Flexible manufacturing processes help meet shifting consumer demand
30 October 2019
3 min read
Home & Lifestyle trends move fast. Companies must stay ahead of the curve to deliver the products consumers want, when and where they want them. That’s why leading manufacturers need more agile, flexible and sustainable supply chains. Digitalized operations adapt to quickly changing requirements, from seasonal spikes in demand to rapidly shifting consumer tastes.
When American actress Meghan Markle married Britain’s Prince Harry in 2018, demand soared for Art Deco and aquamarine rings like those worn by the bride and wedding guests. It was just one of the trends affecting UK jewelry sales that year, according to the UK’s Professional Jeweller website. Other trend-inducing events included soaring demand for lab-grown diamonds following the launch of De Beers’ LightBox brand and the fashion comeback of charms, which caused Danish jewelry brand Pandora’s new bracelet concept to sell out in record time.
Such spikes in demand are not unique to the jewelry industry. For companies across the Home & Lifestyle sector, spotting and responding to market trends can bring big rewards – but only if manufacturers are agile enough to take advantage of the shift.
Sophisticated technology is another development that makes it essential for companies to rethink how they develop and manufacture products.
“As more consumer products are connected devices, their lifecycle gets shorter because they need to keep up with the latest digital technologies to be relevant,” said Vicki Holt, president and CEO of Protolabs, a Minnesota-based manufacturer of custom prototypes and on-demand production parts for companies in the medical devices, electronics, appliances, automotive and consumer products markets. “This requires manufacturers to find product development techniques which can accelerate time to market.”
Consumers also want customized products that meet their unique needs. “Manufacturers are responding to this with more mass-customized products, which require them to develop digital manufacturing processes and supply chains which can economically, reliably and quickly produce at smaller volumes,” Holt said.
The only way companies can achieve such speed and agility? By adopting a new business model centered around digital manufacturing strategies.
MEETING SHIFTS IN DEMAND
For Pandora, meeting demand means producing 117 million pieces of jewelry across 1,500 designs, with more than 500 new lines added every year. Add the complication of ensuring that those pieces are available when and where consumers want to buy them – across more than 7,800 points of sale in more than 100 countries – and the complexity is awe-inspiring.
By digitalizing tactical and operational production planning at its three crafting facilities in Thailand, Pandora is combining automated production with hand finishing.
Digital supply chains, meanwhile, provide the agility the company needs to achieve high utilization and on-time delivery by factoring in peaks in seasonal consumer demand. The result? Pandora will significantly reduce production lead times so it can bring new products to market faster, keep up with demand spikes and build customer interest in its modern jewelry.
“With an advanced planning system supporting our capacity expansion program, we will be able to scale up manufacturing capacity, increase our efficiency and increase agility to satisfy the demands of our valued customers,” said Thomas Touborg, senior vice president, group operations at Pandora.
DELIVERING THE GOODS
In kitchen design, customization is king.
“As the kitchen continues to move from a utilitarian area to the entertainment and leisure hub of the home, the decisions driving a new kitchen installation become more complicated,“ UK market analysis firm Trend Monitor noted in its “2018 Kitchen Purchasing Trends” report.
Schmidt Groupe is France’s biggest manufacturer of custom kitchen and bathroom fittings and storage solutions, selling its Cuisinella and Cuisines Schmidt brands through a network of 610 stores across Europe. The company prides itself on its unique ecosystem, which controls every step of customer value creation from design through production and distribution.
To support that ecosystem, Schmidt Groupe implemented a business innovation platform that enables it to optimize production across its four sites in France and Germany. Sales and operations planning, master scheduling, general transport planning and resource optimization, along with crucial insights into manufacturing capacity and capability to promise, enable the company to optimize its resources and synchronize business-critical activities. The platform now plans the fulfillment of 2,000 orders per day and helps to plan the company’s 200 delivery schedules, ensuring customers receive their orders on time. “Schmidt Groupe (formerly known as SALM) became the industry leader in France and fifth largest in Europe thanks to sustained innovation efforts that included continuous improvement of our processes,” said Jacques-André Feraud, project manager at Schmidt Groupe. “The solution enables us to commit to reliable delivery dates throughout Europe. This helps us maintain excellent service levels, which will enable us to further expand our presence internationally.”
READY AND RESPONSIVE
Adapting to changes in consumer demand involves the entire value chain, from supply to production to delivery – and digitalization is the key. “Shorter product lifecycles and increasing demand for customization will continue to spur innovation in digital manufacturing technologies, business models and ways to add value to the products customers want,” Protolabs’ Holt said.
“Digital manufacturing enables the rapid, reliable production of prototypes and low-volume, on-demand products, and gives product developers, engineers, and supply chain managers access to tools to help them do their jobs better. In doing so, it helps manufacturing companies to accelerate innovation, reduce risk and optimize their supply chains so they can seek a competitive advantage by responding to consumer demands.” ◆
Employers and educators team up to alleviate shortage of middle-skill workers
6 min read
From welders and boilermakers to health care technicians and airline pilots, countries worldwide are facing a profound shortage of middle-skill workers. To close the gap, businesses and educators are teaming up to change out-of-date attitudes about these vital jobs, then recruit and train students for positions with local employers.
An ever-growing skills gap is threatening the sustainability of businesses worldwide, but not in the high-tech jobs you might expect. For many businesses the bigger challenge is in “middle-skill” jobs – welders, boilermakers, pilots, health care technicians and more – that require more than a high school diploma but less than a four-year degree.
In the United States, for example, the National Skills Coalition (NSC) based in Washington, DC, reports that 53% of jobs are middle skill but only 43% of US workers are trained at this level. It’s a massive gap that leaves millions of jobs unfilled, even as millions of unemployed or underemployed college graduates struggle to pay massive student loans amassed while pursuing four-year degrees. And it’s not just a US problem. A 2018 study by French investment bank Bifrance, titled “Attracting talent to SMEs and ETIs,” found that nine out of 10 mid-sized companies in France are facing recruitment difficulties. Across Europe, in Japan and India – in most industrialized countries, in fact - employers report the same.
“It doesn’t matter whether you’re in the UK, in Africa, or the US,” said Daniel Shrader, dean of technology at Orange Coast College (OCC) in California. “We need these middle skills to improve our environment, to be able to manufacture locally, and to develop stronger, more viable communities.”
Dominique Sennedot, director of Le Campus des Industries Navales – a school in France that trains workers for the marine industries – sees the impact on a daily basis.
“The naval industry in France currently employs around 42,000 people and is expected to create 6,000 more jobs in the next three years,” he said. “We have identified 16 trades in need of qualified employees. The fact that we lack people in these trades forces some companies to refuse contracts because they will not be able to honor them.”
In Washington state on the US west coast, Mary Kaye Bredeson, executive director for the Center of Excellence for Aerospace & Advanced Manufacturing at Everett Community College, also sees the gap – one that will grow as middle-skill workers continue to retire.
“There are going to be over 2 million unfilled jobs in the next decade,” she said. One reason for the shortfall? “Parents, educators and society have been saying that a four-year degree is what you need to be successful.”
But middle-skill jobs can be just as lucrative and offer as much career advancement as many four-year college programs without the high expense, she said. And, unlike degrees in history or sociology, for example, demand for these skills is high. In the aerospace sector, “about 50% of the jobs require a four-year degree and 50% of the jobs require technicians,” Bredeson said. “So I think you are going to see more and more professional organizations really sounding that alarm bell.”
Degree programs at four-year colleges don’t offer the hands-on learning opportunities that many employers need, said Joseph Fuller, a professor at Harvard Business School who has studied the issue of middle-skills education. Teaching of those skills tends to be concentrated in technical schools and community colleges, which suffer from funding shortages. US government funding goes mostly to four-year colleges and their students, he said, with “significantly less annual funding for skills training and retraining and almost none for such training when it’s provided by employers.”
As a result, “work-based learning opportunities such as apprenticeships have stagnated,” Fuller said. “This means that businesses’ candidate pools are filled with people with skills that are not relevant to employers’ needs.
Meanwhile, technology advancements continue to drive up the cost of training middle-skills workers, whose roles are becoming increasingly sophisticated.
“When you are buying advanced technology equipment to make things, the cost is substantial to any institution,” Shrader said. “However, this investment helps build secondary school students’ awareness and exposure to attractive technical careers and substantially improves the throughput to staffing industrial middle-skill jobs.”
ADDRESSING THE ISSUE
Increasingly, businesses are stepping up to close the gap, teaming up with educators to develop middle-skills training, recruit students and provide the internships that prepare them for the realities of high-tech workplaces. One such initiative is CampusFab, a training facility near Paris created by a consortium of French manufacturers, apprenticeship training centers and professional organizations.
“We created CampusFab to provide a response to the problem through initial training, apprenticeships or on-the-job training,” said Betrand Delahaye, deputy human resources director at French aerospace manufacturer Safran. The project has also received financial support from the French state and Paris regional governments.
Similarly, Le Campus des Industries Navales is collaborating with major industrialists in western France, who help tune its educational offerings to their industry’s needs.
“The campus will serve as a link between the expression of needs from the industrialists and the training operators, so that the training operators will integrate the complementary skill blocks in order to have ‘employable’ students,” Sennedot said.
The CampusFab and Industries Navales initiatives are exactly what employers and educators should be doing, OCC’s Shrader said, adding that organizing education in the same manner that the manufacturing industry organizes a supply chain would be beneficial to both entities.
“Some parts required by first-tier manufacturers, companies like SpaceX or Northrop Grumman, are acquired through contracts with second-tier providers,” Shrader said. “The second- tier providers need more machinists and toolmakers than the colleges can provide, so we negotiate to be a third- tier provider. This arrangement results in revenue streams that can help offset college equipment upgrades, maintenance and material costs, while students get to manufacture industry-specified parts in a supportive educational environment.
“Second-tier manufacturers then can assess and improve the quality of student work, which improves instruction. Companies also can offer internships, which provide experience and job opportunities. Entering the supply chain in this manner infuses financial support to the community colleges, invigorates the educational process and engages important industry partners.”
