same-daydeliveries it can handle, by improvingorder processing speed. But, rather thanreplacing employees with robots, thecompany is redefining their roles, trainingthem to do new tasks such asmanagingthe robotic systems ormonitoring digitalsystems.“This innovation changes the approachand the roles of everyone in theorganization,” says Valloir.For several decades, talk of automationhas conjured a bleak vision of a futurein which robots steal jobs fromworkersasmachines battle humans for economicdominance.But,as theCdiscountexampleillustrates, the emerging reality is apicture of cooperation, rather thanconflict, as robots andpeople increasinglywork side-by-side inwarehouses, factoriesand labs.As at Cdiscount, robots are fetchinginventory in warehouses to speed

The Panda is a collaborative robotic armdesigned by Munich-based FrankaEmika to perform repetitive tasks thatit can be taught by pushinga few buttons on its arm.

— P.33

fulfillment. They’re also being installed in production facilities to performa growing range of tedious, repetitive tasks. And in some cases, they’reeven being attached to humans in the form of exoskeletons to help withlifting and avoiding injuries.“Robots allow enterprises to bemore competitive and to run better, especiallysmall andmedium-sized businesses,” says Adrien Poinssot, Universal Robot’ssales development manager for France. “And if the work goes better, thecompany hires more people. There is a real synergy between robots andemployees.” Robots have been part of manufacturing for decades, primarilyused in heavy production lines for things like automobiles. Early modelswere considered hazardous to humans and some had to be caged. Andtheir size and cost meant they only made economic sense for such massiveoperations. Over the past decade, things have changed dramatically.According to the International Federation of Robotics’ latest annual report,global annual sales of industrial robots grew to 387,000 units in 2017, upfrom 294,300 the previous year. That includes 69,000 robots installed foruse in logistics, up from 26,300 in 2016, making adoption of robots in thissector one of the highest for any sector. Overall, robot sales are projectedto rise to 630,000 annually in 2021, benefitting established industrialrobot-makers such as Germany’s KUKA (now owned by Chinese electricalappliance manufacturer Midia), as well as a host of new players.The market is not without casualties. Rethink Robotics of Boston, whichwas co-founded byRodney Brooks, anAustralian robotics pioneer, announcedin early October it would shut down. Its robots were intended to usher ina new age of automation; one where machines would work safely next tohumans, rather than be confined to their own sections on the factory floor.That trend looks here to stay even though Rethink Robotics couldn’t getenough market traction.

Filling the Fulfillment GapA seminal moment in industrial robotics came in 2012 when Amazonacquired Kiva Systems for $775 million. Kiva had emerged as a leader inthe robotics revolution, having developed an inventorymanagement systemthat allowed machines to roam a warehouse, find goods, and then bringthem to a human packer waiting in front of a delivery truck. The acquisitiongave rise to Amazon Robotics, a Massachusetts-based company thatmanufactures mobile robotic fulfillment systems. It now reportedly hasproducedmore than100,000 robots used in the e-commerce giant’s fulfillmentcenters.The acquisition created a void because Kiva is no longer selling itsrobots to anyone else. As a result, a large number of startups have rushed

to fill that gap. Among them is Los Angeles-based inVia Robotics, whichhas designed a warehouse robotics platform for e-commerce distributioncenters and other fulfillment facilities. Founded in 2015, the company,which has raised $29 million in venture capital, says its inVia Pickerautonomous mobile robots can help clients increase fulfillment by as muchas 500%. “Warehouse automation is critical for retail businesses to streamlineworkflows, increase throughput and keep up with consumer demand,”says Lior Elazary, the company’s co-founder and CEO.The founders of Lille-based Exotec Solutions saw a similar opening. Foundedin 2015, the company has raised $21 million in venture capital for itsroboticfleet of order preparation robots, which it co-designedwith Cdiscount.Exotec Solutions CEO RomainMoulin says such systems are quickly movingfrom being considered a novelty to an essential tool for all warehouses.“The demand from the market is huge,” Moulin says. “And it’s going toplay a big role in leveling the playing field for everyone.”Beyond just finding and moving items, robots are increasingly beingemployed to perform straightforward chores like packing boxes and doingsome basic assembly of components.For example, Munich-based Franka Emika, which was founded in 2016,makes Panda, a collaborative robot designed to be easy to use out of thebox. (See the photo on pages 32 and 33.) The Panda can be programmedto perform tasks by pushing several buttons on the arm while guiding itthrough a series of maneuvers to “teach” it the process.The most well-known player is Universal Robots of Denmark, which hasbecome a leader in “cobots,” robots designed to physically interact withhumans in a shared workspace. Launched in 2005, the founders of theDanish company wanted to find a way to make large industrial robotic

“There isarealsynergybetweenrobotsandemployees.”

California. The company originally got its start designing exoskeletons forthemilitary and thenmoved intomedical versions to help disabled patients.Eksomore recently began getting inquiries from industry andmanufacturing.While companies have been focused onmaking workplaces safer, reducingthe number of accidents, they still want solutions to protect employeesfrom the long-term injuries that could prevent them from doing repetitiveor heavy work. In 2015, the EksoVest for industry was introduced. Thepassive device uses gas-filled springs to give employees a boost ratherthan using any electronics. As the number of workplace injuries drops,“companies are turning their attention to quieter problems like ergonomicissues,” says Zach Haas, senior product manager for EksoWorks. “This issomething that occurs when someone is doing their job absolutely correctly.”This past summer Ford announced it would roll out EksoVests to employeesin 15 factories around the world. The company says it wants to reducethe physical toll on employees from tasks like holding power tools overtheir heads all day. Haas says this is just one indication that exoskeletonsthat augment human capabilities are on their way to becoming standardequipment.“There was a time when people didn’t wear hard hats at constructionsites,” he says. “Now that’s standard. I think it will be the same for this.We’re having a hard time keeping up with the demand.”

