#8 –November 2018 -Special Edition for Founders Forum xIndustry In Partnership With Henkel Conference

TRANSFORMING A DIGITIZING GROWING UP DIGITAL GERMAN GIANT LOGISTICS WHAT INDUSTRIAL Q&AWITH HENKEL’S A$4TRILLION COMPANIES CAN LEARN CHIEF DIGITAL OFFICER OPPORTUNITY FROM STARTUPS MAN, MACHINE AND THE FACTORIES OF THE FUTURE

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Seehow we do it at g.co/cloudsecureUK TABLE LETTER FROM THE EDITOR OF CONTENTS

P.04 THE BRIEF It was welcome news to learn that five out of nine P.06 THE FACTORIES OF THE FUTURE of the most advanced factories in the world namedbythe World P.10 FLEXIBLE MANUFACTURING Economic Forum and McKinsey are European. The factories P.12 Q&AWITH HENKEL’S CHIEF DIGITAL were chosen outofaninitiallist of 1,000. And, as illustrated in OFFICER the stories in this magazine, there are other signs that Europe P.14 THE SEARCH FOR NEW MATERIALS is holdingits own in the Fourth Industrial Revolution. France’s INNOVATIONS Sigfox is aglobal powerhouse in Internet of Things connecti- P.16 LAUNDRY &HOME MEET INDUSTRY 4.0 vity.Germany’s arago, backed with an investment of $55 mil- P.18 CYBERSECURITY AND THE INTERNET OF lion from the private equity fund KKR, is offering corporates THINGS what it claims is aneutralalternativetoAIsolutionsoffered by P.20 FAST FASHION TAKES ON AWHOLE NEW MEANING big American and Chinese platform companies. And big European companies and entrepreneurs are collabora- P.23 FACTORY-IN-A-BOX ting through Henkel X, an open innovationplatform created by P.24 TOP 25 IIOT STARTUPS TO WATCH Henkel, a142-year-old maker of chemicals and consumer goods. P.26 AWAZE FOR FACTORIES As members of the Henkel Xnetwork gather with Sigfox, ara- P.28 HOW 3D PRINTING IS IMPACTING go and otherstartups in Düsseldorf November8and 9, they will MANUFACTURING be reminded that there is no place forcomplacency in thisfast- P.31 SPOTLIGHT ON AN ADVANCED paced digital world. As Brent Hoberman, executive chairman PHARMACEUTICALS PLANT and co-founder of Founders Forum and RobChapman, CEO of P.32 MAN AND MACHINE Founders Intelligence write in their guest essay:“Startups have P.35 AN APP STORE FOR THE FACTORY FLOOR learned discipline from industrial companies. It is time for in- P.36 IIOT: EVERYTHING IS CONNECTED dustrial companies to learn creative chaos from startups.” P.38 IGNORING THE HERD P.40 HOW BLOCKCHAIN IS CHANGING SUPPLY CHAIN MANAGEMENT P.42 GOING DIGITAL P.44 ASTRATEGIC PERSPECTIVE ON AI P.46 A$4TRILLION OPPORTUNITY P.49 WHAT CAN INDUSTRIALS LEARN FROM STARTUPS By Jennifer L. Schenker Editor-in-Chief, The Innovator

