Smarter factories

5G networks hold the key to usher in a new era of manufacturing

Alex Smith
22 April 2021

5 min read

5G networks provide an unprecedented level of speed and reliability in wireless connectivity. As 5G service becomes more widespread, these characteristics will enable the Industrial Internet of Things, allowing connected devices to make factories smarter and establishing a network infrastructure to support cutting-edge applications. The result? More dynamic and automated manufacturing processes.

As manufacturers look toward a digital future, the Industrial Internet of Things (IIoT) looms as a crucial building block. The next era of manufacturing – often referred to as the Fourth Industrial Revolution – hinges on reliable, real-time insights, made possible by analyzing and controlling the physical production line in real-time with digital technology.  

“The first step of the Fourth Industrial Revolution is about connecting all assets,” said Guilherme Pizzato, head of ecosystem partners for manufacturing & logistics at telecommunications and consumer electronics giant Nokia. “Once connected, manufacturers can collect and analyze all available data and use that knowledge to make better, actionable decisions. This enables capabilities such as asset monitoring, predictive maintenance and advanced robotics.”

So far, however, IIoT’s potential for transformation has been unrealized due to the limited capabilities of previous generations of wireless communication networks – 2G, 3G and even 4G – which cannot offer the low latency (transmission delays) and security required for many of the IIoT’s most valuable applications. Neither can older-generation wireless technology support the high number of devices needed to enable a smart factory.

Therefore, while some aspects of manufacturing have been digitalized, most manufacturers still rely on hard-wired cabling to gather data about shop floor planning and operation, blocking their ability to reconfigure networks as requirements change. As a result, manufactures have not been able to fully exploit the potential of IIoT to optimize their operations – but 5G may soon change that picture forever.


With far greater speeds, lower latency, more reliable connectivity and the capacity to support a high number of connected devices, 5G should make possible a wide range of applications for individual consumers and entire industries.

While 5G is being touted to consumers for high-quality streaming and faster downloads, its implications for industry could be much more significant.

“5G is not just an evolution, but more of a revolution,” said Andreas Mueller, general chair of industry association 5G-ACIA, based in Germany. “In contrast to previous generations, where development was focused on connecting phones, 5G has a very strong focus on connecting all kinds of IIoT devices to deliver new capabilities across many different industries. While we will get higher data rates with 5G, it will also provide very low latency, very high reliability and very high efficiency, enabling it to offer advantages over previous generations of wireless systems.”

“With 5G’s capacity to support a very high density of devices, enterprises can realize different use cases with very diverse requirements at the same location at the same time."

Guilherme Pizzato
Head of ecosystem partners for manufacturing & logistics, Nokia

5G’s improved speed and bandwidth will allow manufacturers to process more data from an advanced network of sensors, facilitating the easy, precise and secure collection and analysis of the massive volumes of production data that will pour from sensor-rich factory floors. By utilizing this additional information, manufacturers can make more informed decisions to increase operational efficiency.

“With 5G’s capacity to support a very high density of devices, enterprises can realize different use cases with very diverse requirements at the same location at the same time,” Nokia’s Pizzato said. “There’s a lot of potential in augmented and virtual reality, for example. These can be used for monitoring production, for training, for remote support, and for other features that can provide immediate benefits. If you have 5G, you can wirelessly connect to get real-time information from assets and production lines and avoid having a cable that prevents you from moving around freely.”


5G also will let manufacturers combine the internal workings of their smart factories with external elements, including production-relevant data from logistics companies, suppliers, products-in-use and maintenance data. Simulating the supply chain and ensuring end-to-end traceability across the entire business lifecycle will allow manufacturers to react more quickly to changing circumstances, helping them manage disruption and miss fewer deadlines. 5G also will give manufacturers more insights into their supply chains, helping them to identify areas of waste and forecast demand more accurately, while reducing the costs of excessive inventory or unexpected shifts in production volumes.

