Going with the flow

Flexible manufacturing processes help meet shifting consumer demand

Jacqui Griffiths
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.

RETHINKING MANUFACTURING

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.

Quickly meeting consumer demand requires today’s manufacturers to find product development techniques that help accelerate time to market. (Image © Protolabs)

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.” ◆

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Shifting the focus

Automotive manufacturers become mobility experience providers

Rebecca Lambert

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.

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 their place was a single sign that read: ‘This Is Not A Car.’ (Image © Volvo Cars)

“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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Smart airports

Airports pursue data integration with partners to improve passenger experience

Tony Velocci

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.

ENGAGING PASSENGERS

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.”

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Eyes in the sky

Drone technology helps energy and materials firms squeeze more profits from resources

Dan Headrick

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.”

MATURING TECHNOLOGY

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.

Teck Resources Limited (Teck) uses Skycatch ruggedized UAVs at its Line Creek steelmaking coal operation in the Elk Valley, British Columbia, Canada, where high winds and drastic temperature changes demand stable performance to rapidly collect and process their data capture with a precise output to view the progression of the site in near real-time. (Image © Skycatch)

“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.” ◆

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Transparency is king

Elevating the role of risk management in financial services requires more integration

Miriam Gillinson

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.

Marc Walby is the former chief operating officer for Risk Management at Deutsche Bank Americas. He led the US risk management practice though a period of significant growth and transformation as new industry and regulatory demands emerged following the 2008 financial crisis.

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.

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Stefan Krause

Canoo co-founder challenges popular conceptions of what a car should be

Bernadette Hearne

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.” 

DESIGNING OUTSIDE-THE-BOX 

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 challenges traditional vehicle design by offering a very large interior over a very small footprint that’s perfect for city driving. (Image © Canoo)

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. 

CHANGING CULTURE 

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. 

Canoo will 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. (Image © Canoo)

“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.” 

RADICALLY DIFFERENT 

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.”

For more information on Canoo's cloud-based product innovation platform, please visit https://go.3ds.com/EVW

5G modularity

How telecoms are using a simple concept to better serve complex needs

Dan Headrick

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.

Nokia has developed its AirScale Active Antennas to boost radio frequency performance and cell coverage over a range of approximately a city block. Such equipment will be deployed first in cities, close to ground level at power poles and crosswalks, as 5G rolls out. (Image © Nokia)

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.”

JOB-SPECIFIC EQUIPMENT

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.”

NETWORK SLICING

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.”

For more information on designing modular 5G systems, please visit: https://go.3ds.com/aPYt

A sea of innovation

Sustainable operations offer a competitive differentiator for savvy shipyards

Nick Lerner

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

Food safety

New health regulations make data integrity the foundation of safe food supplies

Bernadette Hearne

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.

Hear Axendia’s webcast on FSMA.

Access two papers on data-driven compliance:

Sustainable drug development

Innovation and sustainability go hand in hand in pharmaceutical manufacturing

Rebecca Lambert

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.”

SUSTAINABILITY DEFINED

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.

DIGITAL PROGRESS

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.” ◆

For more information on applying simulation to life sciences, please visit: https://go.3ds.com/fL9

Data integrity

Digital continuity helps industrial equipment manufacturers deliver better customer solutions

Rebecca Lambert

3 min read

Many industrial equipment manufacturers struggle to ensure their product data is always accurate and up to date. Sophisticated business innovation platforms address the challenge, managing data as a continuous thread, improving workflows and boosting innovation.

Since moving its global design and engineering processes to a business innovation platform, 3CON, a global producer of manufacturing equipment for the automotive industry, has reduced the time required to develop a new machine by as much as 40%. The key to this success, said Hannes Auer, CEO of the Austria-based company, is that the platform gives 3CON’s workers instant access to every piece of information about every product as it moves from concept to design, engineering, manufacturing and postsales service, ensuring that the data is current, accurate and reliable.

It’s a concept known as digital equipment continuity and, like 3CON, most manufacturers recognize that it is critical for ensuring product quality, accelerating product development and boosting innovation. Yet the 2018 report, “Digital Engineering: The New Growth Engine for Discrete Manufacturers,” published by French consulting and technology business Capgemini, found that almost two-thirds of manufacturers struggle to achieve digital continuity. Indeed, most manufacturers call digital continuity their Number One challenge.

A MAJOR HURDLE

Although 3CON has achieved digital equipment continuity, Auer understands why it remains a struggle for so many.