In Washington state, where aerospace manufacturer Boeing is a major employer, Bredeson found that mechanical and electronics skills are in high demand. To address that shortage, she helped create the “Choose Aerospace” campaign to recruit students who might otherwise have been lost to the region’s other high-profile employer: Amazon.
Students who participate in the “Choose Aerospace” seminars quickly discover why middle-skills jobs are so lucrative: because workers need to be skilled in using many of the high-tech industry’s most advanced technologies.
“With the help of other partners, a lot of colleges are now using artificial intelligence, augmented reality and virtual reality,” Bredeson said. “In the medical field, for example, they’re using avatars and simulators, rather than expensive dummies, to train medical nurses. It makes learning more real.”
COLLABORATION IS KEY
The growing trend of businesses teaming with educators to identify in-demand skills and develop relevant training is a positive development, Harvard’s Fuller said. “Only business can really define what it’s looking for and anticipate what it will need in the future,” he said.
Katie Spiker, senior federal policy analyst at NSC, said that education-business partnerships empower companies to identify the shared goals and needs of an entire industry.
“They help businesses work more efficiently with community and technical colleges, as well as community organizations that can help supplement business investment in workforce development,” she said. “They also help education providers best tailor or develop curriculums that effectively address industry demands.”
Business-education collaboration also helps to ensure that the skills being taught remain current as technology advances and roles continuously evolve. And that collaboration is most effective, Shrader said, when it happens community by community.
“Integrating education preparation and pathways from secondary schools through colleges to employment opportunities is a critical factor,” Shrader said. “It’s all about local schools working together and collaborating on throughput. An early start in secondary school to engineering, design and manufacturing concepts through robotics, virtual experience, digital technology, college tours and projects all increase students’ awareness of, and aptitude for, technical college training programs and industry career opportunities. Moreover, this early start allows community colleges to deliver a more advanced and robust curricula, better preparing students for advanced study, industry or entrepreneurial pursuits. It’s cost-effective and facilitates local and regional improvement. This is our educational equivalent of thinking globally, acting locally.”
Bredeson, who acts as a point of contact between industry partners and 34 community colleges in Washington state, agrees. “We bring industries to our colleges and we do what we call a DACUM to develop a curriculum, since industries have had a hard time telling the [individual] colleges why their particular mechatronics program wasn’t robust enough for industry.” By facilitating the discussions, Bredeson helps both sides communicate clearly. To ensure success, Bredeson said, programs need to be offered to students before they reach high school.
“In Kenosha, Wisconsin, there’s a program that partners industries, schools and a few companies together,” she said. “From second grade, every child visits a manufacturing lab once a week, which removes the stereotype that only males go into manufacturing and construction. It also gives students basic skills, emphasizing the importance of safety, math and teamwork. It’s a wonderful model and a great way to get them involved in the digital world. Can you imagine if every little boy and girl gets introduced to the manufacturing lab at that young age?”
Automotive manufacturers become mobility experience providers
4 min read
As automotive manufacturers face a future where people are increasingly opting for on-demand mobility rather than owning a car, experts advise looking beyond product aesthetics and functionality toward meaningful customer experiences that foster long-term satisfaction and loyalty.
Visitors to the Volvo stand at the 2018 Los Angeles Auto Show may have expected to see the Swedish luxury car brand’s latest models on display. But in place of any vehicle was a single sign that read: “This Is Not A Car.” At one of the world’s major automotive marketing platforms, Volvo decided to tout not its cars but its customer experience.
The bold move reflects Volvo’s belief that today, how consumers experience a car brand is more important than the physical vehicle itself. And so it demonstrated new connectivity services, including an app that allows online shopping to be delivered to the trunk of your car, plus an option for friends and family to access and use your car without a physical key handover.
“Our industry is changing,” Håkan Samuelsson, chief executive of Volvo Cars, said in a press release. “Rather than just building and selling cars, we will really provide our customers with the freedom to move in a personal, sustainable and safe way.”
APPEALING TO THE DIGITAL GENERATION
Global research firm McKinsey estimates that millennials – people now in their 20s and 30s – will represent more than 45% of the potential car-buying cohort in 2025.
“These customers are getting accustomed to superior experience, especially in the digital space, and they expect this same experience in more traditional areas like automotive,” said Harald Fanderl, a senior partner at McKinsey. “This is challenging the traditional setup in dealerships and services, which were organized around the needs of the car – not necessarily those of the customer.”
It’s a trend that is pushing car brands to focus on far more than aesthetics and performance.
Ryan Robinson, global automotive research leader at US-based management consultant Deloitte, said this is especially the case in popular mass-market vehicle segments such as the sports utility vehicle (SUV), where model design now tends to follow a similar template: high and off-the-ground, hatchback boot, sloping rear.
“If the world is going to coalesce around this relatively similar-looking vehicle, manufacturers have to figure out a new differentiator,” he said. “In many instances, that’s down to experience.”
FIRST IMPRESSIONS COUNT
When choosing a car, consumers want value and convenience and they don’t give brands long to influence their purchase decision. Deloitte’s “2018 Global Automotive Consumer Study” found that more than a third of US consumers start researching a vehicle purchase less than a month before they decide to buy.
“If we want to stand out and be memorable we have to offer the experience,” a spokesperson for German automaker BMW said. “It’s as much about ‘how’ as ‘what’ we’re presenting.”
BMW has made concerted steps to seamlessly interlink the online and offline buying experience.
Vehicle configuration happens on a screen, whether online from the customer’s home or on a Virtual Product Presenter at the dealership. Beyond that, the company has introduced the “My Car is Born” feature on the BMW Connected app, which allows customers to track the progress of their new car as it is being built.
A TRULY CONNECTED OWNERSHIP JOURNEY
Brands that invest in making the purchase journey as smooth and enjoyable as possible are likely to better position themselves for future revenue and profitability streams, Deloitte’s Robinson said.
“You want to get people comfortable with making decisions, move them through the process as smoothly and efficiently as possible and lay the foundations for setting up a lifetime relationship,” he said.
Guillaume Becourt, co-founder and Experience Design lead at France-based experience software provider epicnpoc, works with automotive companies to focus on the customer experience across the entire value chain.
“The emotional interaction now goes beyond the physical product and it’s why the experience has to be developed, taking into account all of its dimensions including services, entry and exit phases, and user feedback,” he said. “The product becomes part of an end-to-end system.”
Even when things go wrong, manufacturers are better positioned to rectify the situation if they have a view of the entire customer experience.
“Clarity on end-to-end ownership for a customer request is key,” McKinsey’s Fanderl said. “Players need to establish the Disney-inspired mindset in their employee base – even if it’s not your fault it is still your problem – to create broad ownership to resolve customer problems.”
FUTURE FLEET MANAGERS
In some areas, automotive brands are experimenting with new services to further personalize the customer experience.
British luxury carmaker Bentley has been testing a “bespoke, connected, door-to-door” concierge service, Bentley on Demand. The service gives existing owners the opportunity to request a vehicle on-demand for a test drive or special occasion.
“In the wider market, businesses are exploring the feasibility of a subscription model which can be adapted to suit customers’ changing requirements, allowing them to drive a city car or sedan to work in the week, for example, and then swap for a sports car or SUV at the weekend,” Robinson said.
These developments signal a future where automotive manufacturers might be defined less as consumer end-product companies and more as fleet managers. To succeed, they must take steps now to survive the transition.
“Companies should ask themselves, ‘What is the one purpose that unites us across departments and inspires us to deliver great customer experience daily?’” Fanderl said. “It is very important that automakers do not wait until all the major changes in mobility – electrification, connectivity and so on – really ramp up. True customer experience is a state of mind, and it is a journey that will never end.”
Becourt believes that most automotive manufacturers are already well-structured to evolve their business models, provided they are adaptable and focus on the bigger picture.
“New products and solutions are launching every day but, in parallel, cars are defined years before their release and will be on the market for even longer,” he said. “Manufacturers will need to build even more flexible architectures. And if they want to improve the customer experience around these complex products, they need to think incrementally. The user experience has to be capitalized, re-used and improved.”
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Airports pursue data integration with partners to improve passenger experience
4 min read
Technology and passenger preferences continuously redefine the airports of tomorrow. Compass looks at how some of the most forward-looking of these facilities are exploiting digital technologies to enhance the end-to-end travel experience.
Airports have long been testing grounds for travel innovation, cross-pollinating between aviation, technology and urban development. Now, airports are on the cusp of a bold new era: a system of transportation-infrastructure nodes optimized to deliver optimal passenger experiences.
Smart airports, as these facilities are called, are still the exception rather than the rule, but their numbers are increasing. The International Air Transport Association estimates two dozen may exist worldwide. It expects the number of such facilities to double over the next 20 years, as airport administrators prepare for a massive increase in global air traffic demand.
Since the dawn of the jet age in 1960, airport administrators have focused primarily on safety and on-time performance. Today’s “agile airports,” however, are applying digital-age technologies to the challenge of improving passenger experience.
Examples of agile airports include Las Vegas McCarron International, London Heathrow and Hong Kong International. The common denominator: A focus on using partnerships among airlines, retailers, carriers and other members of the airport ecosystem to offer personalized services enabled by broad process integration and seamless exchange of passenger and operational data. For these and other smart airports, the trend is toward creating intelligent, location-based services, including way-finding to move people through an airport at an optimum rate, minimizing delays and maximizing their spending at restaurants and retailers; providing trusted travel advice; and offering preferential treatment based on passenger segmentation.
Smart airport initiatives are being driven, in part, by a stream of developments in consumer technology that have fueled passenger expectations for unfettered access to real-time information and personalized services. Another driver: Airlines are posting profits that would have been unimaginable a decade ago, and airline industry professionals are determined to sustain that financial performance.
Smart airports will play an essential role in satisfying both imperatives.
“Hartsfield-Jackson Atlanta International and other airports like ours will always be looking for opportunities to make our best better and take the passenger experience to new heights,” said Dawn Gregory, director of innovation and performance at Hartsfield-Jackson, the world’s busiest airport by passenger traffic since 2000.
Pervasive digital connections to air travelers enable airports to establish continuous, real-time communication anytime, anywhere. This allows airports and their partners to engage passengers with relevant and compelling information and offers. These connections also position smart airports to respond quickly to disruptive new entrants, Gregory said.