ADDITIVE MANUFACTURING

INDUSTRIALROBOTICSTARTUPSTOWATCH

EXOTEC SOLUTIONSFRANCEWHAT IT DOES : Designed an inventorysystem that uses autonomous robotsand specially designed shelving tomake warehouses more efficient. Therobots roam the warehouse and thenslide up rails on shelves to find items.

www.exotecsolutions.com

COMMONSENSE ROBOTICSISRAELWHAT IT DOES : : IBuilding a system forautonomous sorting and shippingusing a combination of robotic sortingsystems and artificial intelligencesoftware to prepare orders.

www.cs-robotics.com

INVIA ROBOTICSUNITED STATESWHAT IT DOES : Robotics-as-a-service platform provides ecommercefulfillment centers with warehouseautomation technologies. The InViaPicker retrieves goods from shelvesand carries them to humans.

www.inviarobotics.com

systemsmore accessible to small andmediumbusinesses andmanufacturers.Today, the company sells three models of cobots, ranging from a table-topversion for light assembly to a large version designed for packaging andplacing items on pallets. The cobots can handle painting, assembling, andattaching labels, among other tasks. Most importantly, the cobots arerelatively simple to set up and can be reprogrammed for different jobs asa business evolves. The company, which was acquired by Teradyne in2015, has sold 25,000 cobots. “More and more there is a need to producethe right product at the right moment,” says Universal’s Poinssot. “Thecollaborative robot is one of the bricks of this new industry.”Poinssot says the company is continuing to try to expand the marketthrough an online digital learning platform called Universal Robots Academyas well as an online marketplace that sells accessories from third-partydevelopers. As with logistics robots, Poinssot says a big part of the appealis relieving employees of the most dreary, repetitive parts of their jobs. It’sthat focus on employee well-being that is a driving force behind anotherbrand of machines that augment workers: Exoskeletons.

Suiting UpABI Research has projected that sales of exoskeletons will grow from 5,000units in 2017 to more than 100,000 in 2025. Strapped to the outside ofemployees’ bodies, exoskeletons vary in design and sophistication. Somecontain enough sophisticated computing to justify the use of the termrobotics, serving as a kind of merger between man and machine.For instance, LG recently announced it was developing the CLOi SuitBot,an exoskeleton designed to reduce strain on human workers. Employeesstrap it around their legs and lower back and thewearable robot automaticallyadjusts itself as it senses a wearer’s movement. It can also connect to otherLG service robots, becoming a part of a network of automated devices.One of the first companies in this field was Ekso Bionics of Richmond,


The inVia Picker grabs itemsfrom warehouse shelves at a far greater pacethan humans, increasing efficiencyand freeing people for other tasks.Photo courtesy of inVia Robotics.

— P.35

apps, connect to the IoT, integratewith their systems and collect real-time data, without writing any code.Globalmanufacturers acrossmultipleindustries, including electronics,aerospaceanddefense,medicaldevices,footwear,pharmaceuticals,andcontractmanufacturing, are already usingTulip’s appplatform.AndTulip recentlyannounced it is teaming with BoschRexroth on an IOT-enabled “smart”workstation for the factoryfloor,whichcombines Bosch’smanual productionsystem with Tulip’s manufacturingapp platform. The workstations are

Despite all the hype aroundIndustry 4.0, manufacturing is still apaper-based world. Most of theworkforce still relies on paper-basedinstructions andoperating procedureswhilemanagers collect datamanuallyon paper and whiteboards.Now there are apps for that. Tulip, aspin-out of theMassachusetts Instituteof Technology (MIT), has developeda manufacturing app platform thatintroduces Industrial InternetofThings(IoT) and advanced analytics into theworkflow. An intuitive drag and dropinterface lets process engineers build

built to order and can be retrofittedwith hardware and software for afactory’s specific needs.Initial successwith largemanufacturersprompted Tulip to introduce what itsays is the industry’s first platform-as-a-service, allowingmanufacturersof all sizes to start using the servicedirectly from any Web browser. Themonthly plans, priced at $95 and$195, also include access to Tulip’s“app store”, a manufacturing applibrary comprised of customizablereal-world apps. There’s a 30-day freetrial for all apps, which the companysays is unique in the industry. So farthe library includes over 25 appsthat are ready to use or customizearound major use cases such aswork instructions, quality, leanmanufacturing,machinemonitoring,production visibility, training andauditing.ManufacturersusingTuliphavereduceddefect rates byup to98%, cut trainingtimes by over 90%, and increasedyield, saysNatanLinder, thecompany’sCEO and co-founder.Thales, a French conglomerate thatbuilds electrical systems and providesservices for the aerospace, defense,transportation and security markets,is one of Tulip’s customers. It beganwith two employees using Tulip’s

technology to digitizewhat had been30 pages of assembly instructions atanaviation factorynearTours, France.With Tulip’s technology each step isnow presented onto the work space,turning it into an immersive IoTexperience.Additionally, every movement of theworker and all the surroundingconditions are measured using IoTtechnology.That’s important because certainconditions and parameters have tobe validated before a worker cango to the next step, says FabriceDanigo, methodology and digitaltransformation manager for Thales’Avionics. He says that during a year-long test employeeswereable toworkfaster, saving 15 minutes per hour,and Thales could measure variablesat each step, averting problemsbeforethey happened.Based on the success of the proof-of-concept trial, Thalesplans to introduceTulip apps at its five avionics plants,four in France and one in Singapore.The roll-out will take a year, saysDanigo, the time needed for Thales,with Tulip’s help, to migrate thesolutions and transformall itsmanualprocesses into interactive ones.Tulip,whichwasnameda2018WorldEconomic ForumTechnology Pioneer,aGartner Cool Vendor, IDC Innovator,andFrost andSullivanEntrepreneurialCompany of the Year, is “rampingup as fast as we can as we areexpecting our business to grow veryquickly in themonths to come,” saysLinder. “There is huge demand frommanufacturers to change the waythey work. The technology is herenow, simple to use, relativelyaffordable and can be deployedovernight.”J.L.S.

AnAppStorefortheFactoryFloor— A U.S. startup brings people, machines and processes together for large and smallmanufacturers with its platform-as-a-service offering.


In thenext 10years, the Internet ofThingsrevolution isexpectedtodramaticallyaltermanufacturing, energy, agriculture, transportation andother industrial sectors of the economywhich, together, account for nearlytwo-thirds of the global gross domestic product (GDP).It combines the global reach of the Internet with a new ability to directlycontrol thephysicalworld, including themachines, factories and infrastructurethat define the modern landscape, says a World Economic Forum report.It will also fundamentally transform how people will work through newinteractions between humans andmachines. Dubbed the Industrial Internetof Things or IIoT, this latest wave of technological change “will bringunprecedented opportunities, alongwith new risks, to business and society,”says the report.As more connected devices come online and new services are developedfor them, many important questions remain, including how the IIoT willimpact existing industries, value chains, business models and workforces.That is where the Industrial Internet Consortium comes in. The IIC isbuilding testbeds that cost in the $10 million to $50 million range, toexplore new technologies, new applications, new products, new servicesand new processes and rigorously test them to establish their viabilitybefore coming to market, says Richard Soley, the IIC’s executive director.The testbeds represent the multiple use cases for the Industrial Internetof Things. They include smart buildings in Japan, a smart city in Ireland,an energy grid project in California and an agriculture site in India.The smart city project in County Cork, Ireland focuses on ambulancemanagement. The service allows National Healthcare Service data to beuploaded directly into ambulances and for paramedics to transmit live

information from the ambulance back to the National Healthcare Service.“I am pretty sure we save lives,” says Soley.The smart building testbed connects some 35,000 sensors that collect300 Terabytes of data a year. The project aims to determine if the datacan be used to both make people more comfortable and lower themaintenance costs of the building, he says.