“Manufacturers want to work with best-in class applications, but each application may use different data models, which means the data needs to be converted every time you move between applications,” he said. “Data conversions are inconvenient and time consuming, and at each translation stage you risk losing critical information about the product.”

Capgemini’s “Digital Engineering” report found that “six out of 10 organizations are unable to synchronize different functions’ activities early in the design and development stage. Around the same number also find it difficult to create, access and reuse information on how a product was designed, manufactured and serviced.”

Manufacturers who want to rationalize their existing systems, however, face a daunting challenge.

“Some product lifecycle management systems hold 20 years’ worth of data, all of which will need to be reviewed and rebuilt,” said Jacques Bacry, vice president PLM Group leader at Capgemini and one of the report’s lead authors. “Synchronizing and converging all of that data is an immense task.”

Yet it also is an inevitable one.

“As manufacturers continue to move toward virtualization and simulation within their production systems, they need to be able to pair that with real-world data to detect and correct issues before they happen, ensure process quality enhancements and improve worker and product safety,” Bacry said. “For this, strong digital continuity is paramount.”

FROM PIPE DREAM TO REALITY

For 3CON, the answer lay in moving its entire design and engineering process to a single platform with fully integrated applications for project management, 3D design, numerical control programming and simulation.

“We needed to be able to work with best-in-class applications, so we did a great deal of research before coming to our decision and trusting in one provider,” Auer said. “Today, we manage our entire production process on one platform. All our designers and engineers from around the world use the same data model. This information then carries through into our service department.” As a result, workers are free from interface issues and confident that the data they access is up to date.

“Moving from file-based management to our consolidated global database, the performance to load or update very large assemblies is incredible,” Auer said. “Workflows and user roles guarantee that our designers always have the latest version of the design available, regardless of who made the last change.”

CLOUD-BASED CONTINUITY

Like 3CON, US-based trailer manufacturer Globe Trailers has achieved digital continuity by shifting its entire operation to a unified platform – but Globe Trailers chose to do it on the cloud. That choice, said Jeff Walters, vice president of engineering, gives him peace of mind and ensures business continuity.

“Cloud technologies help by allowing resources to be moved from managing the server and back-end technology to rolling out front-end technology to the manufacturing floor and customers,” Walters said.

“We have digital continuity through 80% of our process, which is up from 30% before switching to our new platform. We have optimized our digital process so much that we were able to throw our giant printer in the trash.”

SAFER, MORE RELIABLE PRODUCTS

Digital continuity allows manufacturers to improve their processes and avoid repeating past mistakes – benefits that translate into better solutions for customers.

“It’s about more than saving time; the quality of our engineering is better,” 3CON’s Auer said. “In the past it was really hard to be sure that all the designers were working with the latest CAD data. Now, if someone changes something in the workflow, everyone working on that product is informed immediately. All lessons learned are integrated into the standard model.”

Digital continuity also enables new production methods and processes.

“If you can define right at the beginning of the engineering stage how a product is going to be manufactured, you can also imagine new methods to design and build it,” Capgemini’s Bacry said. “And if you’re able to simulate what’s happening in the factory, you’re able to very quickly customize your production line too.” ◆

For more information on digital continuity, please visit: https://go.3ds.com/gf2

Designed for assembly

Leko Labs’ innovative design approach goes from blueprint to finished home in a snap

Nick Lerner

3 min read

Luxembourg-based Leko Labs creates cross-machined wooden modules that can be assembled and then disassembled, allowing houses to be expanded, reconfigured or rebuilt into something else. The digital platform that coordinates and drives all of its processes ensures harmony from start to finish. Compass spoke with the firm’s CEO, François Cordier, about the challenges and methods of building the future.

COMPASS: Can you briefly describe Leko Labs and its work?

François Cordier: We started five years ago to revolutionize the design, engineering, manufacture and construction of sustainable housing by deploying technology that addresses the cost, time, risk and inefficiencies of building with traditional materials and methods. By manufacturing glue-free, cross-machined, ecologically treated timber components from renewable sources, our walls are lighter, stronger and 40% thinner. This increases the liveable space by up to 10% over conventional building methods.

What is your company philosophy?

FC: We were inspired by the automotive and aerospace industries to use robotics and digitalization to economically and sustainably mass-produce good quality products. We connect the dots and apply that same technology to construction.

What are the main construction industry challenges that your company addresses?

FC: Construction is a highly fragmented, conservative, low-productivity industry that uses outdated materials and methods to build inefficiently with damaging environmental impacts and large-scale waste. Leko Labs’ approach is to use renewable wood as a primary construction material within an efficient, connected enterprise. We deploy advanced digitalization, vertical integration, workflow coordination and robotized manufacturing technology. This strategy removes cost and time overruns to significantly reduce the risks associated with traditional construction.