—P.3 THE BRIEF

THE CHANGING NATURE OF COMPETITIVENESS

The changing nature of economic competitiveness in aworld HR’S USE OF AI IS INNOVATION that is becomingincreasingly INDEX GROWING AND SO ARE transformed by new,digital technologies is creating afreshset 1 —Germany 87.5 CONCERNS of challenges for governments and 2 —United states 86.5 businesses. That is the key finding 3 —Switzerland 82.5 of the WorldEconomicForum’s 4 —China &Taiwan 80.8 2018 Global Competitiveness Report. 5 —Sweden 79.8 Some 78% of human to give you 100 resumes, it will spit According to thereport, which uses 6 —Japan 79.3 resourcesdepartments expecttouse out the top five, and we’ll hire those.” abrandnew methodology to fully 7 —United Kingdom 79.2 machine learning in at least one But the company realized its new 8 —South Korea 78.2 capturethe dynamics of the global HR process withintwo years, system was not rating candidates 9 —Netherlands 77.5 economy in theFourth Industrial according to anew survey conducted for software developer jobsand 10 —Finland 76.3 Revolution,manyofthe factorsthat by Bain&Company, which polled other technical posts in agender- 11 —France 76.1 willhave thegreatest impact in human resource executives and neutral way. 12 —Denmark 75.4 drivingcompetitivenessinthe future 13 —Canada 75.0 managers at 500 large companies That is because Amazon’s computer have never been the focus of major 14 —Singapore 75.0 in the U.S., Germany,and the United models were trained to vet applicants policy decisions in thepast. 15 —Austria 74.3 Kingdom,including publicly traded by observing patterns in resumes Theseinclude ideageneration, and privately owned companies submittedtothe company over a entrepreneurial culture,openness Source: World Economic Forum acrossabroad range of industries 10-year period.Most came from and agility. from manufacturing to retail to men, areflection of male dominance The tool maps the competitiveness healthcare. Somecompanies surveyed across the tech industry. landscape of 140 economies through are already seeing successfrom TheSeattle company ultimately 98 indicators. Foreach indicator, fromideagenerationtoproduct using the technology. disbanded the team by the startof using ascalefrom 0to100, it commercialization. Some 103 Unilever,for example, is using AI lastyearbecauseexecutives lost indicates howclose an economy is countries scored lower than 50 in to help withscreening job candidates hope for the project, according to to the ideal stateor“frontier”of this area of the index,whichis and thetechnologyhas cut the the Reuters report. competitiveness. When combining toppedbyGermany,followed by average timeittakes to hirenew Amazon’s experimentoffers acase thesefactors, the UnitedStates the United States and Switzerland. people by 75%, according to Bain. studyinthe limitations of machine achieves the best overall performance The report notably finds that the But news of the Bain survey comes learning. It also serves as acautionary with ascore of 85.6, ahead of attitude toward entrepreneurial risk as news reports revealed that Amazon taletothe growing list of large Singapore and Germany.The average is the mostpositive in Israel and hadtoscrap an AI system that it companies includingHilton score for the world is 60, 40 points tends to be negative in several East was using forrecruiting purposes Worldwide Holdingsand Goldman away from thefrontier. Asian economies. Canada has the becauseitfound it wasbiased against Sachs Groupthat arelooking to One of the report’smost concerning most diverse workforce and women candidates .“Everyone wanted automate portions of the hiring findings is therelative weakness Denmark’s corporateculture is the this holy grail,” an Amazon executive process. acrossthe board when it comes to least hierarchical,both critical factors told Reuters. “They literally wanted mastering the innovationprocess, for drivinginnovation. it to be an engine where I’m going

P.4—THE INNOVATOR THE BRIEF

of Change Global Technology Group is an exclusive, action-based global network of male leaders in technology aiming to accelerate their diversity learning and programs. The leadersare committed to standing up alongside women to share responsibility andreinforce accountability for addressing gender inequalitywithin their organizations and the industry at large. Seventeen globalleadershave committed to being Male Champions of Change, including: — Steve Demetriou, Chairmanand CEO, Jacobs — Mark Read, CEO,WPP — Tony Hall, Director General, BBC — Bob van Dijk,CEO,Naspers — Wendell Brooks, President,Intel Capital ACCELERATING — Gavin Patterson, CEO,BTGroup CHANGE — Jonathan Newhouse, Chairman/CEO,Condé Nast International — Ambarish Mitra, Co-Founder and CEO,Blippar — Nagaj Kashyap, Corporate Vice President and Global Head, M12 — Rahmyn Kress, Chief DigitalOfficer,Henkel and Founder, Agroup of prominent male business leaders arestepping up Henkel X to become Male Champions of Change for anew group calledAccelerateHER, — Brent Hoberman CBE, Co-Founder,Founders Factory/first minute which was formed to address the under-representation of womenin capital/Founders Forum the technology industry. — David Jones, Founder/CEO,You &MrJones andOne Young World AccelerateHER, apart of the FoundersForum group, aprivate global Founder communityofsuccessful technologyfounders and investors, is working — Damian Bradfield, President, WeTransfer with anetworkoftechnology leaderstoaccelerate change throughbest — Philippe Chainieux, CEO,Made.com practices andpromote the value of gender parity.Its work focuses on — David Eun, President, Samsung NEXT and Chief Innovation Officer, threecore areas: events, strategy and innovation, and Male Champions Samsung Electronics of Change. — Frédéric Mazzella, Co-Founder and President, BlaBlaCar Its global AccelerateHER events shine alight on accomplished female — Nicolas Brusson, Co-Founder andCEO,BlaBlaCar founders, (suchasex-Google and Yahoo executive Marissa Mayer,pictured here) providingthe crucialvisibility thegroups says femalefounders Each Champion is conducting leadership assessments and focus groups need to raise capital, access new networks or partner with collaborative within their organizationsleading up to the inauguralGlobal Tech companies.The group says it is evaluating and mappingbest practices Group meeting in January 2019 in Davos, Switzerland. The Global Tech across technology companies, providing partners with guidance and Group will meet again in London next June around AccelerateHER’s advice on the latest innovative diversity technology.The Male Champions and Founders Forum’s flagship events.