Improving Order FulfillmentIn October the IIC announced results and updates to a Smart FactoryTestbed that is operational at two sites in Germany and at two sites inSouth Korea. The testbed’s network of factories allows manufacturerswho want to improve order fulfillment and create new businesses toassign flexible production resources across multiple sites, according toan IIC announcement. The testbed also allows factories to use “plug andwork” functions and data analytics.Also in October its Track & Trace Testbed generated the requirementsfor a new IIoT standard for tracking and tracing assets.

INDUSTRIAL INTERNETOF THINGS

EverythingisConnected— The Industrial Internet of Things linksthe machines, factories and infrastructure that drivebusiness.

— P.37

Through its work on that testbed aneed emerged for themanufacturersof sensors to be able to agree on away to publish the requiredinterpretation of the data that theyproducevia anElectronicDataSheet.The testbed, led by Bosch with theIIC member participants Cisco andSAP, developed the requirementsfrom a logistics use case, whichgathers data from transport-relatedassets to ensure transport-service-level agreementsaremetand logisticschains optimized.

The IIC has also just set up a new interface and web-based tool thatguides users through the analysis and planning of their own IIoT projects.Soley is also a member of the executive board of the IOTA Foundation(along with Johann Jungwirth, Volkswagen’s chief digital officer), which

bills itself as the first open-source distributed ledger – a type of blockchaintechnology that is beingbuilt to power the IoTwith fee-freemicrotransactionsthat guard the integrity of the data.The foundation, which is based in Germany, aims to help big corporatesuse blockchain technology to create new businessmodels and new revenuestreams. “We don’t yet have any IOTA test beds but a couple are beingdesigned,” says Soley.As blockchain adoption has increased over the last decade, early adoptershave been hit with sluggish transaction times and skyrocketing fees.IOTA says its technology better positions it to speedily handle largevolumes. Its distributed ledger does not consist of transactions groupedinto blocks and stored in sequential chains, but as a stream of individualtransactions entangled together called The Tangle.

Enabling the Emerging IIoTThe main focus of IOTA is to enable the emerging IIoT, according to thefoundation. But it says it also plans to be the transaction settlement anddata integrity layer for the “Internet of Everything.” This includes smartcities, smart grids, infrastructure, supply chain, financial services, peer-to-peer payments and insurance. It is just one example of how newentrants are attacking the needs of industry by developing sensors, cloudplatforms, networking infrastructure, as well asmachine learning softwareto transport or extract insights from the deluge of data that is nowemanating from the world’s machines.J.L.S.

“Thetestbeds[...] includesmartbuildingsin Japan,asmartcity in Ireland,anenergygridproject inCaliforniaandanagriculturesitein India.”

Electric grids, carsand smart buildings arebeing connectedby the Industrial Internet of Things


INTERNET OF THINGS

we want to cover the whole planetwe cannot rely only on groundantennas.”Sigfox is gearing up for asset tracking,which LeMoan considers “the biggestopportunity now for IoT.”

Bubbles and StickersThe French startup, which isheadquarterednearToulouse, recentlyannounced a newmovable hardwaretransceiver called a Bubble whichserves as a hot spot. The Bubble usesSigfox’s low-powerwide-areanetworkto connect to the cloud instead ofGPS,WiFi or Bluetooth technologies.“We have a simple vision,” says LeMoan. “You take data, you send dataover the air, and our many antennaswill catch the data. The fact thatthere is no connection necessarymakes us unique.”TheBubbles communicatewith state-of-the-art battery-free stickers Sigfoxhas developed that can be attachedto everything from a suitcase at anairport to goods in a factory thatneed to be inventoried.Le Moan says the stickers aim toreplace radio frequency identification

France’s Sigfox madeheadlines in 2014when it pierced theears of cows in the Pyrenees so thattiny modems could be inserted andtheir whereabouts tracked via itsdedicated Internet of Things cellularnetwork. The info was transmittedto researchers studying the movingpatterns of herds, an application thatwas considered novel at the time.Fast forward four years and Sigfox’sLow-PowerWide-Area network “cow-nectivity” has been extended tomillionsofobjects inover50countries.It’s rooftop base stations, which serveas transmitters, cover about onebillion people. “With Sigfox you canmove from Johannesburg to NewYork to Singapore and always be onthe same network,” says CEO andCo-Founder Ludovic Le Moan, ascheduled speaker at the FoundersForumx Industry In PartnershipWithHenkel Conference in Düsseldorf onNovember 8 and 9.Early next year Sigfox plans to launcha fourth satellite.“This way we will have a fullconstellation of satellites that willcomplement the ground networkthat we are rolling out,” he says. “If

(RFID) tags which were heralded asa high-tech way of tracking goodsin stores and in supply chains buthave fallen out of favor because theyuse a lot of power, only operate atshort range andwhen grouped closetogether can cause interference witheach other. He says Sigfox’s stickerscan track assets without any of thoseside effects.“The challenge of IoT is the cost of

solutions,” says Le Moan, “becausethere is a need to transfer data atthe lowest possible cost.” Servicescan then be built around it. Forexample, Sigfox sensors currentlytrack Michelin tires from the factoryto the end-customer. The concept ofBubbles is a new way for customersto knowwhere the device is, he says,“When you cross the path of a Bubblewith a sticker tracking device, likeat an airport, the sticker on yourluggage will know that it is passingby a Bubble it trusts, says Le Moan.He says he believes it will be possibleto get the cost of the sticker downto three cents or less, since they arebattery-free. “There are many, manyideas to link what we are doing withblockchain,” says Le Moan. Forexample, he says, if you want to beassured that your luggage will notbe opened when you leave it at theairport, an insurance company couldgiveaconsumeraguarantee.Attachingblockchain applications to the datain our network is something thatmakessense.But,hesays, thecompanywill stick to tracking goods, including“moo-vable” assets.J.L.S.