The phenomenon of ride-hailing services is one of the most recent such disruptions.
“This will affect all airports,” Gregory said. Some of these services “don’t even exist yet, but we’re already studying the possible impact on our business model and how we should be preparing for it, including how air taxis could influence air travelers’ expectations of Hartfield-Jackson Atlanta International.”
As smart airports evolve, they will reach farther beyond their physical boundaries to enhance the passenger experience. For example, Hartsfield-Jackson Atlanta is working with the city’s Urban Land Institute to study potential autonomous vehicle corridors around the airport, with an eye toward creating better connections to the airport and its terminals.
Some forward-looking airports have become living labs, creating innovation incubators to foster and develop start-up businesses with new concepts for host airports to test. Munich and Aeroport de Paris Group – which includes Orly and Roissy Charles de Gaulle near Paris – operate innovation incubators, as does Singapore’s Changi. The latter partnered with the Singapore Economic Development Board to invest US$50 million (44.5 million euros) into its “Living Lab Program.” The goal: to develop and implement technology solutions leveraging automation, data analytics, the Internet of Things, non-intrusive security and smart infrastructure.
“Essentially, we want innovators to show us what we don’t know and present future opportunities with specific focus areas,” said Rick Belliotti, director of Innovation and Small Business Development at California’s San Diego International Airport. That facility’s Airport Innovation Lab recently welcomed applicants for its second group of innovators, who will go through a 16-week accelerator program.
In the initial class of entrepreneurs, the focus was on parking and improving passengers’ end-to-end experience while in transit. The second group’s focus is on reducing operating expenses.
RAISING THE BAR
While the accelerator program is new, the San Diego lab can point to some successes. For example, the AtYourGate app, which allows travelers to shop online from their mobile devices and have food and other purchases from the airport’s retailers and restaurants delivered to them at their departure gate.
Successful innovations developed in San Diego’s incubator could be rolled out not only in San Diego but by other airports and analogous businesses, including shopping malls, convention centers and other transportation hubs, Belliotti said. Following San Diego International’s successful deployment of AtYourGate, for example, the app was rolled out to Newark Liberty International Airport in New Jersey.
“We continually seek to raise the bar on customer satisfaction, and one way we do that is by embracing new technologies,” Belliotti said. “We demonstrated [AtYourGate] has the right formula to deliver a high-quality service that can change the way people experience air travel, a cornerstone of our Innovation Lab.”
Not to be outdone, Hartsfield-Jackson Atlanta International is using artificial intelligence and augmented reality to help sight-impaired travelers identify agents who can assist them in navigating the sprawling, 192-gate airport.
MAKING A DIFFERENCE
To make the most of these and other technologies to improve the passenger experience, reduce costs and raise operational efficiency, airports need to put in place processes that optimize all of their available resources, said Aneil Patel, Air Policy managing director of Washington, DC-based Airports Council International (ACI).
Software-based planning systems can make all the difference for airports prepared to align their processes and available resources with key performance indicators (KPIs), which measure progress against goals. Airport KPIs might include security wait times, airline turnaround times and how long it takes for luggage to find its way from aircraft cargo holds to carousels. At least one demand-driven software product, for example, allows an airport, in collaboration with partners, to anticipate the number of passengers who will check in, making it possible to decide in advance how many check-in desks and security lines to open, at what time and for how long.
But Patel draws an important distinction for airports aspiring to transform their operations.
“Becoming a smart airport is not about technology per se,” he said. “It’s about how airports apply data generated by sensors that are part of a smart airport’s infrastructure.”
“Technology is the enabler to help us raise our game,” Gregory at Hartsfield-Jackson said. “What matters most is how you implement the technology, which is just a means to an end.”
Drone technology helps energy and materials firms squeeze more profits from resources
4 min read
Mining, power generation and chemical companies – not renowned as early technology adopters – are deploying drone technology at an accelerating pace. Drones are proven to save companies time and money, improve safety and, most importantly, collect data that can be analyzed for operational improvements.
In 2018, in what has been described as the largest commercial drone purchase ever, Komatsu Smart Construction ordered a fleet of 1,000 high-precision drones equipped with machine vision technology supplied by San Francisco-based Skycatch.
Launched in 2015 to alleviate Japan’s severe shortage of skilled construction workers, Komatsu Smart Construction is a drone-assisted, automated equipment service under Komatsu, a Japanese multinational corporation that manufactures heavy equipment used in construction, mining and other industrial applications.
The technology, integrated into drones built by China’s SZ DJI Technology Company, will be used at Komatsu’s construction sites, producing maps accurate to mere centimeters, monitoring onsite stockpiles of construction materials and, one day soon, controlling the robot construction vehicles Komatsu is developing.
The massive order illustrates how far drone technology has come. As a result, many industries that traditionally have been slow to adopt new technologies are now embracing drones, using them to improve safety, use equipment more cost-effectively and collect real-time data that can be analyzed to improve productivity.
Mining companies are among those taking the plunge, adding drones, automated vehicles, Internet of Things (IoT) devices and sensors to their operations. Those purchases are contributing to growth in the worldwide mining equipment market, which Zion Market Research projects will climb from US$70 billion (62.5 billion euros) in 2017 to US$98.5 billion (88 billion euros) by 2024.
“There was some early reservation,” said Patrick Stuart, product director of Skycatch. “But I’ve seen the mining industry come a long way, from not doing too much to innovating faster than some of the other verticals. It’s really exploding in mining.”
Energy and mining companies work in harsh, dangerous environments. Drones fitted with high-precision cameras, thermal imaging, integrated imaging sensors and enhanced data capture capability can hover inside smokestacks to look for cracks and locate corrosion inside refinery production units. In mining, drones explore excavated shafts to ensure their integrity before workers are sent in. Above ground, drones map slope and elevation and report on equipment and stockpile management.
“The heavy processing industry has been looking at drones for quite a long time,” said Marc Gandillon, marketing head for Flyability, a Swiss drone manufacturer of unmanned aerial vehicles (UAVs) that operate in confined, dangerous and inaccessible spaces. Recently, however, many companies have decided to deploy drones at a large scale. “Why now? Because the technology is mature enough so that it really meets the needs of these companies,” Gandillon said.
Dow Chemical Company, for example, began testing drones in 2014 at its manufacturing facility in Freeport, Texas. Dow uses drones to inspect tanks and pipelines, a process that used to take days and often involved human exposure to dangerous chemicals. With drones, the same work takes hours and eliminates the risk of exposure.
“We kind of fumbled through the first couple of years,” said Andy Lewis, global improvement leader at Dow. “But the level of use picked up as we explored different technologies to reduce safety risk. With drones it’s a win-win.
We can reduce the amount of [chemical] exposure to people and do jobs quicker and more productively. We saw so much advantage that now we use drones in all the company’s facilities across the globe. Even if productivity isn’t the issue, the safety benefits are worth it.”
EASE OF USE
While drones and their data-gathering payloads are becoming increasingly sophisticated, improved ease of use is another key adoption driver.
“They used to be hard to use,” Gandillon said. “The rules used to be messy. Now the regulatory aspects are built into the drones. The data quality is so much better. We’ve got the right sensors, the right data-capture systems. Drones are now more suited for industries’ needs. There has been a sort of conjunction of aerial platforms and heavy industry; they’re starting to speak the same language.”
Those improvements help to explain why drones now represent one of the leading technologies transforming the mining industry, said Joe Carr, director of mining innovation at London-based satellite telecommunications company Inmarsat.
“These drones not only scan the mines from perspectives that are dangerous and near-inaccessible to humans; they also instantaneously communicate any information they pick up,” Carr observed in the industry publication Mining Technology. “This makes for a more rapid and detailed analysis of the mine slopes without having to deploy highly skilled geologists or geotechnical engineers into an inherently hazardous environment or affecting production by closing haul roads.”
ALL ABOUT DATA
Industry research analyst Colin Snow, CEO of Redwood City, California-based Skylogic Research, is not convinced, however. Much of the early growth of the fledgling drone industry, he said, has been fueled by hype. Still, he acknowledges that it is becoming easier for companies to incorporate drones into their operations.
“It’s gotten better,” Snow said. “Payload and images are getting much more resolute, easier to use. [There is] more automation in mission-planning and the actual processing. So, it’s easier.”
One of the biggest trends Snow anticipates in the next few years may not sound very exciting, but could have major implications for corporate balance sheets: the ability to integrate drone data into corporate workflows for documentation, predictive maintenance, enterprise asset management, tracking and GIS data integration.
“In the end, you need a report that supports decision making,” Flyability’s Gandillon said. “The only thing that matters is the data.” ◆
Breaking down barriers to encourage collaboration
enables intelligent procurement
3 min read
Jean-Pierre Pellé is a director at Argon Consulting, a global leader in transformation operations. Compass asked him how frictionless collaboration among Design, Engineering and Procurement departments helps companies achieve a sustainable competitive advantage.
COMPASS: How important is procurement as part of companies’ efforts to align the enterprise around goals such as efficiency and sustainability?
Jean-Pierre Pellé: Companies need to position parts sourcing in the broad context of total cost of ownership (TCO). In aerospace, for instance, organizations work closely with their suppliers to improve their competitive advantage in the market. They realized that if they looked only at the price of a product they would miss many other factors that could improve efficiency. So they started thinking not only about price but about TCO, which considers the whole lifecycle of the product, including environmental concerns and performance. In doing so, they brought the shared objective of the different departments into focus.
In many organizations the Design, Engineering and Procurement departments work in individual silos. Why is it important to remove those barriers?
JPP: Procurement and Engineering need to be able to work together with the same objective – to design a robust product that is efficient in terms of production for the market, maintenance and other factors. When these departments don’t work together their different priorities can create friction: Procurement wants to reduce the cost of parts while Engineering, which is focused on maximizing the performance of products, says cutting costs is too risky.
To improve a product, Procurement needs to activate new kinds of levers: the way they challenge specifications, introduce innovations from suppliers, reuse parts and so on. That involves collaboration with Engineering, Marketing, Manufacturing and others and sharing real-time insights.
What opportunities do sourcing and standardization hold for improving efficiency?