How does the Leko Labs system re-invent the construction process?

FC: A conventional house takes around 24 months to build. Currently, a Leko Labs house takes nine months to complete. With further advances in robotized component manufacture and assembly, this will soon be reduced to six months. And, with the introduction of modular rooms with pre-installed plumbing and electrics, we are working toward reducing the build time of a complete house to 24 hours.

Leko Labs’ unique cross-milled components allow buildings to be assembled in record time and then disassembled for renovations, expansions or entirely new buildings. (Image © Leko Labs)

What effect does this have on construction industry economics?

FC: Because we can increase room spaces within the same footprint as a conventional property and substantially cut build times, developers can provide more accommodation and see a faster return on their investments. Architects may not always be required to design or coordinate projects, and subcontractors who have been more than 30% over budget will no longer be able to overcharge this way. Leko Labs’ buildings are recyclable so, after 30 or 50 years of use, they can be disassembled and re-used on an infinite loop.

How have you integrated your processes, partners and supply chain – and what advantages have you achieved?

FC: Our online portal achieves a digital thread that runs through the extended enterprise. Therefore, all aspects of our business, including project management, finance, bills of materials, as well as client and stakeholder updates, are fully integrated. The advantage is that our business is easy and quick to scale through repeatability because international partners can start collaborating instantly.

What DfMA (Design for Manufacturing and Assembly) technologies does Leko Labs deploy?

FC: We are able to automatically turn any architect’s plan into a Leko Labs design in 10 minutes. Using a single digital model throughout our processes increases productivity and avoids the potential mistakes and quality issues caused by misinterpretation. We deploy technology that automatically generates optimized scripts for dividing wall lattices, slats and posts as well as BOMs [bills of materials] and NC [numerical control] files. Designs that are verified for stress analysis are directly linked to robotized CNC [computerized numerical control] machines that manufacture building components. A simple on-screen “print” button initiates their manufacture.

What is the role of 3D simulation in your business?

FC: Simulation drives everything at Leko Labs because we simulate all aspects of the workflow. Design, engineering, manufacture, logistics and final assembly are represented in 3D so we can perfect and optimize every element and each step of a project digitally, before we commit any physical resources.

How do you see the future for Leko Labs and the industry in general?

FC: In addition to single family houses, we are developing the technology for high-rise buildings in which everything will be modularized and pre-fabricated. Building component factories will be de-centralized, moving into cities to reduce transportation. Mass customization will become the norm and families will configure their home online the same way as they currently specify their car. Labor shortages in construction will continue, but digitalization and automation of the industry will help achieve commercial and environmental sustainability, enabling more costeffective housing for generations to come.

To see Leko Labs’ unique design system, view the video at go.3ds.com/pvm

To discover how a digital thread connects the extended enterprise, please visit go.3ds.com/yjG

Manufacturing’s soft side

How hardware makers are winning in the software world

Rebecca Lambert
14 January 2019

4 min read

From cars to kitchen appliances, advanced computer software is no longer just the territory of sophisticated computers; it’s everywhere. A typical high-end automobile, for example, contains at least 50 million lines of code. For many manufacturers, the growing importance of code requires them to become software companies too. 

Amazon has just made life a bit easier for culinary-challenged people everywhere. Its new smart microwave will cook meals with a simple voice command, no expertise required. For example, put a potato in and say “Alexa, microwave my potato,” and the appliance chooses the right settings for that dish.

The microwave works using Amazon’s Alexa Connect Kit, a Wi-Fi and Bluetooth low-energy module packed with software that automatically and securely connects to Amazon-managed cloud services – including the settings for microwaving hundreds of common dishes.

Spicing up low-tech devices with software is a common strategy these days, one that is dramatically changing what consumers expect from manufacturers. Today, mastering mechanical, electrical and form-factor design is not enough; manufacturers must understand software as well.

“We’re putting silicon into pretty much everything these days,” said Steve Koenig, vice president of Market Research at the US-based Consumer Technology Association (CTA). “We’re using software to enable a whole load of different features and functions in devices. It’s good news for consumers as these systems can be updated over the internet, so they’re getting access to new capabilities and improvements all the time.”

RISING COMPLEXITY

For many manufacturers, this means fundamentally changing what products they make and how they build them. In the automotive sector, for example, manufacturers are now creating what is, essentially, a robot with four wheels.