IgnoringTheHerd— Sigfox is pioneering new ways to track assets withBubbles and stickers TheBubbles

communicatewithstate-of-the-artbattery-freestickersSigfoxhasdevelopedthatcanbeattachedtoeverythingfromasuitcaseatanairport togoodsinafactorythatneedtobeinventoried.

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The industries that power the global supply chain have stubbornlyresisted radical change for decades despite being plagued by fraud, buriedunder mountains of paper, and suffering mind-boggling inefficiencies.This conservatismmakes their sudden love affair with blockchain technologyone of the crypto era’s most surprising twists. IBM and shipping giantMaersk have teamed up to develop an industry-wide blockchain platformthey believe can finally modernize an industry that still often runs onphone calls and handshakes. Retailers like Carrefour and Walmart have

HowBlockchain isChangingSupplyChainManagement— The technology is adding transparencyand efficiency to a system that still runs on phone callsand handshakes.

by Chris O’Brien

embraced blockchain as away tomake their supply chainsmore transparentin order to build more trust with customers. A host of startups have seizedon this trend to demonstrate that blockchain ismore than just the foundationfor cryptocurrency.The technology serves as an immutable distributed ledger that allows analmost limitless number of participants to record transactions. It is perfectfor supply chains because the transactions are transparent to everyone onthe platform, allowing for easy verification and a high degree of trust andsecurity. Any change to the record has to have the agreement of all parties.“Global supply chains are some of themost complex, multi-party ecosystemsin the economic landscape today,” says Maersk’s Mike White, who headsthe TradeLens blockchain project the company is co-developing with IBM.“Blockchain is one of the technologies that really changes the game.”The blockchain revolution is coming just in time for supply chains. A studyby Transparency Market Research projects that the value of goods movingacross the supply chain will almost double from $8 trillion in 2016 to$15.5 trillion in 2023.The projected growth is likely to strain the capacity of shippers but buildingmore ships, ports or other infrastructure can be a costly and risky proposition.Blockchain is appealing because it makes existing resources more efficient.Today, a product moving across the globe could involve 200 separateexchanges of data or paperwork and pass through 30 different parties asit moves from factory, to warehouse, to port, to customs, to a ship, andso on. These transfers are still often marked on paper, arranged by phonecalls, verified with a handshake, or maybe typed into a spreadsheet. Whensomething gets lost, or broken, or delayed, there is virtually no way for a

— P.41— P.41

SUPPLY CHAIN

company or consumer to know why. “We’re trying to address one of thebig challenges of the movement of cargo, which is the lack of visibility ofa container at any given time,” says Todd Scott, IBM’s vice president ofblockchain global trade.That led to IBM’s official announcement of TradeLens with Maersk earlierthis year. Maersk and IBM began exploring development of a blockchainservice in 2016 before officially announcing TradeLens in August. Thecompanies say 94 organizations have agreed to participate, includingshipping companies, ports, customs agencies, freight forwarders and truckingcompanies. In some cases, the partners say the shipping time for itemswas reduced by 40%, while the query time about the location of a cargoitem was reduced from 10 steps to one.“What’s interesting to me is the breadth of participation across all partsof the ecosystem,” says White of Maersk. “It shows me the market is ready,the industry is ready to embrace a solution.”While TradesLens has gotten the most attention, it’s not the only effort.Last year, a groupof logistics veterans foundedShipChain,which is developinga supply chain platform on a type of blockchain technology called Ethereumwith a goal of bringing together all links of the supply chain. Scheduledfor release later this year, the company’s platformwill create smart contractsdesigned to automate all recordkeeping. This will allow users to arrangepayments once a contract is fulfilled and verified. To fund its developmentShipChain raised $30 million earlier this year through an initial coinoffering (ICO), the cryptocurrency world’s rough equivalent to an initialpublic offering.“With blockchain, there’s a unified, single layer of trust,” says ShipChainCEO John Monarch. “Right now, that doesn’t exist… there’s no way toverify anything.”

Building Consumer TrustLondon-based Provenance is taking a different tack. The company grewout of research Jessi Baker conducted for her PhD in computer science.She became one of the first people to use blockchain for the supply chainas part of her research. Since then, Baker has worked with non-profits to

develop pilot projects such as a program to verify that fishermen aremeeting social sustainability goals when they catch tuna.In shifting to building a for-profit company, Baker decided to focus ontrust between brands and consumers. Provenance offers a platform thatblends blockchain, mobile, and social technologies to allow companies toshow consumers a product’s entire journey. Such a system can offer proof,for example, that the beef you are eating really comes from Argentina,and not from Scotland, which reported an outbreak of mad cow diseasein October. Consumers can contribute comments, reviews, or personalstories that are verified and attached.The reason companies are becoming Provenance clients is “they want tobe trusted by their customers,” says Baker.Trust is also at the heart of the IBM Food Trust project, another of the techcompany’s major blockchain efforts. This was developed in tandem withWalmart, and was motivated by an outbreak of E.coli in prepared lettucea few years ago. Amassive recall was ordered in large part because officialscouldn’t determine the origin of the contaminated lettuce or where it wasdistributed.With the IBM Food Trust, companies can track every item of food fromfarm to table. Following another E.coli outbreak in the U.S. lettuce supplythis year that is linked to the deaths of five people, Walmart recently toldall suppliers of leafy greens they must have blockchain technology in placeby next year if they want to continue working with the company. Thecompany said it would offer guidance, resources and training to helpsuppliers onboard to the IBM Food Trust platform.French retailer Carrefour announced in October it was joining the IBMFood Trust. Carrefour stated that it will continue to use a blockchainplatform it developed itself when dealing with smaller, local suppliers.But it makes sense to join the IBMprogram toworkwith bigger, internationalbrands, says Emmanuel Delerm, director of Carrefour’s blockchain program.Carrefour says it is embracing blockchain to promote trust with end-consumers. “This traceability and this visibility is really a way to say tocustomers that we really want to share this with you and show we care,”says Delerm.