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

—P.5 COVER STORY

THEFACTORIES OF THE FUTURE

—Fourth Industrial Revolution technologies are spurring new techniques and business models. By Jennifer L. Schenker

Haier, aChinese home appliance manufacturer, has linked its Collaborating With Mechanical Co-Workers consumers and suppliersinamasscustomization platform thatautomates The roles of man and machine are changing. Foryears robots used in factories eachstep of production. The automated process allows acustomer to were stationary and setapart in cages to protect workers. Nowtheyare personalize orders for appliances such as washing machines or refrigerators working side by side with humans. (See the story on pages 32 and 33.) then designs the specifics, callsfor relevant components from the suppliers, To keep up, humans are acquiring some new superpowers. Workers who manufactures the appliance as the parts arrive (there are no warehouses), used to have to follow long, complicated paper-based changeover instructions delivers it to the end-user, and arrangesfor monitoring and service when it now work more efficiently because they can see each step projected onto is in use. asurface using AR technology. (See the story on page 31.) And exoskeletons Welcometothe factory –and the supply chain –ofthe future. It’s digital, are being testedtoreduce workerinjuriesand increase productivity.Ford it’s connected, it’s smart, it’s flexible, it’s customizable. And it’s here now. Motor companyisdeploying them at 15 of its factories around the world. Fourth Industrial Revolutiontechnologies, such as robotics, Internet of Things (See the picture.) (IoT), artificial intelligence (AI), augmented reality (AR), robotics and additive Nonetheless, robots are replacinghumans in some warehouses and factories. manufacturing, are spurring new techniques and business models that are The clothing manufacturer Uniqlo recently replaced 90% of its employees fundamentally transforming the global production systems that have at awarehouse in Tokyo’s Ariake district. The robotic system is designed to traditionally served as an engine for growth and innovation in economies transfer products delivered to the warehouse by truck, read electronic tags around the world.Capgemini projectsthat smartfactories have the potential attachedtothe products andconfirm theirstock numbersand other information, to add $500 billion to $1.5 trillion in value to the global economy within according to press reports. When shipping, the system wraps products placed five years. And nearly every manufacturingvertical including autos, home on aconveyor belt in cardboard andattaches labels to them.Only asmall appliances, consumer goods, electronics, apparel and pharmaceuticals will portion of work at the warehouseneeds to be done by humans. Meanwhile, be impacted. Here is aglimpse of what the future holds : the Chinese phone part maker Changying Precision Technology Company

P.6—THE INNOVATOR Bionics Ekso

The merger of man and machine: Afactory worker wearing MANUFACTURERS ARETOP CORPORATE an Ekso Bionics exoskeleton R&DSPENDERS Trailing 12 months R&Dspending (as of 6/16/17)

Amazon $17.4B has created an unmanned factory.Everything in the factory —from machining Alphabet $14.5B Samsung $12.8B equipment to unmanned transport truckstowarehouse equipment —is Intel $12.8B operated by computer-controlled robots. The technical staff monitorsactivity Microsoft $12.7B of these machines through acentral control system, according to aCB Roche $11.7B Huawei* $11.2B Insights report. Apple $10.8B Where it once required about 650 workers to keep the factory running, Merck $10.3B robot arms have cut Changying’shuman workforce to less than atenth of Toyota $9.6B Novartis $9.2B that, down to just 60 workers. Ageneral manager said that it aims to reduce Johnson &Johnson $9.1B that number to 20 in the future, the report says. Daimler $8.8B General Motors* $8.1B Robert Bosch* $7.8B Pfizer $7.8B Moving From Factory Floor to Facebook $6.4B the Consumer’s Door Cisco $6.2B Oracle $6.1B The factory floor is notthe only thingthat is changing. The wayproducts Honda $6.1B get to marketisalsobeing transformed. On-demand decentralizedmodular Astra Zeneca $5.9B IBM $5.8B equipment and custom machineslike 3D printers are enabling manufacturers Sanofi $5.7B to handle increasing demand for personalized products while moving production closer to consumers. (See the stories on pages 23 and 28-30.) Source :company filings, Bloomberg *indicates R&D spending reported annually

—P.7 COVER STORY

HOW FOURTHINDUSTRIAL REVOLUTION TECHNOLOGIES ARE CHANGING FACTORIES

ROBOTICS AUGMENTED REALITY

Blockchain,animmutabledigital ledger technology,iseasing thecomplexities Factories and warehouses Technology is making of integrating suppliers and making the supply chain more transparent, are becoming more and more changeovers on production automated lines and maintenance helping businesses like Walmart to more quickly identify problems and more efficient avoid recalls. It also gives consumers ameans to gain quality assurances, building brand trust. (See the story on pages 40 and41.) And autonomous ships, vans, trucks and drones are changing lastmile delivery.(See the story on pages 46-48.)