“Many models on the market are drive-by-wire – there is no mechanical linkage between the steering and wheels themselves,” CTA’s Koenig said. “And the engine is software defined, providing the instruction set telling the computer [car] how to operate.” 

By 2030, research firm McKinsey estimates that software will account for almost a third of vehicle content in a typical family car. Today, it makes up roughly 10 percent.

“Over the past 10 years, the level of complexity in the software that we’re managing has increased by a factor of at least five,” said Jean-François Salessy, R&D senior vice president and head of the Electrical & Electronic Systems Division at French automotive manufacturer PSA Group. “When I began my career 30 years ago, the airborne computer that was managing the aircraft mission of Dassault Rafale had about 1 million lines of application code. Nowadays, our cars have around 50-60 million lines of code. More than 80 percent of the features in the car are fed by software.”

LET SOFTWARE LEAD

Like PSA’s Electrical & Electronic Systems Division, many manufacturers have created dedicated departments to focus on software innovation.

“The software team needs to take the lead in driving a product’s functional development,” Adam MacBeth, an engineering manager working on Google’s new operating system, Fuchsia, said in an interview with First Round Review. “Software is the aspect most responsible for creating the behavior exposed to the user.”

Ensuring that software and mechanical design complement one another, however, is a complex new challenge to manage.

“We must anticipate the software impact on the hardware,” PSA’s Salessy said. “We evaluate the architecture footprint of the software – space required for memory banks, accessible responsiveness and so forth.”

But the hardware and software disciplines tend to make assumptions about the other’s field that don’t pan out, requiring expensive change orders to resolve the errors, MacBeth said. “The hardware engineering team might assume something about software response time,” he said. “The software team might assume something about how the device will feel in someone’s hand. I’ve seen it happen where hardware is created that physically can’t enable the software to work.”

ORGANIZED FOR SUCCESS

To avoid software-hardware clashes requires complete visibility and strong collaboration between the two development teams.

Swiss appliance manufacturer V-ZUG, for example, uses a product innovation platform to help its employees work together effectively and avoid unpleasant, late-cycle surprises.

Peugeot reveals the e-Legend Concept car at the 2018 Paris Motor Show. Featuring artificial intelligence technology, it offers a voice-controlled personal assistant for autonomous driving. (Image © PSA Group)

“One of the platform’s biggest advantages is that it provides an integrated solution for the different disciplines involved in product development,” said Petra Peter, mechanical engineering technician at V-ZUG.

“All product stakeholders – mechanical, electrical, software development – can collaborate on the most up-to-date version of a product’s data, which promotes a fluid exchange of ideas,” added Blaise Metzker, head of CAD/CAM at V-ZUG. “This transparency also increases product quality.”

Product innovation platforms that also support digital simulation go a step further, helping the various disciplines test their designs in a virtual environment to ensure that they perform as intended, well before production begins.

“Our team is developing new processes and technology where traditional design rules do not apply anymore,” said Sini Rytky, vice president of Product Management at TactoTek, an electronic systems manufacturer headquartered in Finland. “Simulation was seen as a solution to both verify the operation of electrical functions before building real parts and to speed up the design and time [available] for fine-tuning.”

COMBINING STYLE AND FUNCTION

Increasingly, experts agree, manufacturing leaders are defined by their ability to create seamless hardware and software experiences that connect multiple aspects of the consumer’s life and, ultimately, make daily tasks easier.

“The more powerful the influence your software has over your hardware, the more you can mold your product to fit users’ needs,” MacBeth said.

V-ZUG, for one, uses its software to differentiate its products from a host of competitors.

“We provide our customers with more functionality than what is usually found in the [appliance] industry,” said Ernst Dober, head of Development and Services at V-ZUG. “At the same time, it’s our priority to make our appliances easy to use. This is why we invented the ‘press and go’ feature, which automatically starts the desired program at the touch of a single button. We also provide recipes with our ovens and steam cookers in digital format, which can be used by anyone.”

While software can differentiate products, however, it won’t compensate for poor physical design. Consumers continue to show loyalty to products that are pleasing to the eye and comfortable in the hand.

“I believe that there will long be an emotional relationship between cars and humans,” PSA’s Salessy said. “At the 2018 Paris Motor Show, the crowd’s reaction to Peugeot’s e-Legend Concept car was incredible – and that was largely to do with its appearance. The esthetic of the car remains critical. Nonetheless, the way you interact with it is critical too. This is why we spend significant time on software impact on overall ergonomics, aiming at the best of both worlds.”