BLOCKCHAINFORSUPPLYCHAINSTARTUPSTOWATCH

CARGOXSLOVENIAWHAT IT DOES : IntroducingdocumentsbasedonEthereumblockchaintechnologytoreplacepaperBillofLading,thedocumentports issueforeverycontainer. It iscritical tothe industry,butdependenceonphysicaldocumentscreatesaslowandinefficientprocess.www.cargox.io

SHIPCHAINUNITED STATESWHAT IT DOES : Building a blockchainplatform to improve tracking itemsacross the entire supply chain. It willblend blockchain with an API to allowvarious participants to connect theirrecords to the platform.

www.shipchain.io

PROVENANCEUNITED KINGDOMWHAT IT DOES : Using a combinationof mobile, APIs, and blockchain, it iscreating a platform that reveals aproduct’s journey while allowingconsumers to attach verifiable storiesand experiences.

www.provenance.org


ENERGY


Tado, a German startup that makes smart thermostats, is helpingenergy companies offer new kinds of digital services to their customers.The startup’s smart thermostat has been engineered to be able to connectto a heating system’s digital serial interface. Through Tado, utilities canmonitor the health of a house’s boiler remotely and collect diagnosticsthat can be used by engineers or repairmen.And Tado, a competitor to Nest, a smart thermostat company acquired byGoogle in 2014 for $3.2 billion, has ambitious plans to do more withutilities.The company – which has just raised a new $50million round of financingfrom Amazon, the French energy company Total, the UK energy companyE.ON, EIC and the European Investment Bank – has so far struck partnershipdeals with 30 energy companies.The deals are helping utilities increase customer retention, says Tado’s co-founder and managing director, Christian Deilmann.The deregulation of the energy sector in Europe is leading to high customerchurn. “With much more competition coming onto the market peoplereally start to switch providers based on price,” he says. “In the UK aquarter of the people switch providers every year. If it is just about buyinga cubic meter of gas or some kilowatts of electricity they don’t care wherethere energy is coming from.” Tado helps utilities offer a more holisticservice and build a much stronger customer relationship, says Deilmann.Under the partnership deals, Tado delivers the maintenance data to theutility company so that it knows when there is a problem in a householdand what is broken, and Tado even calculates how much time it mighttake to repair it. With maintenance contracts that are not based on digital

GoingDigital— A German startup is helping European utilities offernew types of services to customers.

data, some 50% of the time that repairmen show up to fix something theyend up having to order a part from a wholesaler and come back a secondtime. “With Tado the first-time fix rate is 95% because the engineer knowsup front what is wrong,” says Deilmann.The heating system has 120 codes and an error code is transmitted anytimethere is a fault somewhere. “If the repairman knows your pump is brokenand shows up the first time with a spare part it gives your customer a verygood feeling,” he says.Tado and the energy companies split revenues from the service. “We reallywant to back this up with more services,” Deilmann says. It’s a good betthat at least one of the new services will be voice-based and work on Alexa,Amazon’s cloud-based service, which is available on tens of millions ofdevices. People who are used to controlling temperature through theirsphone are also likely to want to control by voice, “therefore there is astrong correlation and it is very interesting to them,” Deilmann says.Amazon likes smart-home customers because research shows that theengagement rate goes up by a factor of fourwhen there are daily interactions.

Helping to Balance the GridThe smart thermostat business is part of a booming sector. Gartner forecaststhat consumers and businesses will be spending almost $3 trillion onconnected devices such as smart-home hardware by 2020.Around a third of all global energy consumption goes to the heating andcooling of buildings. Smarter technologies allow more efficient controland can save up to 31% of that energy. But Tado wants to do more with

— P.43— P.43

its smart thermostats than help fix boilers and enable consumers to say“Alexa, turn down the heat in the living room.” It wants to help balancethe grid.Heating or air conditioning systems are the largest consumers of energyin buildings, says Deilmann. “The good thing is that there is some flexibilityin the heating and AC systems and this flexibility is of value to the energygrid, especially in areas where you have production in solar and wind.”A shift of 20% of energy – while keeping to the boundaries of what

constitutes a level of comfort in homes – amounts to a lot of energy whenyou add up all the buildings in the country, says Deilmann. “It is not idealwhen you have to think about what time you should load the dishwasherbut in our case it is really using flexibility assets in the background withouthaving any effect on the comfort level.” . “It is a massive market. It hashuge potential and we want to grab it.”

J.L.S.

Tado’s intelligent thermostatdevices allow consumersto control the temperaturein their homes.Utilities can tap into the devicesto monitor the healthof consumers’ home heatingsystems in order to providemore efficient maintenance services.

TADO’S UTILITY CUSTOMERS INCLUDE :

— E.ON UK, Germany and Italy— SSE UK— Naturgy Spain— Essent Belgium— OVO Energy UK— Badenova Germany— Vattenfall Germany— Nuon Netherlands— Energie Oberösterreich Austria— IREN Mercato Italy

“Gartner forecaststhatby2020consumersandbusinesseswillbespendingalmost$3trilliononconnecteddevicessuchassmart-homehardware.”


The German artificial intelligence (AI) guru Chris Boos has amessage for executives at big corporates. If you are worried about beingdisrupted by so-called platform companies – Amazon, Google, Facebook,Amazon, Alibaba, Baidu – you should be. All of the big platform playershave a General AI platform and are working to make it more versatileevery day.General AIs are built from multiple algorithms that are designed to offsetthe limitations of individual algorithms and enable the AI to tackle differenttasks while learning on the fly. These AI are usually built on top of largedata pools acting as a kind of world description. Every time a new fieldis added, the AI’s “world” gets bigger and it has an exponentially betterlearning curve. The very clear goal of these General AIs is to disruptbusiness in any vertical, says Boos, the CEO and founder of the AI companyarago and a scheduled speaker at the Founders Forum x Industry inPartnership with Henkel conference in Düsseldorf November 7 to 9.“It makes sense to partner with these platforms in business areas that areno longer strategic because they will give the best result possible,” he says.“But it is suicidal to work with them in any part of the business that isstrategic or core because as soon as they own the knowledge and datathey will reimplement the business model.”Arago claims to be the only neutral General AI platform built for establishedenterprises. “Wewant corporates to succeed in competingwith the platforms

TheStrategicImplicationsofAI— Can a European AI company help corporates take onthe likes of Google, Amazon, Facebook and Alibaba ?