JPP: It depends on the sector and the kinds of activities the company is involved in. When you have repetitive business or enough volume you can think about how to standardize and modularize so the company benefits from robust process and products. That means the parts are cheaper because you’ve got volume and there’s less risk to manage once you’ve validated the processes, and you’ve got lower cycle times. This is typically what the automotive industry has done. For example, every BMW Mini produced is different, but at least 80% of the parts are common to all. The company has the volumes to achieve standardization and modularization
Is it possible for industries that don’t have high volumes to make similar efficiency gains?
JPP: In industries such as construction, for instance, it can be more difficult to rationalize processes because the way you build your project depends on the client’s specifications and requirements. But you can have cooperation and shared ways of working. This is where Procurement brings value to market, because it gives Engineering a way to benefit from suppliers’ innovation and efficiency in introducing new products and technologies or faster time-to-market through more efficient working processes. It depends on what the client will support, so Engineering and Procurement need to provide proof of the value they’ll get.
How can companies empower their Design, Engineering and Procurement departments to work better together?
JPP: To enable these departments to work together with the same objective, companies first need to be aware of how their employees are willing to collaborate and understand their own interests. The goal is not only to optimize costs; it is also to improve global performance and to ease collaboration between the functions within the company, based on an understanding of their interests. Cross-functional teams are good enablers to achieve efficient collaboration.
How is technology helping companies to support collaboration between Procurement, Design and Engineering?
JPP: Product innovation platforms are designed to give each user access to the information needed to perform their specific role. Because all of a company’s information has been enhanced by adding new properties based on a 3D shape, acting like a fingerprint, a query such as “do we have a part that does X?” generates results in a few seconds. These data-driven insights serve as a universal language to connect Engineering and Business systems at a global level.
How does collaboration increase innovation?
JPP: Through collaboration, Procurement can become a trusted partner to Design and Engineering. Procurement can help Engineering benefit from an ecosystem of suppliers to increase innovation, efficiency and speed to market. As a result, Procurement and Engineering can bring proof of the value the client wants to see – in terms of cost, quality, cycle times, service or other priorities.
Elevating the role of risk management in financial services requires more integration
3 min read
Rising regulatory demands have increased pressures on various departments, and one wrong move can result in massive fines and severely damaged reputations. Marc Walby, former chief operating officer for Risk Management at Deutsche Bank Americas, discusses the evolving role of risk management and the potential positive impact of digitalization.
COMPASS: How has the role of risk management evolved in recent years?
Marc Walby: Risk management in the financial services industry has experienced a sea change since the 2008 crisis, driven by both increased regulatory demands and the firms’ own recognition of the need to improve governance and risk practices to avoid past mistakes.
Pre-financial crisis, the role of risk management was less prominent within the organization and typically focused on the traditional credit, market and liquidity risks, transaction approvals and basic portfolio management.
Risk management has had to elevate itself to the top of the organization and become more integrated into the strategic planning and business decision-making processes. There has been a need to think more holistically about enterprise-wide risks, and non-traditional risks such as operational, technology, reputational and conduct. This has added more responsibility and complexity to the role of the risk organization and has required a new way of thinking and operating, working with new frameworks and establishing much greater enterprise-wide collaboration.
How would you elevate the role of risk management?
MW:Two of the most important actions are to ensure the role of the chief risk officer is positioned prominently at the board level and establish an organizational structure that ensures the independence of the risk management function.
Determining an enterprise-wide risk strategy and risk appetite statement is also essential. This requires Risk to take a much more collaborative approach with the senior leadership and businesses to ensure a common understanding of the business strategy and the inherent risks that go along with it. That in turn necessitates far greater collaboration with the board, senior leadership and other areas of the organization, where the necessary data might be housed.
When it comes to adopting a collaborative approach, what could financial companies learn from other industries?
MW:Given how busy we are each day, it’s easy to forget to take the time to step back, think outside the box and look at best practices in other industries. Many industries have to manufacture, distribute and develop products in a highly complex environment that is subject to significant regulatory scrutiny – the classic examples being aerospace and pharmaceuticals – where there is a critical need for collaboration, transparency and robust audit trails.
These industries have advanced workflow tools that could be beneficial to financial services. These systems enable cross-division and cross-jurisdictional collaboration for the development, approval and manufacture of complex products. They are robust, with rigorous approval processes built into the businesses, and defined control points and audit trail processes. In this sense, there’s a direct parallel with the development and distribution of financial service products, in which robust and complex internal and regulatory standards must also be met.
How could digitalization help to better manage risk?
MW:There’s a lot of buzz around digitalization and machine learning, but I believe we’re still in the relatively early stages of its application for risk management. Digitalization and automation have the potential to significantly improve risk capabilities by generating valuable insights. Once you’ve digitalized key risk information, that then lends itself to layering other capabilities on top of that data, such as algorithms and advanced analytics.
Data and technology is also crucial when it comes to new product and services development. It’s becoming ever-more incumbent on business and risk organizations to ensure that they understand the risks of new products and how that risk is measured and monitored. Risk frameworks are continuously evolving, and the ability to codify those frameworks with policies, procedures and control points, and integrate those requirements into the business origination and risk management processes, is becoming increasingly important.
Alongside risk management, which other areas might benefit most from digitalization?
MW:Aside from client-facing applications, I see clear opportunities in control areas such as Compliance and KYC [Know Your Customer], with digitalization of client adoption, client lifecycle management and trade monitoring. The onboarding of clients, maintenance of their relationship and business activity monitoring is ripe for digitalization and has true business benefit – with the potential to create significant efficiencies for the customer and enhance their service experience.
Canoo co-founder challenges popular conceptions of what a car should be
6 min read
Can subscribing to an autonomous-ready electric car improve air quality, alleviate traffic jams and make driving fun again? Stefan Krause is betting on it, and Canoo – the California-based mobility service provider he co-founded to eliminate the difficulties of driving – is his chance to prove it.
For as long as he can remember, Stefan Krause has loved automobiles. When he was a boy living in Colombia in the 1950s, his family imported Volkswagens to Central and South America. The first car he remembers his parents owning was a BMW, and his passion for that vehicle led him into BMW’s executive ranks as an adult, where he reinvented the Mini and Rolls-Royce brands. He has driven in two modern-day Mille Miglia events, modeled after the legendary Italian open-road motorsport endurance race. He owns several classic cars, including two convertibles.
But while Krause loves cars, he has come to loathe driving – especially in large cities like Los Angeles, where he now lives.
“The great freedom that owning a car once gave you is gone,” said the co-founder, chairman of the Advisory Board and former CEO of Canoo. “Having a car in the city has become a hassle. It’s a great motivator to sit in L.A. traffic and think about solutions. [Cars] should be about mobility, but most of the time we’re sitting still.”
While trapped in those endless, polluting Los Angeles traffic jams, Krause pondered how to make the world’s existing automotive infrastructure work more efficiently while giving drivers more value from their cars. In megacities, those automobiles sit parked or gridlocked 90% of the time. Worldwide, including smaller cities and rural areas, cars sit unused, on average, 75% of the time.
The answer that emerged from Krause’s musings on this lack of motion in modern mobility is Canoo, an electric car company with a major twist: When Canoo introduces its first models in 2021, prospects won’t be able to buy them. Instead, they’ll subscribe to use them, much as they subscribe to watch programs on Netflix or Hulu. Because they’re fully electric, Canoo’s vehicles won’t produce emissions. They also will be autonomous-ready to allow existing roads to carry more cars safely, helping to eliminate the gridlock and accidents caused by human error and unpredictability.
“Our main mission is we want to build electric vehicles for subscription,” Krause said. “When you think about this, a car purpose-built for subscription, it needs to be quite different than a car built to sell to you. And that's why we didn't find the right car. And the idea was let's build a car that enables this type of a business model.”
Canoo will own the cars and all of the logistics that go with them, such as insurance. One of its goals is to replace a car that may need a repair with one that’s working perfectly. If a subscriber’s needs or preferences change, they can even swap one model for a different one. Unlike car leases, which typically last two to three years, subscribers take a car for as long as they want and then cancel at any point.
In short, Krause believes, subscriptions are the automotive business model of the future.
“Today, people want to make a monthly payment and have all their transportation needs handled,” he said. “They don’t want to register a car, insure a car, take a car to the dealership for service, sell a car when they’re tired of it. So our model is about making people’s lives easier by becoming the subscription company for mobility.”
Canoo plans to offer four different models – lifestyle, commuter, ride-sharing and delivery – but all of the bodies will be mounted on a simple, one-size-fits-all skateboard design. The base houses the battery and electric drivetrain and provides room for storage. The design allows for more internal room than a traditional car, but in a smaller package than a conventional SUV.
“When we look at today’s electric cars, we mainly see vehicles that still look like combustion-engine cars, with all those disadvantages,” Krause said. “We have all of this technology that you have to package into the vehicle, so it has developed into a three-box design: the engine compartment, the passenger compartment and the luggage compartment. Now we can put everything into the floor of the car, yet today’s electric vehicles still have a combustion-engine form. They’re dinosaurs. We’re going to take advantage of all the space that electrification opens up and give it to our passengers to enjoy.”
Canoo develops its designs on a cloud-based product innovation platform that serves the company’s centers in Los Angeles, Silicon Valley and China, along with Canoo’s suppliers.
“When you create a startup, you don’t want to spend time buying computers and figuring out how they work,” Krause said. “This whole company is run on cloud-based systems. We don’t have a server room. We didn’t have to wait six months to get our computers up and running. As we’ve grown we’ve moved four times, and after every move it is so easy. You put your computer on your table, log into your cloud-based platform, and you’re immediately back to efficiency. As a result, we have designed a car with just 400 people and a low investment.”
For example, he said, development costs for Canoo were just 10% of what his former employer, BMW, typically spends to develop a new vehicle design.
Krause’s BMW experience was pivotal, however, in Canoo’s decision to outsource its manufacturing rather than build its own factories. Canoo buys the cars’ components entirely from third-party suppliers and outsources assembly to contract factories. It’s a proven model; BMW has used contract manufacturing on a number of its cars, including the midrange 5 series.