Vodafone is among the telecommunications companies setting up 5G networks across the world, which will give manufacturing companies unprecedented levels of wireless capabilities in their factories. (Image © Vodafone)

To understand the potential for 5G in enabling IIoT applications that extend beyond the factory floor, Erik Brenneis, IoT director at Vodafone Business  suggests imagining a fleet of autonomous forklifts or transport vehicles.

“You need real-time connectivity to achieve a consistent view of your operations,” he said. “IoT, powered by 5G, allows you to connect both your control centers and your vehicles to the outside logistics chain so you can oversee and efficiently manage different elements of your factory. When are my goods coming? Where are my automated vehicles in the factory? What’s the status of my machines? You can monitor and control that in real time, and that’s a game-changer compared to what you could do with previous network technologies.”


Once high-tech manufacturers have successfully combined 5G with IIoT, creating intelligent plant ecosystems, the next challenge will be using the insights from those ecosystems to improve operations. While smart factories have the potential to be significantly more efficient than existing methods of production, manufacturers will need to focus on maintaining and extending their competitive advantages by quickly extracting insights from massive volumes of data. Modeling and simulating both the supply chain and physical assets will help transform both the business model and production processes, increasing efficiency, output and quality.

Virtual twins of their production lines will help manufacturers to understand what the data means in context and act on it quickly. These dynamic, multi-physics digital models of the elements and operations of any physical object or process transform data into quick-to-interpret visuals. Virtual twins therefore help manufacturers assess, share and validate different scenarios and production opportunities by aggregating data from the production line, manufacturing equipment, people and production plans – enabling products experts to run “what if” scenarios to identify, test and execute improvements.

"While we will get higher data rates with 5G, it will also provide very low latency, very high reliability and very high efficiency, enabling it to offer advantages over previous generations of wireless systems."

Andreas Mueller
General chair, 5G-ACIA

Because they incorporate AI and machine-learning, virtual twins can also learn from and react to real-time data relayed by a 5G-IIoT ecosystem in the context of pre-set parameters, dynamically adjusting shop floor activities or offering their human partners suggestions for improvements to material and product flows. Virtual twins also can flag performance, quality and maintenance issues so that they can be addressed quickly, before they shut down production. Furthermore, enabling everyone within an organization to access shared 3D visualization opens new paths for collaboration.

Through its 5G enabled smart factory in Oulu, Nokia has reported a 30% increase in productivity and a 50% decrease in “time of product delivery to market, and an annual cost savings of millions of euros.” (Image © Nokia)

“5G-IIoT is an enabler for change in the ways in which we produce, so that we can get away from the very static production lines that we still have today,” Mueller said. “We can adapt to a very flexible type of production in which the production line can be quickly reconfigured. In extreme cases, you could reconfigure several times a day in order to resolve an issue, because 5G-IIoT makes it so much easier to do so.”


While few significant technological barriers remain in bringing 5G-IIoT to factories, most industry players have not yet embraced the technology, with the amount of testing in the real world remaining limited Much work remains for manufacturers, machine and equipment providers, platform providers and wireless connectivity infrastructure suppliers to demonstrate the reliability of 5G and IIoT for industrial settings and establish trust within the wider industry.

“It's a journey,” 5G-ACIA’a Mueller said. “We have a vision now of where we want to go, but there are more things to be done. What is still missing is an extensive validation of the [5G] performance in real-world environments. You need a certain level of trust in the technology to rely on 5G for your production. We have to establish that trust, and that’s why we need extensive test beds and trials in the real world.”

Despite this, Mueller is convinced that those who lead the way in adopting more flexible models of production stand to gain the greatest advantage.

“I can personally see the market start really taking off in 2022,” he said. “But it’s important that companies don’t wait until this happens to develop a 5G strategy, because by then it might be too late. It's important that everybody understands the developments that come along with 5G early on and adopts an effective strategy to take advantage of it. Be a pioneer and not a follower of the trend.”