ARTIFICIAL INTELLIGENCE

and we give them the technology to fight with the same gear as they do,”says Boos. Boos, a member of the digital council consulting the Germanfederal government, has been working on AI technology for more than25 years. He launched arago in 1995.And he knows what it is like to go head-to-head with Google. He has beendoing it for years. Arago helps businesses manage and automate everyprocess within a company, from IT operations to business processes andtransactions. Its AI platform HIRO uses reasoning and a knowledge-basedproblem-solving engine to deliver enterprise automation solutions toclients such as UBS, Lufthansa Technik, SAP and Klöckner.The company, which raised $55 million in 2014 from the private equityfirm KKR, was named in 2017 as a leader in semantic intelligence by theresearch firm Frost & Sullivan. Arago is on amission to dispelmisconceptionsabout AI, which Boos says can lead to dramatic mistakes.For starters, AIs do not “understand” anything about the world. “If an AIis a good chess player, that does not mean it also is an analytical thinker,”he says. “Similarly, if an AI can answer Jeopardy [questions] it does notmean it can listen to a board conversation and make sense of it.”Businesses need to recognize the different flavors of AI and the consequencesof adopting them, he says. Narrow AI, an alternative to General AI,typically uses one algorithm to solve a particular problem. There are majorlimitations to this approach. Applying machine learning to a problemmeans having a dataset to explain to the machine what desirable resultsare. If that is possible the machine will find optimal solutions for problemsin that space. But the more complex the problem, the more data one needsto describe the current situation. Most real-life problems are too complexfor this type of machine learning, Boos says.General AIs are the only way to automate entire businesses and allow forcompletely new business models, says Boos. But all General AIs operatedby big platforms are used to disrupt every sector that they can. That iswhere arago comes in.Boos argues that it is important to have an alternative to the big disruptors.Arago only competes on AI and has no intention of entering into any othersector, he says.

Automating the FutureThe way to think about AI is to realize that it is not about pattern matchingor prediction. “It is all about automation,” says Boos. “But not the kind ofautomation we are used do. AI is about dramatically increasing productivitywithout the need to leverage economies of scale. That means AI is theend of the era of industrialization.”J.L.S.

— P.45

“AI isaboutdramaticallyincreasingproductivitywithouttheneedto leverageeconomiesofscale. ThatmeansAI is theendoftheeraofindustrialization.”Chris Boos,arago CEO and Founder


LOGISTICS

From the time a product leaves a factory in some distant cornerof the world to the moment it reaches your doorstep, it uses a dizzying numberof services, with dozens of companies exchanging hundreds of differentdata points. It is a remarkable journeymade evenmore epic by the fact thatsomany logistics services remain in a digital dark age, completing transactionsvia phone, paper and fax machine.Nowonder logistics companies are being targeted from all sides for massivedisruption. Startups as well as some of the world’s biggest corporates aremarshalling financial and technical resources to transform logistics throughthe use of autonomous cargo ships, Uber-like shipping platforms, artificialintelligence-driven warehouses, delivery drones and modular self-drivingdelivery vehicles.These sweeping efforts have the potential to accelerate the delivery of justabout every good, reduce delivery times, shrink costs, and eliminate waste.Yet this momentum is being sapped by a vast legacy infrastructure that isso antiquated that it’s hard for companies to transition into this newworld.The challenge for participants in the logistics revolution is to get all thepieces to align to deliver the promised benefits.TheWorld Economic Forum estimates that an average of 85million packagesor documents are shipped every day. The system is coming under strain asfuel prices rise and consumers come to expect fast delivery of any productat any time. This requires a flexibility and agility that is simply impossibleformany logistics players, according to a recent study co-authored by ShantonWilcox, Partner & Manufacturing Segment Head for Infosys Consulting.Most shippers understand the need for agility but, the report says, 42%haven’t made changes in the past five years. “A lot of the basics are broken,and the foundation is just not there to allow them to get where they wantto be,” Wilcox says. Frustrated by the slow pace of change, e-commercegiant Amazon has registered itself as a freight forwarder, allowing it to helppartners manage the regulations and logistics associated with international

A$4TrillionOpportunity— A digitally-optimized logistics industry could add hugevalue to the world economy.

By Chris O’Brien

shipping. The company is also experimentingwith things like an on-demanddelivery service dubbed “Amazon Flex,” an Amazon Air fleet of planes, anda Delivery Service Partner program for franchise delivery businesses. It hasalso built 744 operational facilities around the world and ordered 20,000Mercedes-Benz vans that it plans to use as part of a leasing program targetingsmall businesses.Brian Solis, a principal analyst at the Altimeter research firm, says retailersand logistics players have no choice but to adapt. “You as a consumer arebeing constantly taught to expect immediacy and personalization,” Solissaid. “You’re constantly wanting something more and faster and better.Everything is being reinvented to cater to this accidental narcissist. Nomatter what business you’re in, this is happening.”The World Economic Forum has tried to sound the alarm, urging logisticscompanies tomove faster or risk squandering amassive economic opportunity.With e-commerce penetration projected to grow from 7% in 2015 to 17%in 2025, the Forum says a digitally-optimized logistics industry could add$4 trillion in value to the world economy. “Logistics has introduced digitalinnovations at a slower pace than some other industries,” says a Forumreport. “This slower rate…brings enormous risks that, if ignored, could bepotentially catastrophic for even the biggest established players in thebusiness.” Indeed, there is a growing list of new entrants in areas such asshipping, warehousing and delivery with big ambitions.

SHIPPING:Making it Easy, Transparent and EfficientIsraeli entrepreneur Zvi Schreiber got the idea to disrupt the world ofinternational freight shippingwhen, as amanager of an electronics company,he spent days calling shipping agents, trying to get price quotes.The experience inspired him to found Tel Aviv-based Freightos in 2012,which has since raised $92million in venture capital. Its fundamentalmissionis to make freight booking as easy as ordering an Uber. But so few shippershave even basic digital tools that Freightos in 2013 launched AcceleRate,a cloud-based service that allowed freight companies to digitize and centralizetheir internal information. Since then Freightos has launched amarketplacethat lets adopters share their prices and book services across theWeb.Makingbooking faster andmore transparent helps ensure capacity on ships is beingefficiently used, Schreiber says.Rather than try to draw industry players into the modern world, Berlin-based FreightHub became a freight forwarder itself and entered directlyinto the business of shipping. Via itsWeb-basedplatform, customers - includingsmall andmedium-sized businesses - can book shipping. FreightHub, whichhas raised $23 million in venture capital, helps arrange the entire processthrough a network of agents, says CEO and co-founder Ferry Heilemann.Other startups such as Flexport, which has raised $300 million, and Fleet,are also entering the freight forwarding business. “People think it’s toocomplicated and that startups can’t tackle that,” saysHeilemann, a scheduledspeaker at Founders Forum x Industry in PartnershipwithHenkel conference

— P.47

in Dusseldorf, November 7-9. “But that’s what they used to say about fintechstartups and the financial industry.” Disruptions from startups are forcingstalwarts to adapt. Shipping giant Maersk’s freight-forwarding unit Damcolaunched a digital platform last year called “Twille” Likewise, freight forwarderDHLearlier this year releasedMySupplyChain, a software and service designedto allow for greater tracking of shipments as well as enhanced data analytics.Even vessels are getting an overhaul. U.K.-based Rolls-Royce is developingautonomous and remote-controlled cargo ships that it hopes to deploy by2025. The autonomous system is being developed at the company’s R&Dcenters in Finland andNorway. According to the United Nations, about 90%of the world’s trade is carried over the seas, and Rolls-Royce believesautonomous fleets of ships can increase safety and efficiency.“We’ve proven a lot of the technology that’s required,” says Kevin Daffey,Director of Engineering, Technology and Ship Intelligence at Rolls-Royce.“Now it’s about convincing businesses that there’s a business case and thatit can revolutionize their business model.”Still, it’s an enormous undertaking to equip ships with the array of visual

sensors and cameras needed, plus the servers necessary to process the datain real-time, which could be as much as one terabyte per day per ship.