Testing is another area where Canoo has innovated to substantially cut costs. Traditionally, physical crash tests account for a substantial percentage of the upfront costs winning approval from regulatory authorities in the United States, Europe and Asia. But Canoo has validated its skateboard design virtually, using cloud-based simulation software that perfectly replicates the physics of front and rear crashes. As a result, a single set of physical tests can be used to validate the results predicted by the virtual simulations. In addition, side-impact tests will be conducted on each of the company’s four designs. The result: development costs that are only a quarter of those for a traditional vehicle, and conducted in much less time.
Krause looks forward to the days when all vehicles are all-electric and autonomous. Eliminating pollution is an obvious advantage. Reducing or eliminating accidents by eradicating human error is another motivator. Eliminating noise is a third advantage, and one that few automotive executives mention.
“In some of the Chinese cities – Shanghai, for example – that have gone over to electric scooters and buses, the noise level has completely changed, making it a much nicer place to live,” Krause said. “You almost feel in the countryside; you can hear the birds again.”
Until that day arrives in Los Angeles, Krause is enjoying the energy and engagement of working in a startup.
“When I started this, I knew that I didn’t want to work for yet another blue-chip company. I didn’t want to do any more quarterly reports or annual meetings. Established companies are a big ship. You have a lot of people. You have a corporate culture, processes and systems, financial metrics. Successful companies have discovered some magic formula that works for them, and the system protects the magic formula and milks it. At some point, however, the world changes and you have to change. But now you’ve built a massive set of behaviors and culture and rules that fight you when you try to challenge them.”
Startups, however, are an entirely different animal, Krause has discovered to his delight.
“We have a different culture because the people that work here don’t see themselves as employees. They’re not looking for certainty and they’re not looking for safety. They want to do something cool, but they’re also looking for an above-average financial return for doing it. So they push innovation. They scrutinize our strategy and our thoughts and our ideas much, much more than our investors sometimes. They’re investing their lives in this, so they ask really good and tough questions. Once you give them the right answers and they’re convinced that you’re going to succeed, they will go all the way with you. They know the odds will always be against a startup. But motivation is high. You meet super-interesting people. You work with super-interesting people. The path is hard, but there’s a lot of fun to it.”
Former Member of the Board of Management of BMW AG for Development and Purchasing Burkhard Göeschel is a former colleague of Krause at BMW. Based on his experience, Göeschel is confident in Krause’s ability to advise the experienced Canoo team.
“He is open-minded to new and strategic ideas, and it’s not dependent on the size of the company. At BMW, I had some very strong discussions with him on new projects and unconventional solutions. We had a good relationship to step into new areas that also might be risky, but I could rely on his advice to get a common solution.”
Canoo aims to offer its first subscriptions in 2021, beginning in cities on the US West Coast with populations of 10 million or more. The target audience is young professionals who would like to drive an electric car but are too early in their careers to afford price tags of US$50,000 or more. Canoo’s subscription prices have not yet been announced.
“I think if you want to change the world you have to think radically differently,” Krause said. “Electric cars won’t work with combustion-engine business models. Thanks to the availability of new design systems, we were able to price a financially viable vehicle without reducing the quality.”
When disaster strikes, saving lives requires rapid analysis and response
7 min read
Humanitarian relief organizations may have the world’s most difficult supply chain challenge, requiring tradeoffs between cost, efficiency and speed with lives hanging in the balance. As their challenges increase, more of these organizations are adopting supply chain optimization systems, helping the organizations’ experts identify the best options in record time.
When violence flared in the remote Ferghana Valley of southern Kyrgyzstan in 2010, it drove an estimated 400,000 people from their homes, provoking the kind of humanitarian crisis that sets the International Committee of the Red Cross (ICRC) in motion to organize an emergency response.
At ICRC’s headquarters in Geneva,where planners for the organization’s Eurasia region are based, workers mobilized blankets and medical kits from Swiss warehouses for a crisis area more than 4,000 miles (6,437 kilometers) away. As the planning unfolded, however, a member of ICRC’s logistics team realized that its warehouse in Peshawar, Pakistan, though responsible for serving the ICRC’s Far East division, was much closer, only 1,000 miles (1,600 kilometers) from Kyrgyzstan.
“What we had to do was use intuition,” said Christophe Hambye, head of the ICRC’s logistics division. “The cost of flying supplies from Europe would have been tremendous.”
Fortunately, ICRC’s risk of logistics missteps has dropped since the organization computerized many of its logistics functions, Hambye said. One piece of software, developed with two engineering schools, the École Polytechnique Fédérale in Lausanne and the Eidgenössische Technische Hochschule in Zurich, helps the ICRC determine where to preposition supplies to optimize response times.
“We managed to model where we should be keeping different inventory, taking into account inbound routes — where commodities come from and by which means of transport — and how we model the outbound routes from these centers to selected operational sites,” Hambye said. “It includes speed of delivery, urgent scenarios and the environmental footprint.”
While retail firms have used computers to optimize their sprawling supply chains for more than a decade, humanitarian organizations – which often have diverse global suppliers and emergency needs spread over different parts of the world – are only beginning to deploy sophisticated supply chain software. These systems analyze the complex logistics of purchasing, storing and dispatching supplies in a matter of seconds, managing the tradeoffs and presenting planners with a range of options. This ensures that better options, such as the one ICRC almost missed in Kyrgyzstan, are always considered.
When used by humanitarian organizations, however, the supply chain systems developed for commercial organizations may need additional programming. If airports, roads or ports are closed by war, weather or earthquakes, for example, relief agencies that have worked in advance with their system’s programmers will be able to automatically source helicopters, camels or elephants to transport supplies into otherwise inaccessible regions.
SAVING LIVES, NOT MONEY
While business and industry tend to use supply chain optimization to reduce their costs, humanitarian organizations have a different agenda.
“When you deal with humanitarian goods the objective is not to maximize profits or revenues, but rather to save human lives,” said Burak Kazaz, a professor of supply chain management at the Whitman School of Management at Syracuse University.
Kazaz and two academic colleagues were called in by the United Nations Children’s Fund (UNICEF) to help the organization figure out how much of its budget to spend shipping relief supplies by ground, which is less expensive, versus how much to transport by air, which costs more but can reach a disaster-hit area more quickly, saving more lives.
In 2008, for example, 8.4 million people faced a “hunger emergency” in parts of Ethiopia, Somalia and Kenya when crop failures hit crucial areas and UNICEF ran short of ready-to-use therapeutic food (RUTF), a nutrient-dense combination of peanut butter, vegetable oil, powdered milk and vitamins packaged for long shelf life. The Kazaz study found that the agency had not set aside enough emergency funds to transport RUTF shipments by air and had to raise more money, a time-consuming process.
To prevent such situations in the future, Kazaz and his colleagues developed a mathematical model to help agencies like UNICEF figure out how much of the agency’s budget should be earmarked for shipping relief supplies by ground methods (sea or truck), or by air. “Our work provided a scientific approach to the problem as opposed to a gut feeling of ‘let’s reserve a certain percentage for air shipments,’” Kazaz said.
For example, one counterintuitive insight the model produced was to suggest spending heavily in just one country rather than spending money evenly over all the affected countries. By accurately determining the needs for one country, with expenditures for resources such as staff on the ground to determine the state of crops and obtain accurate weather data, Kazaz said, UNICEF can more efficiently distribute its relief aid.
“Instead of two uncertain markets, it’s better to resolve uncertainty in one market, which reduces the need for air shipments to that market,” Kazaz explained. “They can now put the money saved from air shipments into making more surface shipments to the (remaining) uncertain markets.”
GAINING A GLOBAL VIEW
An even bigger effort to streamline supply chains for humanitarian relief is taking place under the auspices of with non-governmental organizations (NGOs) in an effort to eliminate overthe United Nations, which is working lap and shortages when a crisis hits. Known as the Emergency Supply Pre-Positioning Strategy, or ESUPS, the goal is to create a shared central platform for tracking all organizations’ relief inventory, then use optimization software to determine where relief supplies should be stored. The software makes its recommendations based, in part, on data from past disasters.
“There’s a million reasons why importing relief items to a country at the time of a disaster is the worst possible time,” said Florent Chane, who works for the German relief organization Welthungerhilfe and serves as project manager for ESUPS. After a big storm, he said, port and airport infrastructure is often damaged, and customs officials can be overwhelmed by the influx of aid.
In countries where the need is predictable – the Philippines, for instance, which has an average of 20 cyclones per year – aid organizations pre-position supplies like tarpaulins and latrines so they will be available when needed.
The difficulty, Chane said, is that aid agencies currently don’t share information about what and where they are pre-positioning disaster relief. “Either you have too much stock for some items or they are not in the right place, or there are other items you don’t have enough of,” he said.
Another challenge is that emergency assistance provided by donor governments often comes with restrictions, such as being legally earmarked for certain countries or regions, which limits aid agencies’ ability to move them to areas where they may be more needed. Such limitations greatly complicate the process of allocating aid. Supply chain systems can help ensure that agencies observe the restrictions and avoid repercussions due to mistakes.
ESUPS involves a two-part process: data collection, followed by analysis to figure out where to store items. First, ESUPS is working to assemble a database of what every aid agency actually has in its local warehouses in each country, a process complicated by the fact that each agency has different names for the same items or different components in similar items. For example, a medical kit in one country may differ from a medical kit in another.
Once the inventory data is collected, ESUPS needed software to analyze the data and determine which supplies needed to be moved. Data scientists at Penn State University and the Massachusetts Institute of Technology’s Center for Transportation and Logistics teamed up on the challenge, outlining a mathematical model for optimizing the pre-positioning of relief supplies. The potential cost savings? Between 7% and 20% – money the agencies could use to provide even more relief.
Jason Acimovic, an assistant professor of supply chain management at the Smeal College of Business at Penn State, specializes in helping private companies optimize their supply chains so that customers get their online orders in the shortest possible times at the lowest cost.
Luckily for humanitarian agencies, Acimovic was able to use the same kind of data analysis he did for private firms – assigning a simple metric to inventory held in a specific location – to figure out a better way for pre-positioning relief supplies.