Equipment as a service

Is the traditional ‘make, sell, ship’ business model a thing of the past?

Lindsay James
14 April 2021

4 min read

Against a backdrop of continued digital transformation and rising customer expectations, the business model of industrial equipment manufacturers is changing – and fast. Now they are not only expected to make, sell and ship great products, but to own and sometimes even operate them, too. Vele Galovski, Vice President of Support and Field Services Research at the Technology & Services Industry Association (TSIA) explains the challenges and opportunities that this shift will bring.

COMPASS: How are the business models of industrial equipment (IE) manufacturers changing, and what has brought about this change?

Vele Galovski: IE manufacturers’ business models have always revolved around making a product, selling the product, and then shipping the product. With the exception of the occasional support and maintenance contract to keep the product running, anything after the sale has always been the customer’s responsibility. The customer was generally responsible for owning, operating and using a product to achieve their business outcomes.

But this is now changing. Customers are increasingly wanting IE firms to not only make, sell and ship great products, but to own and sometimes even operate them, and to assist them in achieving the return on investment that was promised in the original sales call. This is what we mean by ‘equipment as a service’ (EaaS).

Customers don’t care about the product or the features anymore, they care about the outcome. A new generation of IE manufacturers is realizing this. The rules of the game are changing thanks to the ubiquity of new technology such as sensors, machine learning, artificial intelligence (AI), analytics and the cloud.

How does EaaS differ from traditional lease offers?

VG: Equipment as a service means many things to many people. Some people incorrectly define it as any type of subscription offer where the customer pays for access to the technology as an operating expense [OPEX}. A standard lease would fall into this category and should not be considered EaaS.

To create a true ‘as a service’ offering, you must go beyond the OPEX payment method and focus more on the value-added service provided. For instance, a company that traditionally sells air compressors as a capital expense [CAPEX] purchase can now offer ‘compressed air as a service’, in other words, cubic meters of compressed air consumed. Included in the ‘as a service’ fee, the original equipment manufacturer [OEM] provides the compressor, on-site maintenance services, remote services, air treatment systems and logistics services. This fits the longer-term industry trend of OEMs shifting from selling units to selling consumption.

What challenges does this present to IE manufacturers?

VG: Running a business according to these new rules is fundamentally different from the traditional capex model that IE manufacturers have been used to. In fact, there’s an exhaustive list of challenges.

Customers are increasingly wanting IE firms to not only make, sell and ship great products, but to own and sometimes even operate them, and to assist them in achieving the return on investment that was promised in the original sales call. This is what we mean by ‘equipment as a service’ (EaaS).

The old way of working saw IE manufacturers receive at least 80% of their revenue from the customer upfront. But now the whole economic engine is changing. The risk is shifting to the manufacturer, and now they have to install their product and provide demonstrable success before there’s any chance of getting paid.

Ultimately, this is a change of huge proportions, which will have a significant financial and cultural impact.

What are the key areas of focus for IE companies looking to succeed with this new way of working?

VG: First,IE manufacturers need to put a greater onus on ensuring their products are of the highest quality. After all, if something goes wrong, it’s now on them to fix it.

But that’s not all. Perhaps most importantly, they need to embrace owning technology and get to grips with everything from sensors and telemetry through to data analytics – key things which are imperative to their success.

It’s the evolution of these digital technologies that is both enabling transformation and driving disruption all at the same time. Low-cost sensors, for example, have opened the door to getting greater value from EaaS, since they offer a way for IE firms to monitor, track and measure what their equipment is doing. As a result, equipment manufacturers are rushing to incorporate sensors in all of their products, primarily with a focus on monitoring product performance.

Does the change from sell to sense-and-respond change the challenge and the opportunity?

VG: The hard part is connecting these sensors, not only with the cloud, but with each other, allowing devices to communicate with one another within a single operating environment, or to ‘home base’ [the manufacturer] to report performance in real-time. This enables suppliers to move beyond monitoring of the physical product and create value-added services based on insights gathered from device usage data.