WAREHOUSES:From Clunky To Instant FulfillmentOnce merchandise clears a port, it is almost guaranteed to pass throughone or more warehouses as it winds its way to a home or business. Thetraditional, clunky methods of inventory distribution, fulfillment, andpreparation for delivery create another painful bottleneck.Traditional players are taking steps to change that. For example, UnitedParcel Service has announced it is developing an analytics and machinelearning project to better leverage the vast amounts of data it generates tocreate better predictive tools and better manage storage and capacity acrossits warehouses and vehicle fleets. And, to remain competitive, French retailerCdiscount, founded almost 20 years ago in Bordeaux, created its own in-house lab called “TheWarehouse.” It brings in startups that can help it make

Rolls-Royce has partnered with Intelto build autonomous cargo ships that promiseto bring savings and efficiency to an often clunkylogistics industry.Courtesy Intel/Rolls-Royce

LOGISTICSSTARTUPSTOWATCH

FLEXPORTUNITED STATESWHAT IT DOES : A full-service air andocean freight forwarder. Its platformoffers an end-to-end service forlogistics teams, delivering real-timetracking, structured data, andshipment-specific communication.

www.flexport.com

FREIGHTOSISRAELWHAT IT DOES : Runs an onlineinternational freight marketplace, tryingto make booking shipping as easy asordering an Uber. It also offers acloud-based service called AcceleRateto help logistics customers centralizeand digitize data such as rates.

www.freightos.com

FREIGHTHUBGERMANYWHAT IT DOES : An official freightforwarder, it can arrange all details andpaperwork connected to shippinggoods internationally. Its onlineplatform helps organize all aspects ofthe logistics chain, including quotes,booking, managing documents, andtracing goods as they travel.https://oceanprotocol.com


Vera, a self-driving truck concept for well-defined routes in limited spacessuch as ports or warehouse districts that could carry freight. Vera is a trucktractor that can pull a trailer but has no cab for a human. Mercedes-BenzVans is taking a hybrid strategy, creating a self-driving platform called “VisionURBANETIC” that offers one module for carrying people and another thatcan hold ten pallets of goods. Renault, meanwhile is developing its ownmodular, self-driving delivery pod called “EZ-Pro.” These can be reconfiguredwith different pods and run separately, or in a platoon. In some cases, ahuman could ride along to carry the packages from the pod to the customer.Startups are also targeting the opportunity. According to CB Insights, trucking-related startups raised more than $1 billion in 2017, up from the $763million invested in 2016. Each of these investments is building toward thelarger logistics revolution by creating delivery networks that will expandthe types of goodsmerchants can sendon-demand, says Paul Asel, amanagingpartner at Nokia Growth Partners in San Francisco, which has invested inPeloton, a startup developing autonomous systems for long-haul trucks. Asmore vehicles become autonomous, andmore inefficiencies are eliminatedacross logistics, consumers will reap enormous benefits.“We believe as the marginal cost of delivering goods and services declines,there will be a lot more services that people choose to use in terms of last-mile delivery,” Asel says, “As soon as you start thinking through the rippleeffect of this, it really becomes exciting.”

LOGISTICS

better use of data and robotics in its warehouses, better manage peak salescycles and improve delivery via technologies such as autonomous vehicles.For companies who don’t have the resources or expertise Mumbai-basedFractal Analytics has developed algorithms and artificial intelligence tomoreaccurately predict inventory needs andmanagement. In one case, a customerwas able to save $5 million by reducing the inventory it kept on hand, saysthe company. That kind of smarter fulfillment also allows such warehousesto be more responsive to on-demand orders.Other startups are trying to reinvent the very concept of a warehouse.Israel’s Commonsense Robotics just recently launched a 6,000 square-footmicro-fulfillment center in downtown Tel Aviv that provides autonomoussorting and shipping. Using amix of robotics, AI and humans, the companycan more efficiently use its tiny warehouse to deliver goods in city centers.Chaldal is going one step further, by using robotics and AI to create networksof single room “nano-warehouses” in crowded developing cities like Dhaka,Bangladesh, where it is based, to do on-demand fulfillment. And Austria-based Logsta launched last year to create warehouses that are at the centerof a service that helps small businesses with everything from learning howto get their products into Web-based marketplaces like Amazon to helpingarrange all aspects of shipping and last-mile delivery.Transforming warehouses is critical for businesses to stay competitive aslast-mile delivery options explode. In the U.S. alone companies like grocery-delivery service Instacart, which just raised $600million in venture capital,and Postmates, which now offers delivery of food and goods in 550 cities,are making instant fulfillment the default expectation.

Transforming the Last MileFor many consumers, much of the logistics revolution looks like a youngcollege student furiously pedaling a bicycle around city streets carrying alarger Deliveroo or Uber Eats insulated backpack.While this analog solutionis indeed fueling an ecommerce expansion, the mobility industry has farmore ambitious plans to reimagine this end of logistics.Amazon has been experimenting with drone technology, as has China’sJD.com,whichhas beendelivering small packages to remote areas.Meanwhile,Israel’s Flytrex struck a drone delivery partnershipwith Icelandic ecommercestartup AHA in August 2017. Mostly, the packages tend to be smaller goods,like food, or new smartphones. Currently, AHA is approved to fly 13 routesaround Reykjavik.But drones are still often limited to one item under a certain size. A widerange of automotive makers believe they can have an even bigger impacton logistics by introducing fleets of self-driving trucks for long-haul shippingand autonomous vans for last-mile deliveries. VolvoTrucks recently introduced

Boxes are lifted into a prototypeof Renault’s EZ-Pro, an electric self-driving modularvan that can be adapted to different sizesfor last-mile delivery to homes and businesses.Courtesy of Renault