When he was working with an industrial client, Acimovic said, he developed a two-step process involving a linear program, a standard tool that optimizes how to deliver goods from a set of warehouses to a set of demand locations, coupled with what he calls a “balance metric,” which tells the firm in a single number whether the inventory at any location was sufficient.
“The linear program is an optimization problem, so we can minimize cost and also minimize time, which is another way of saying, ‘How fast can you get the relief to the intended beneficiaries?’” Acimovic said. “Now time becomes a more important aspect to look at than cost.”
Of course, businesses have years of customer data, which they can analyze to make predictions about future demand. It’s not so easy with humanitarian relief, which involves unpredictable and fast-changing demands. But the scientists were able to sift through a database called EM-DAT, which contains records of disasters going back to 1900.
“The balance metric could help the NGOs realize where their gaps and overlaps are to create a dashboard or key performance indicator that would tell them they had too many blankets in Dubai and not nearly enough in Asia,” Acimovic said.
MANAGING THE UNKNOWABLE
The scientists acknowledge that humanitarian relief, unlike online retailing, has many unknowable issues; once stored in a country, it may not be as easy to get goods out as it was to get them in, for instance. “This balance metric that we’ve developed can be one of the things that helps guide NGOs to making better decisions that will be cheaper and have a quicker response in the future,” Acimovic said. “It can be used as part of the decision-making process because we know there are a lot of things that can’t be quantified.”
The ESUPS program is being rolled out in the Philippines for a first test, Chane said, because the United Nations and NGOs there already use an existing humanitarian platform, called Pacific Region Logistics Cluster, to keep an accurate account of their relief inventories.
“Basically, we have defined the starting point, which gives us a picture about the situation in the country,” Chane said. “Using the algorithm, we define the optimum level of stock based on that data, where it should be, what items, in which quantities, and we can provide recommendations to the government and partners in that country to say: ‘This is how you can transition to an optimum situation.’”
Human experience and intuition may always play a role in humanitarian relief, where so many variables are unknown and unpredictable. But by adopting more sophisticated optimization tools, aid agencies are improving their ability to respond quickly and at minimal cost, saving more lives.
How telecoms are using a simple concept to better serve complex needs
3 min read
5G, the fifth-generation communications and data platform for mobile devices, is not a network. Instead, it is a concept for organizing networks and other technologies to create greatly expanded capacity, enabling a wide variety of uses in multiple scenarios.
5G (fifth generation) represents the latest in cellular mobile communications, but it is more than an evolution of 4G technology. Proponents describe it as a platform for digital innovation, linking everything digital and managing that data more efficiently and effectively than ever before.
Peter Linder, head of Ericsson’s 5G Marketing in North America, describes the difference this way: Say you lay asphalt for a highway based on current and projected traffic patterns. “When traffic patterns change, you haul your equipment out and widen the road,” Linder said. “That’s today’s 4G network – smart phones and fast Internet speeds, traffic metered in bits and bytes.”
5G goes one step further, laying more digital “asphalt” in a new part of the spectrum. By matching the needs of different use-cases to the specific capabilities of different spectrum ranges, 5G can accommodate more traffic simultaneously, much as smart roads and autonomous driving systems will one day enable cars, pedestrians and bicycles to coexist in perfect safety.
A MODULAR STRATEGY
“That much variation is only possible with modularity,” said Jan Gopfert, founder and managing director of ID-Consult GmbH, a Munich-based firm that advises companies on complex projects.
A modular approach allows telecom equipment makers and wireless carrier companies to deploy and combine different radio, baseband and cloud technologies flexibly across multiple spectrums and distributed architectures.
To achieve it has required broad collaboration among telecom equipment makers, including Ericsson, Nokia, Qualcomm and Huawei, together with mobile operators, including AT&T, Sprint, Orange and Vodafone. The result: a three-layer infrastructure to support different bandwidth and latency requirements:
• Enhanced Mobile Broadband (eMBB). Addresses consumer demand for faster, more reliable mobile broadband with data transmission rates of at least 100Mbps for HD video and augmented reality/virtual reality.
• Ultra Reliable and Low Latency Communications (URLLC). Handles real-time, mission-critical tasks that can’t risk interruptions, including remote surgery on patients,autonomous vehicle interaction and industry automation. Latency for such critical applications must be less than 1 millisecond.
• Massive Machine-Type Communications (mMTC). Supports the billions of low-cost, long-battery-life devices connecting to the Internet of Things (IoT). These devices transmit low volumes of non-critical data and are not particularly delay-sensitive.
To create enough room for all of the anticipated traffic, the carriers have agreed to employ unused spectrum in the high-frequency range, where more bandwidth is available. Technologies for higher frequencies, however, have shorter ranges than 4G, so each technology is being used to deliver communications and data within the limitations of its own range.
“In the first phase, the industry is not trying to cover the whole universe of 5G,” said Volker Held, Nokia’s 5G market development manager. “We did a lot of activities with companies like Qualcomm and Intel to create devices with interoperability to communicate properly from a network perspective, and we are continuing the collaboration with the ecosystem for further building blocks of 5G technology.”
Initially, 5G will offer faster speeds on smartphones and wireless devices. As 5G evolves, IoT usage will ramp up, interconnecting devices, vehicles, cities, utility grids and infrastructure.
By 2025, Statista.com estimates that more than 75 billion devices will be connected to the internet.
The most demanding and complex applications will require sophisticated, modular combinations of the technologies. Assisted and autonomous driving, for example, requires dynamic cellular-V2X (vehicle-to-everything), vehicle-to-vehicle (V2V), vehicle-to-infrastructure (V2I), and vehicle-to-network (V2N) communications. 5G will direct that traffic into the high-frequency range, where signal response time is super fast (low latency). To enable this, Qualcomm, Ericsson, Ford, Audi and others are creating new devices and systems that reliably deliver signals 20 times faster than 4G.
Other uses, however, don’t require that kind of mission-critical speed. Smart facility climate control systems, factory production lines and e-commerce chatbots fall into this category. Still, they will require different equipment working in different frequencies, or will depend on cloud-native, software-driven architecture than can shift computations into the edge cloud.
“This requires a high degree of orchestration and automation capabilities from the start,” Ericsson’s Linder said. ”While 4G is based on standardized network functions for a universal service, 5G allows us to tailor capabilities for specific categories of use cases.”
As 5G evolves, the platform will be subdivided further through virtualization technologies that include Software Defined Network (SDN) and Network Functions Virtualization (NFV) – an approach known as “Network Slicing.” Slicing allows virtual networks to be dedicated to particular functions. Deployment is expected in 2020.
“5G is a system of systems that makes the network totally programmable, with different virtual networks on the same infrastructure,” Held said. “It will enable a lot of vertical industries to digitalize themselves.”
Cities seek innovative ways to allocate space to pedestrians, vehicles and bicycles
7 min read
Urban congestion is a growing challenge, so local authorities and private companies are all in search of more sustainable and efficient mobility networks for pedestrians, cyclists and drivers. Smart solutions, from automated vehicles to apps for seamless journey planning, are helping pave the way for safer, cleaner and more reliable urban mobility.
In cities around the world, getting around is an increasingly challenging business. Traffic congestion causes delays and frustration, making some routes no-go areas during peak times and undermining the convenience and freedom of movement that made car ownership so popular.
As drivers fume in traffic, those using buses, trams or trains must negotiate the same streets, often facing long waits at their pick-up points or stations. Between different modes of transport, they join the cyclists and pedestrians, who in some areas wear protective masks to navigate crowded streets amid clouds of exhaust fumes.
With little or no coordinated planning in most cities for peaceful coexistence among different types of transportation, travel could seem doomed to being ever-more frustrating and dangerous – but innovators and entrepreneurs are joining city officials in developing solutions.
In Helsinki, for instance, travelers are using the Whim app to pre-plan their journeys by selecting favored modes of transport, from buses and bike shares to trains, trams or taxis – all paid for through the app. If plans change, travelers can adjust their routes and modes of transport in real time to maximize convenience and minimize delays. This is Mobility as a Service (MaaS) in action, illustrating how technology can enable the holistic management of urban mobility issues on an individualized basis.
“The technical elements, such as cloud services, APIs and integration between systems, now exist to combine all the modes of transport in a convenient and seamless way that can compete with the freedom gained from owning a car,” said Sampo Hietanen, founder and CEO of Finland-based MaaS Global, the company behind Whim.
Whim’s success in Helsinki – and its deployment in cities in Belgium and the UK – shows how the technologies that are increasingly available on mobile devices can enable urban transportation that offers the freedom and choice long available only from car ownership.
“We will see the evolution of personal subscriptions for urban mobility, similar to mobile phone contracts,” Hietanen said. “For over a decade, young urban people have been getting their driving licenses later; in some cities, car ownership is falling. Millennials are no longer dreaming of car ownership; they want to experience MaaS and, so far, they’re completely underserved in that.”
Meanwhile, in the West Midlands, a metropolitan county in England, a vision is emerging of a more responsive, convenient transport network that uses data sharing to connect people to key destinations that include work, housing and education. “Data sharing between vehicles could help the transport network respond quickly to disruptions and changing demand,” said Laura Shoaf, managing director of Transport for West Midlands (TfWM), the public body responsible for coordinating transport services in the county. “Technologies such as connected and autonomous vehicles build on this potential, as vehicles will be able to share data with each other to optimize the routes they take on the network.”
MaaS ultimately promises urban travelers a seamless experience that combines multiple transport modes to take them from door to door without the hassle of finding parking spots, waiting in line or getting to and from terminals. In fact, MaaS can open a world of travel opportunities for around 616 euros (US$689) per month, equal to the average monthly cost of owning a car in Europe, as reported by LeasePlan in its annual car cost index for 2018. The cost is similar in the US, with an average cost of US$706 (628 euros) per month, based on the American Automobile Association’s figures for 2017.
“For the average cost of car ownership it would be possible to provide unlimited mobility on trains, buses, trams, taxis, bike shares and a choice of cars whenever you need to drive – not only across a single country but in cities around the world,” MaaS Global’s Hietanen said.
AUTONOMY FOR THE PEOPLE
Public transport isn’t the only focus area for improving urban mobility, however. Many people love their cars, if not the experience of driving them in the city. In the high-tech, autonomous driving era, multiple integrated technologies will transform cars into “productive data centers and, ultimately, components of a larger mobility network,” consulting firm McKinsey predicted in a 2019 article titled “Mobility’s second great inflection point.”