Utilizing these insights effectively will be the key to success. The advent of low-cost storage allows companies to collect and store more data, which can then be used to help identify equipment failures, predict when a failure will occur and provide insights on the optimal operating environment.

These monetization opportunities are the reason why the data collected from sensors will ultimately become more valuable than the physical product itself. With this in mind, I believe that those IE manufacturers that will experience the biggest success will be those that implement a digital platform so that they can close the gaps on digital transformation and manage everything all from one place.

How do you see EaaS evolving in the future? Will the traditional product-selling model disappear?

VG: Unfortunately, I think IE manufacturers will need to do both – essentially, they need to meet the demands of their customers, whatever they may be. Some customers will always want to own their own equipment, but I definitely see a time where EaaS becomes a more favorable option for many. It’s also possible that we will move toward a hybrid model, where vendors sell their product for a lower fixed price and then they get additional revenue on usage.

Vele Galovski, Vice President, Support and Field Services Research, Technology & Services Industry Association (TSIA)

For more than 30 years, Vele Galovski has driven business model transformation in a diverse set of industries, including technology, financial services and business services. At California-based TSIA,  the world's leading research organization dedicated to helping technology companies achieve profitable growth and solve their top business challenges, he enables companies to transition from traditional capital expenditure (CAPEX) to annual recurring revenue (ARR) business models based on value realization and improved customer business outcomes.

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Modeling mechatronic success

MBSE cuts automotive development cycles, improves on-time product launches

Rebecca Lambert
7 April 2021

4 min read

Automotive manufacturers and suppliers are embracing a progressive approach to develop complex vehicles faster: model-based systems engineering (MBSE) platforms that connect all mechanical, electrical and software disciplines. Experts recommend getting started by adopting MBSE one project at a time, using simple changes as building blocks to teach knowledge reuse and eventually integrating the entire organization.

Manufacturers that use a model-based systems engineering (MBSE) platform to interlink all disciplines and systems configure new vehicles faster and more cost effectively, compared to those reliant on traditional engineering and manufacturing approaches, a recent study found.

“If you look at the hard metrics, our research found that for the best in class – those that have embraced MBSE and are in the top 20% of the aggregate performers – 91% met their product launch dates and saw a 9% reduction in the development cycle,” said Ed Ladzinski, CEO of SMS ThinkTank, a US-based systems modeling and simulation consultant. “For the laggards, only 44% met their product launch milestones, and saw an 8% increase in their development cycle.”

Traditional engineering lags MBSE, experts agree, because its linear, document-led approach, where separate teams develop vehicle, powertrain and major subsystems and then try to merge the three, cannot accommodate the accelerated development cycles and growing complexities of next-generation vehicles. MBSE-focused automotive manufacturers, however, bring their vehicles to life as virtual twins: dynamic, digital 3D models that can be evaluated not only as a fully integrated automobile, but also in context of virtual universes that simulate real-life operating conditions. With these models, every interconnection is defined from the start, ensuring that each system integrates seamlessly throughout the design process and beyond, and performs as expected in different operating conditions.

"This is a real opportunity for the automotive industry to better manage and adapt to change, be more innovative and deliver better products that exceed consumer expectations."

Ed Ladzinski
CEO, SMS ThinkTank

“MBSE focuses on the development of a coherent, digitalized systems model,” said Tino Krüger, the Berlin-based managing director for professional services company Accenture’s Industry X.0, Engineering/PLM and Smart Factory practices. “This comprises requirements, design, analysis and verification information and is characterized as a model-centric approach. The model serves as a single source of truth for the development team and is the primary artifact produced by systems engineering activities. Documentation becomes secondary and is automatically generated from the system model.”

Beyond speed and cost savings, manufacturers can expect to minimize errors and continuously improve performance.