For more information on software-driven user experiences, please visit: go.3ds.com/0nj

Utilities’ talent search

Rethinking the approach to human resources to attract and retain talent

Dan Headrick

3 min read

Energy, power and utility companies face big challenges navigating regulatory, environmental and technological change. Securing the one resource they can’t do without – skilled talent to replace aging workers – might prove the most difficult hurdle yet. 

In 1968, the TV crime drama series The Mod Squad debuted a groundbreaking concept during a time of counterculture upheaval: how to convince rebellious, socially outcast young hippies to work for the police. “The times are changing,“ the tough but kindly police captain character who recruited the young people said. “They can get into places we can’t.“

Jump 50 years. Instead of police forces that need street-smart young people to get the job done, it’s mining, energy, gas and oil companies trying to attract tech-savvy young generations to an industry beset with stagnant revenues, competitive power markets, tightening regulations, bruised public relations and legions of aging workers heading for retirement.

ATTRACTING WORKERS

The analogy might seem trite, but the challenges are serious. Shifting consumer behavior, heightened environmental awareness and evolving career expectations among younger generations of job seekers are forcing energy sector companies to rethink how they approach human resources.

“When it comes to recruiting and retaining talent, we’re behind the eight ball all the time,“ said Alp Malazgirt, CEO of Turkish metal and mining company Yilmaden Holding, who recently helped lead the company’s expansion of operations into six countries through a series of acquisitions. “How to attract and retain them? It’s a global problem that seems to be present all the time, which begs the question: how do you grow the business with limited talent?“

For example, the Nuclear Industry Institute reports that the world’s nuclear power industry, which produces 11 percent of the world’s electricity, is reeling from the combined pressures of alternative power suppliers, increasingly stringent regulations and persistent public concerns about safety. But what really scares nuclear energy executives, the institute reported, is that nearly 40 percent of the industry’s global workforce – as much as 50 percent for utilities generally – will retire over the next few years. To replace them, companies will need to hire 20,000 people over the next four years, and managers fear that many talented young people simply won’t want to work in the utility sector.

“Millennials consider these industries to be old, stodgy and not very creative,” an industry sales executive posted in the online industry forum Energy Central.

Many young people today view utilities cynically as indifferent to the environment, culturally rigid and bottom-line obsessed, human resource managers and industry analysts agree. For many young people, therefore, the prospect of working for a utility company is ethically repugnant.

Ken Ester, 62, worked for 24 years in IT-telecommunications at one of the world’s largest utilities, US-based Duke Energy. “When I got the job offer, I thought it was great,” he said. “I had a good salary and benefits, and I could retire after 30 years. Millennials today don’t have that mindset, no matter how great the company is.”

Instead, he said, younger employees tend to hone skills and build careers by moving from job to job, either within the same company or to different organizations. Ester, who managed a 12-member team at Duke before taking early retirement in 2016, said he learned to accommodate that mindset, but it came at a cost.

40%

of the nuclear industry’s global workforce will retire over the next few years.

“Young workers want to implement new ideas; managers have to stay stable,” Ester said. “That can frustrate young people. My philosophy as a manager was that you need to let folks move around if they want to, but it’s always a drag on efficiency to let them do that. It takes time to get up to speed.“

Malazgirt, the mining company CEO agrees. For example, teams of skilled finance experts that managed his company’s complex acquisitions had the highest turnover rate. “These people are motivated, but once the project is over they want to move on to the next exciting project.”

RECRUITMENT THROUGH ACCOMMODATION

In its seventh annual Deloitte Millennial Survey, the global consulting firm found that companies seeking to hire bright young talent must understand that, despite being tech-savvy, the entire generation is nervous about the future in the face of Industry 4.0, robotics, artificial intelligence, environmental degradation, social inequities and political instability.

That said, companies are looking at novel ways to approach a new generation of talent. Many utility companies emphasize cultural diversity, said Lloyd Adams, vice president of SAP for Utilities. Some companies are exploring reverse mentoring, an idea former GE CEO Jack Welch popularized in the late 1990s, when he required that top executives partner with junior employees to learn about the internet. And because technology advances so quickly, new knowledge must be gained constantly, which creates an opportunity to tap employees’ curiosity and creativity.

“How to attract and retain the next generation?” Malazgirt asks rhetorically. “It’s not easy, but my turnover is the lowest in the company because I spend time training and what I call ‘digital upskilling.’ I think recruiting people to come to work for us was a lot more difficult in the past than it is now.”

For information on how energy, power and utility companies can create an engaging work environment, please visit: go.3ds.com/0nC

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