The emergence of electric vehicles, combined with automation, is the great enabler.
“The availability of electric vehicles has coincided with the development of autonomous cars and intelligent road networks,” said Heikki Laine, vice president, Product & Marketing, at Cognata, an Israeli company that uses artificial intelligence to provide virtual testing environments for autonomous vehicles. “A big driver of that is tech giants entering the space and working with startups and vehicle manufacturers to change the way goods and services are delivered to people.”
Although it may be a while before autonomous vehicles (AVs) are a common sight on city streets, progress is being made.
“AVs are being tested in several US states, while China is pushing hard for autonomous innovation,” Laine said. “Crucially, regulators are also getting up to speed. In Singapore, for example, we’re seeing regulations around the use of AVs.”
And while smart cities, highways and connected vehicles are already established concepts, Laine said the final piece of the puzzle – the human factor – is falling into place. “It’s not just about putting sensors on things and connecting them; it’s about turning that into real, measurable improvements for the experience of the person in the city,” Laine said.
SAFE, CLEAN AND RELIABLE
That urban travel experience needs to be safer, cleaner and more reliable for everyone, whether on foot, on two wheels or in a vehicle.
“I like owning and driving a car, but I love the idea of automation making my life safer, easier and reducing my footprint on the world through efficiency,” Laine said. “Those are things we’ll see huge improvements on during my lifetime and I’m very excited about it.”
While connected vehicles may actually increase the amount of traffic on the roads, they also stand to help optimize existing transport infrastructure because they enable cars to safely drive faster and closer together, DesignNews.com reported in a January 2019 article titled “5 Predictions of Tech Disruptions in the Next Decade.”
“That means doubling or tripling the effective road capacity without the need to continually widen freeways,” the article said. “Lane widths, traffic signals, long merge-ways, and a host of other features will become useable driving space when the vehicles are all working together.”
With transportation accounting for almost a quarter of Europe’s greenhouse gas emissions and the main cause of air pollution in cities, a European Commission study on climate change reports, the opportunity to make an environmental impact is significant.
“Automated mobility pairs efficiency with electricity [to power automobiles], so it can make a real, measurable impact on carbon emissions,” Laine said. “We’re already seeing cities in Europe, for instance, limiting the amount of car traffic, especially in terms of vehicles that are not using clean energy. Moving to electrification, where the end-point emissions are eliminated, reduces emissions at the urban level. Even at the macro level, that pairing of energy efficiency with cleaner energy production through renewables ripples out from the city to impact the wider environment.”
As the technologies on travelers’ phones and in public and private vehicles enable more holistic management of urban mobility issues, barriers to seamless multimodal transport are falling thick and fast. But some gaps remain.
“To create a sustainable urban mobility model, MaaS needs to happen before AVs hit the roads in great numbers,” Hietanen said. “We need to find models that give people the individual choice that makes them comfortable. That’s going to be one of the biggest issues for cities. They need to start planning now, in a way that enables the seamless use of multiple transport options and allows all the innovations that come with it.”
And while Laine foresees a gradual adoption of AVs in cities, the groundwork is already being laid.
“University and corporate campuses are the natural first adopters of AVs because they can build out the infrastructure much faster,” Laine said. “The changes we’re seeing there – such as making interchanges more friendly to robo-taxis and specifying pick-up and drop-off locations – are small-scale versions of what we will eventually see across the cities themselves. On a larger scale, the city of Los Angeles is looking at how to connect the port and rail yard to accommodate autonomous trucking; do they need a separate lane, for instance, or can the AVs interact with regular traffic?”
In France, an electric autonomous shuttle service has been launched at the University of Lille. And in the US, real-estate operating company Brookfield Properties is providing autonomous vehicles to transport tenants of the Halley Rise office park development in Reston, Virginia, between their office buildings and parking lots.
Successful models will need to strike a delicate balance between the interests of travelers and those of stakeholders such as transport providers, who traditionally have resisted cooperation, seeing it as a killer of competitive advantage.
“There are many who want the concept of mobility as a service to happen, but there are also many who want to control how it happens and to own the end-user relationship,” Hietanen said. “But end users want to get all their services from a one-stop shop and to choose where they get that access from. Nobody is big enough to do this on their own. It needs a lot of coordinated cooperation. It needs an ecosystem.”
As that ecosystem develops, both urban travelers and transportation providers stand to benefit, TfWM’s Shoaf said.
“Connected and autonomous vehicles will transmit and receive data about congestion and pollution,” she said. “Sharing this data between vehicle owners, manufacturers and public sector authorities could allow optimization of routes to improve air quality and reduce journey times. In addition, better sharing of data about travel demand and usage, with a strong focus on the end user, will help public authorities and transport providers to plan new schemes better so that investment in the transport system is directed to services which meet users’ needs.”◆
Sustainable operations offer a competitive differentiator
for savvy shipyards
3 min read
As sustainability becomes a greater priority in the shipping industry, some shipyard operators are capitalizing on design and manufacturing innovations that enable zero-waste operations to produce zero-emission ships. The result? Shipping and shipbuilding businesses that are more sustainable.
As shipyards worldwide focus on strategies for improved competitiveness, Damen Shipyards Group in Gorinchem, Netherlands, has chosen an innovative approach to differentiating its offer: deploying simulation technology to efficiently design and build vessels that minimize carbon emissions.
The company’s new, fully electric ferries, for example, have zero emissions, while emissions from its other craft have been cut by 20%-60% via hybrid propulsion technologies, in some cases reducing vessel resistance through hull design or applying different types of surface finish. Air lubrication also cuts energy demand by up to 10%.
“System integration and optimization are key to carbon reduction,” said Jorinus Kalis, Damen’s manager of development in R&D. “This is where digital technology plays an important role. Right from project initiation, we use 3D design, development and visualization to digitally create, test and validate efficiencies in our systems, products and operations.”
3D model-based data allows designers to demonstrate new ideas to internal and external stakeholders. “The options for creating greater efficiency can be complex and therefore difficult for people to understand,” Kalis said. “The business and technical cases for modifying and innovating interacting fuel, propulsion and electrical systems can more easily be made using highly visual and ultra-realistic validated data that proves the financial and environmental impacts of decisions.”
INCREASING SUSTAINABILITY AWARENESS
Lloyd’s Register, the marine classification and professional services organization, reports that meeting the UN’s goal for the shipping industry of 50%-70% carbon emissions reduction will require significantly more zero-emission vessels (ZEVs) by 2030. To achieve this, an increasing number of new-builds will need to be zero emission, to compensate for the CO2 output of existing fleets.
The business implications for the shipbuilding industry are clear: operators will choose the yards that can most efficiently, competitively and sustainably build and deliver low-emission and zero-emission vessels.
As a result, innovative shipyards – like Damen – are increasingly focused on the inextricable link between environmental and commercial factors. To balance the many competing priorities of modern ship operators, these shipyards are deploying digital simulation to explore and solve CO2 emissions issues while simultaneously increasing productivity and efficiency to become more environmentally and commercially sustainable businesses. 3D simulation allows shipyards to explore many more design options to zero in on the optimal balance of performance, initial cost, total cost of ownership, cargo capacity, environmental impacts and more.
“The current pressure to reduce emissions, and need to minimize costs, is driving demand for efficient ship designs,” said Richard Halfhide, editor of The Naval Architect, the Royal Institution of Naval Architects’ principal magazine. “There’s no silver bullet for low-carbon shipping yet, but operators live in the same society as the rest of us and want to find solutions. Yards that offer low-carbon vessels will be the big winners in the marketplace so shipyards are concentrating on that, to the mutual advantage of the planet and their business.”
Damen Shipyards Group is a prime example of the trend. The company employs 12,000 people worldwide and produces 150 vessels each year. Damen’s vessels range from 10-meter (32 foot) workboats to 205-meter (673-foot) navy support vessels. These are manufactured, serviced and refurbished at yards located on six continents.
Damen’s leaders view their focus on sustainability as a good business decision.
“Rather than wait for legislation and rules to drive change, we are making a difference by developing new propulsion systems, such as hybrid electric and battery diesel electric, as well as working toward ever-more efficient and zero- materials-waste manufacturing,” Kalis said. “There is a strong business and social incentive to promote environmental sustainability. Common sense tells us to act responsibly, and that boats and yards that reduce emissions and waste at the manufacturing stage achieve technical, commercial and environmental improvements.”
SAFER, CLEANER POWER
For more than 100 years, dieselpowered boats have contributed to a thriving maritime economy but also to environmental degradation. To reverse that trend, designers are focusing on innovative ways to reverse the tide. New ideas include exhaust scrubbers and catalysts that capture emissions before they are released into the atmosphere; replacement fuels that include LNG, hydrogen, methane and methanol; and oxidized fluid cells, like those found in hybrid cars.
The World Trade Organization (WTO) projects that international trade will grow at around 3.5%-4% per year; news organization Reuters reports that this demand is likely to drive up ocean cargo and, consequently, demand for ships. Simulation technology is helping shipbuilders to capitalize on this growth market by incorporating data about a boat’s expected operating conditions into its design, ensuring overall design integrity and manufacturability before production begins. Combining the vessel’s component, system and software data at the design stage, where the data can be tested virtually through advanced digital simulation, helps designers to achieve optimum performance.
“Because we combine systems and validate them before they have been physically initiated or procured, mistakes are avoided and risk is reduced,” Kalis said.
“In addition to simulating onboard vessel systems, Damen’s shipyard operations have also been simulated, leading to manufacturing process efficiencies and reductions of wasted materials and work. This strategy has doubled manufacturing productivity for some shipyard operations, and we plan to extend this aspect of simulation further.”
Ultimately, he said, investment in powerful simulation capabilities helps Damen optimize the performance of its products – and the performance of its business.