“With this holistic way of thinking, consider all the other benefits that may initially get overlooked [in an ROI calculation]: the risks that don’t materialize, the rework that doesn’t need to be done, the customer complaints that don’t occur, the insight that goes into every decision,” Ladzinski said. “This is a real opportunity for the automotive industry to better manage and adapt to change, be more innovative and deliver better products that exceed consumer expectations.”


Accenture’s MBSE practice has launched a series of workshops that show businesses how to develop a reusable, high-level architecture of an innovative product in just 10 weeks with MBSE. “Under the theme ‘from zero to hero,’ our certified experts teach your interdisciplinary team the basics of MBSE to first gain a deep theoretical understanding of the model-centric approach,” Krüger said. “In parallel, as a team, we apply this knowledge directly to the development of the client’s own use case and let MBSE be experienced in a digestible, yet creative and applied manner. With this newly developed theoretical and practical skillset, clients can further design and develop their own prototypes, while connecting the results to their existing development infrastructure.”

Accenture’s guidance is based on the universal Cyber MagicGrid Framework, which helps transform stakeholder needs into systems requirements.

“We start with the problem domain,” Krüger said. “The goal is to understand the customer’s problem in order to design the product in a customer-oriented way. Within the solution domain, the actual engineering and the development of a technical solution tailored to the previously defined problem begins. Finally, the physical components of the product are elaborated in the implementation domain. Based on the workshop, we further help our clients to scale MBSE on a strategic level.”


Bosch Car Multimedia, a division of Germany-based Bosch Mobility Solutions, makes advanced vehicle infotainment and navigation systems. Until it reengineered its processes and brought all disciplines together on a single platform using an MBSE approach, it lost critical information and experienced costly late-cycle product changes.

To address these issues, Bosch Car Multimedia adopted a standard framework and a business innovation platform to organize its processes around MBSE, connecting its specialized functional teams with a visual language that each discipline could understand. The company, which formerly relied on physical prototypes to detect design errors, now creates an integrated 3D model, allowing all software, mechanical and hardware engineers to work concurrently on designs and testing their interactions virtually so that product performance can be evaluated and refined at an early stage.

“With a model-based approach, we can analyze concepts and their weaknesses quicker, taking into account all tolerances in the early development phases, so that the system can be correctly interpreted,” said Martin Schmidt, director of customer programs at Bosch Car Multimedia. “For example, through kinematic simulation and behavior modeling we were able to adapt the design of a blockage detection algorithm.”

By using a ‘systems of systems' approach such as model-based system engineering, automotive companies can simplify engineering complexities between mechanical, electrical, software, and other functions. (Image © Dassault Systèmes)

As more manufacturers recognize MBSE as a critical tool for successfully executing holistic change, SMS ThinkTank’s Ladzinski encourages them to think of MBSE as a journey, not a destination.

“Start out [your MBSE adoption journey] by developing a gap analysis, looking at where you are now to where you want to be,” he said. “Then draw up short, medium and long-term objectives with a real focus on educating all areas across the business of the impending changes. Remember, MBSE is not a product but a way of thinking throughout the entire product lifecycle. And it’s not an overnight implementation, but a journey that takes leadership, resources and patience.”

Effective MBSE change management requires that businesses consider the wider impact of MBSE across their processes, corporate structures and culture, and get all stakeholders on board.

“MBSE is traditionally successfully applied to current IT landscapes and even can be included during the decision-making process,” Krüger said. “Decision-makers should be advised to set the right scope for an MBSE integration as a starting point.”

Over time, businesses practice MBSE more naturally and on a strategic level, building it into everything their developers, designers and engineers do to put all interconnections in dynamic relation. “The model-centric approach enables improved communication, tackles ever-rising complexity among today`s products and services, and also reduces risk during the design and development phases,” Krüger said. “Functional dependencies in progressively complex products are presented transparently, and customer needs are realized and transformed to highly functional products.”

Discover more about the benefits of MBSE >

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