— P.49

GUEST ESSAY

Does your company play? With data? With ideas? Withtechnology?Many of the most valuable companies and technologies arisefromamateur enthusiasts having a go at something no industry professional,no matter how well funded, would attempt.. The offices of the mostsuccessful startups feel like creative chaos, an atmosphere corporationscan’t tolerate.But if industry leaders can’t find a way to access this unstructured energy,their companies are unlikely to be the leaders of the next breakthroughindustries. They put at risk their leadership positions in their own industriesif they don’t make the transition to becoming technology companies.For example, for years people have been hailing the transformation thatthe Internet of Things will have on business and society. Businesses haveconnectedmillions of sensors but use them only formarginal optimizationor command and control. Transformational use cases are out there, butthey aren’t likely to be invented by the engineer at headquarters. Instead,hackers trying to solve something important for a customer will createthemwhen they combine data from15 sensors from15different companies.Today though, almost no industrial company has truly opened its dataand processes to allow this play, this opportunity.This is the biggest lesson industrial giants can learn from the philosophyof consumer technology companies. Develop platforms that allow othersto experiment, create and play. Watch carefully what is successful andhelp scale the most promising. If you try to control everything you arelimited to the (often brilliant) minds of the teams who work for you. Ifyou open your data or your platform to others, you remove those limitsand gain100x more brilliant minds to solve problems for your customers.Opening to the outside is new and uncomfortable, but essential. Industrialcompanieshavebeendesigned tooptimizea set of processes and technologiesto do something highly efficient and no sensible CEO will allow those tobe disturbed for a high-risk idea. This is why the play-spaces need to beas separate as possible but as integrated as necessary to assure autonomyand freedom while also allowing the core business to provide the data

andmarket access to scale the innovation. Large industrial companies canlearn from all three advantages startups have when it comes to playingand experimentation:

Focus: Startups don’t have the resources to solve everything, so theygo after one thing really well. Because of this their teamsmaintain an end-to-end view of the problem to be solved, avoiding the fragmentation ofworking separately on different parts of the problem. Many clients wework with add big teams to a project and includemanywho aren’t directlyinvested in the product’s success. To avoid that Amazon Chairman andCEO Jeff Bezos has the two pizza rule – never have a team working on aproblem that needs to order more than two pizzas.

Closeness: Successful startups understand their customers in detailand solve a very particular and acute real-world problem. Their mis sionin the early days is to gather as much data as possible on the problem andits solution during their short funding window. This brings them naturallyclose to their customer, as the customer is the only source of validation.And the only source of survival.

Integration:When something is genuinely new, start-ups need to controlthe end-to-end process to solve a customer pain point. It is only once theproposition is at scale and the value chain becomes commoditized thatcompanies begin to modularize and eventually create platforms to allowthe next wave of innovation. Tesla is a perfect example of a company thatmanaged to get a differentiated product to market years before others bycontrolling the core technology. Boom, amaker of supersonic jets, is doingthe same in aviation. Startups have learned discipline from industrialcompanies: the leanmethodology has been translated to the startupworldand is now gospel. It is time for industrial companies to learn creativechaos from startups.

Founders Intelligence (FI) helps large companies such as Shell, Visa, Henkel and FannieMae to benefit from the new ideas, technologies and business models that will transformtheir industries. FI is a part of Founders Forum, a private network of some of the world’smost successful founders.

WhatCanStartupsTeachIndustrialCompanies?

By Brent HobermanExecutive Chairman and

Co-founder, Founders Forum

Rob ChapmanCEO of Founders Intelligence


POUR NOS LECTEURS FRANCOPHONES

EN BREF

L’AVENIR DES USINES

LA FABRICATION FLEXIBLE

QUESTION – RÉPONSE AVEC LE CHIEF DIGITAL OFFICER DEHENKEL

LA RECHERCHE POUR L’INNOVATIONDES NOUVEAUX MATÉRIAUX

LE MÉNAGE RENCONTRE L’INDUSTRIE 4.0

CYBERSÉCURITÉ ET L’INTERNET DES OBJETSLes systèmes de contrôle industriel sont une proie facile pourles hackers.

LA MODE RAPIDE PREND UNE TOUTE NOUVELLE DÉFINITIONBientôt, les robots prendront les commandes des clients selonleurs goûts.

« FACTORY-IN-A-BOX »Nokia et ses partenaires proposent une solution agile et portablepour la production industrielle 4.0.

TOP 25 DES STARTUPS DE L’INTERNET DES OBJETS

LE WAZE DES USINES

L’IMPACT DE L’IMPRESSION 3D SUR LA FABRICATION INDUS-TRIELLELatechnologieestutiliséepourtout–desmachinesorthodontiques,aux voitures, aux moteurs de fusées.

VUE SUR UNE USINE PHARMACEUTIQUEDE POINTE

L’HOMME ET LA MACHINELesrobotstravaillentdeplusenplusauxcôtésdeshumains,aug-mentant l’efficacité dans les hangars, usines et labos

UNE APPSTORE À L’USINE

INTERNET DES OBJETS : TOUT EST CONNECTÉLaventeaudétail, lasanté, lesservicesfinanciers, ledivertissementet les services publiques sont transformés par la technologie etles nouveaux modèles de business.

PIONNIER DE L’IoT

L’IMPACTE DE LA BLOCKCHAIN SUR LA CHAÎNE LOGISTIQUE

LE QUOTIDIEN AU DIGITAL

UNE PERSPECTIVE STRATÉGIQUE DE L’IAUne compagnie d’IA européenne peut-elle aider les corporationsà concurrencer Google, Amazon, Facebook et Alibaba ?

UNE OPPORTUNITÉ À $4 MILLE MILLIARDSUneindustriede la logistiquedigitalementoptimiséepeutajouterune plus-value énorme à l’économie mondiale.

CE QUE LES INDUSTRIELS PEUVENT APPRENDREDES STARTUPS

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Directeur de la publication,président de laSAS Les ÉchosPierre LouetteDirecteur des rédactionsNicolas BarréDirecteur desdéveloppements éditoriauxdu pôle Les ÉchosHenri GibierDirectrice générale du pôleLes EchosBérénice LajouanieDirecteur de créationFabien Laborde

Editor-in-ChiefJennifer L. [email protected]&LayoutStudio L’Eclaireurwww.les-eclaireurs.comContributing EditorKimberly Conniff TaberContributing JournalistsChris O’Brien, Esther AttiasEditorial assistantSimon LulingHead of Strategy andCommunicationFabrice FévrierPress relationsKarine [email protected](+33187397392)

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ImpressionNewsPrint, France

Origine du papier : ItalieTaux de fibres recyclées : 0%Le papier de ce magazineprovient de forêts géréesdurablement et est por-teur de l’Ecolabel européenIT/11/011Ptot : 0,013Kg/tonne

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