“Digitalization means we can make firm performance commitments to partners, stakeholders and operators, demonstrating the additional value these innovations bring in terms of assured financial gain.” ◆
For more information on intelligent connected systems, please visit: go.3ds.com/2MP
New health regulations make data integrity the foundation of safe food supplies
3 min read
In 2011, US President Barack Obama signed the US Food Safety Modernization Act, the first major US food safety legislation since 1938. Compass spoke with Daniel R. Matlis, president of Axendia, a food and drug industry analyst firm, about how and why the US Food and Drug Administration (FDA) is depending on food industry data to achieve the legislation’s goal – safe food supplies – and how food companies worldwide will be affected.
COMPASS: What are the goals of the US Food Safety Modernization Act (FSMA)? And are regulatory agencies in other parts of the world moving in the same direction?
Daniel R. Matlis: The FSMA shifts the FDA’s food safety focus from a reactive process – someone gets sick from food and the government tries to figure out why – to preventing contaminated and unsafe food products from ever being released to the public. The law also applies to all food imported into the United States, so non-US food producers also must ensure compliance.
What may surprise you is that the FDA is not simply counting on physical inspections of food processors and producers to achieve the law’s goals. Instead, the FDA is using the data collected by every producer, transporter and processor as food moves through the supply chain to identify and eliminate sources of contamination.
The deadlines for implementation have passed for all but the smallest farms. So what steps have food companies taken to meet these new data-collection requirements?
DRM:Unfortunately, most companies continue to focus on compliance and record-keeping as an operating expense, so they’re using more people, more time, more spreadsheets and more paper in an effort to meet these requirements. In reality, this drives real costs up and productivity down. Even worse, it does little to identify the gaps and address the risks that the legislation was intended to eliminate, so our food chain may not be significantly safer than before.
How should companies be responding?
DRM:Sound data is the foundation to good decisions and good science. Product quality, safety and efficacy all rely upon the vast amounts of data generated throughout the product lifecycle.
However, to give the FDA the visibility it needs, manual methods simply can’t report relevant data with enough detail and context. What results is an incomplete picture of the risks and hazards, which leads to unrecognized vulnerabilities and uninformed decision-making.
The FDA has cited companies for a long list of data integrity problems: lack of raw data to support records; inaccurate and incomplete records; test results for one batch being used to release other batches; backdating; fabricating data; and discarding data. All of these issues are inherent in manual, paper-based reporting because those methods lack security and don’t maintain the data history.
Do companies need to invest in more computer systems?
DRM:No, more systems are not the answer. The real challenge is to manage data across multiple systems that were never designed to work together, which is why people have to run around and collect the reporting data manually.
What companies need instead is a platform that ensures data integrity from beginning to end. It’s the only way to achieve digital continuity and integrity and make compliance reporting simple, informative and actionable.
Why is a platform necessary to digital continuity?
DRM:A platform approach unifies data, applications, processes and people across the organization, as well as with external partners. Data-consuming applications from business, manufacturing, laboratory and quality areas all draw data from an authoritative source. This allows users across the value chain to access, organize, analyze and share scientific, quality and process data with full confidence of their integrity. Digital continuity enabled by a platform makes data available while ensuring that it is unaltered, complete, useful and in context.
How can companies justify the cost of a platform for regulatory compliance?
DRM:The silver lining in all of this is that platform-enabled data integrity and consistency don’t just help with regulatory compliance. In fact, they are the key to ensuring overall quality, accelerating innovation, shortening product development cycles and increasing the rate of new product introductions.
A fully integrated platform enables collaboration, decision-making and innovation by supporting visibility across research, design, quality, manufacturing and post-market. While you may not want to invest in a platform just to support compliance, you can certainly justify investing in one to grow and improve your business.
So you expect to see more companies make the transition?
DRM:If they want to survive they don’t have a choice about whether – only when. Standalone solutions have created disconnected data islands that hinder visibility, quality and compliance, increase costs and make it difficult or impossible to make data-driven decisions. It’s time to view the entire business as an integrated system with the overarching goal of improving quality and safety.
Companies that do this will win in the marketplace because they will have earned the trust of both regulators and consumers by supporting safe food supplies.
Innovation and sustainability go hand in hand in pharmaceutical manufacturing
4 min read
With support from their global regulatory bodies, more pharmaceutical manufacturers are embracing digital technology. As they strive to operate more efficiently and sustainably, they also are accelerating healthcare innovation to save more lives.
At the end of 2018, scientists at the University of Edinburgh’s Roslin Institute confirmed that they had bred genetically modified chickens that produce eggs packed with proteins widely used in drug discovery and biotechnology. The process is 100 times more economical than producing the proteins in factories – and it is more sustainable, too.
While the researchers face years of work before the process can produce medicines for human use – just gaining regulatory approval could take decades – they said the study provides a “promising proof of concept” that could lead the way to more efficient drug production.
The Roslin project is just one example of innovative research focused on accelerating the process of inventing and developing new drugs. With a growing world population, aging demographic and the rising prevalence of chronic diseases, pharmaceutical companies are under intense pressure to find more treatments more quickly and increase drug yields and quality, all while reining in the high cost of drug discovery and reducing its environmental impact.
That’s a lot to juggle all at once, but Daniel Matlis, president of Life Sciences industry analyst firm Axendia, believes that focusing on innovation and sustainability is a powerful combination to drive competitive differentiation in life sciences.
“There are opportunities to manage cost while improving outcomes when you are green,” he said. “If you approach innovation and sustainability initiatives in a positive manner, by looking for ways to do good for your patients, your employees and for the environment, and do well for constituents and shareholders by improving value, that’s when you see companies achieving the best results.”
Each year, Corporate Knights publishes its Global 100 index, a ranking of the world’s most sustainable companies. Companies are judged on numerous criteria, including renewable energy use, waste production and supply chain sustainability.
In a nutshell, a sustainable company is “one that balances its pursuit for profits with responsibility toward human life, society and the environment,” said Michael Yow, director of research at the Toronto-based media and investment advisory firm.
In 2019, for example, Japanese biopharmaceutical company Takeda made the list for the fourth consecutive year.
“As a patient-centric, global, valuesbased, R&D-driven biopharmaceutical company and responsible global corporate citizen, our charge naturally extends from life-changing medicines to building sustainable value,” Christophe Weber, company president and CEO, said when the award was announced. Among other sustainability achievements, Corporate Knights recognized Takeda for performing in the top 25% of all companies for innovation capacity.
For many such companies, advanced technology developments in the fields of scientific modeling and simulation hold the promise of accelerating discovery for drugs, vaccines, medical devices and more while also improving manufacturing efficiency.
In the life sciences, simulations are becoming an increasingly powerful option for testing new drug formulations without risk to humans. Scientists at California’s Stanford University, for instance, are taking part in the Living Heart Project, which uses a scientifically accurate digital 3D heart model to simulate how drugs affect the entire organ. The model also can predict the drugs’ risk of side effects such as lethal arrhythmias, the leading reason for the US Food & Drug Administration (FDA) to deny approval to a new drug.
“BY LOOKING FOR WAYS TO DO GOOD FOR YOUR PATIENTS, YOUR EMPLOYEES AND FOR THE ENVIRONMENT, AND DO WELL FOR CONSTITUENTS AND SHAREHOLDERS BY IMPROVING VALUE, THAT’S WHEN YOU SEE COMPANIES ACHIEVING THE BEST RESULTS.”
DANIEL MATLIS PRESIDENT, AXENDIA
“Modeling and simulation plays a critical role in organizing diverse data sets and exploring alternate study designs,” FDA Commissioner Scott Gottlieb said in July 2017, when outlining the regulatory body’s plan to help consumers capitalize on advances in science. “This enables safe and effective new therapeutics to advance more efficiently through the different stages of clinical trials.”
In April 2019, for example, global biopharmaceutical firm AstraZeneca confirmed that it will be using artificial intelligence and machine learning for the discovery and development of new treatments for complex diseases that include chronic kidney disease. AstraZeneca said it plans to use the technology to better understand the underlying mechanisms of complex diseases and more quickly identify new potential drug targets.
“The vast amount of data available to research scientists is growing exponentially each year,” Mene Pangalos, executive vice president and president of BioPharmaceuticals R&D at the company, said in a press release. “We can unlock the potential of this wealth of data to improve our understanding of complex disease biology and identify new targets that could treat debilitating diseases.”
Simulation also can help life science companies optimize their processes for drug manufacturing development.
“Scale-up in biopharma manufacturing is not a linear process,“ Matlis said. “While you may have mastered how to make a product in a 15-liter [approximately 4 gallon] vessel, when you scale up to 1,500 liters [approximately 400 gallons], you don’t just multiply everything by 1,000. You have to take into account a multitude of process variables to ensure product quality and yield.
“Traditionally, companies executed physical scale-up trials to hone the process variables and manufacturing equipment in order to be able to achieve sustainable, steady-state manufacturing,” he said. “Today we’re seeing innovative companies modeling and simulating these processes using digital twins of product, process and equipment, in order to scale up and achieve sustainable manufacturing levels – high quality, high effectiveness, high efficiency – while minimizing the number of actual test and validation runs that need to be done.”
DRIVING POSITIVE CHANGE
Regulatory bodies like the FDA play a key role in encouraging or discouraging the industry's use of technology innovation.
“Today, realistically, computer modeling and simulation does not play a driving role in regulatory decision making, but we want it to,” Tina Morrison, deputy director, Division of Applied Mechanics at the FDA, said at a 2018 conference. “We want to lessen the burden of evidence in clinical trials and animal studies. We want to do the work that’s necessary, not the work that we think is needed just because that’s what we’ve done for 20 years.”
Ultimately, Matlis said, pharmaceutical businesses must look at sustainability in drug discovery and manufacturing in a holistic way, across their entire product lifecycle. “This is not just about reducing waste and packaging,” he said. “It’s about engraining innovation and sustainability concepts into the organizational culture and implementing the technology to achieve these goals.”
One major challenge, he said, is convincing pharmaceutical executives that the benefits of modeling and simulation in drug discovery, development and manufacturing are powerful – and real.
“When I talk to executives and we discuss modeling and simulation, using the example of the Living Heart Project, the reaction that I get most often is, ‘This cannot be real. This cannot be happening today,’” Matlis said. “They need to recognize that these technologies are not simply buzzwords. We need to shift from the paradigm that all these technologies are science fiction and realize that they’re science fact.” ◆