The Shift to Outcome-Based Services As if all of these changes were not enough, manufacturers are increasingly expected to move from providing productstoproviding outcomes, says Eric Schaeffer,senior managing directorand head of industrialpractice at Accenture. Forexample, Michelin, one of the world’slargest tire manufacturers, has shifted its business model from selling tires as aproduct report prepared with Accenture. Software platforms are expected to emerge to aservice guaranteeing performance. It workslikethis: Michelin places that will better facilitate data capture, aggregation and exchange across IoT sensorsinside trucks to collectdata, like fuelconsumption, tire pressure, the ecosystem, helping manufacturers create and monetize new products temperature,speedand location. Thisdata is then processed in acloud and services. Thebig winnerswill be platform owners and partnerswho solutionand analyzed by Michelin experts, who provide recommendations can harness thenetwork effectinherentinthese new digital business andtraining in eco-drivingtechniques. By encouraging the right handling models to createnew kinds of value, thereport says. of the truck equipment,the companycan help truck fleetowners reduce Going forward “any industrial manufacturer should be part of one or more fuel consumption by 2.5 liters per 100 kilometers, representing annual ecosystems,and thishas implicationsfor the way they operate their savings of €3,200 for long-haul transport travellingover 120,000 km, companies,”saysAccenture’sSchaeffer. “It meanshavingtoopenupto whichworks outtoreducing total cost of ownership at least 2.1% and the outside, but industrial manufacturers are not very comfortable with CO2 emissions by eight tons. The service helps Michelin achieve higher ecosystems.” customer satisfaction, increaseloyaltyand raise EBITDAmargins,according Anumber of other issues still have to be resolved.Cybersecurity remains to aWorld Economic Forum report. aserious concern. As machines operating criticalinfrastructure become Other manufacturers are starting to sell uptime, i.e. aguarantee thatthe connected they become more vulnerable to cyber attacks. (See thestory productsold will be up and workingacertain amountoftime. If it does on pages 18, 19.)And amajority of manufacturers have stalled in their as promised the customer will pay an agreed-uponprice.Ifitdoesn’tthe efforts to embraceIndustry4.0 technology.Astudy conducted by the manufacturer pays apenalty. WorldEconomic Forum found that over70% of manufacturers investing Delivering such outcomes will require newlevelsofcollaboration across in technologies such as BigDataanalytics, artificial intelligence or 3D an ecosystem of business partners,bringing together players who combine printingdonot takeprojects beyond thepilot phase. their productsand servicestomeet customer needs, according to aForum That is why the Forum is building anetwork of experts to help, says Helena

P.8—THE INNOVATOR ADDITIVE ARTIFICIAL INTERNET OF THINGS THE OUTCOME ECONOMY MANUFACTURING INTELLIGENCE IoT technology allows Manufacturers like tire-maker 3D printing technology is being Manufacturers are using factory machines to communicate Michelin are leveraging the used to manufacture AI to reduce equipment downtime, technology to sell outcomes as everything from orthodontics to spot production defects, improve well as products airplane parts the supply chain, and shorten design time

Leurent, head of future of production at the WorldEconomic Forum. have to multiplythat.”The processgets bogged down becausesenior Concluding ayear-longstudy with McKinsey,the Forum named the world’s executives decide to start by experimenting so “they say ‘let’s do robotics, nine most advanced factories in September,recognizingthe strides the let’s do aproof of conceptaround machinelearning’and so on,” says winners had made in embedding Industry 4.0 technologies. Haier’s factory Schaeffer of Accenture. “Tocover theentire fieldyou coulddothisforever.” in Qingdao, Chinawas among the winners,asweretwo other factories Manufacturers need to develop astrategy for digitaland figure out how in China.Anetwork comprisedofthe winnerswas officially launched in they want to tie it to their business, then put the right architecture and September. They have all agreed to share theirknowledgewith other skill sets in place. “I would say manufacturing is the hardest spotonearth, manufacturing businesses. if you want to put together all the technologies –IoT,AI, robotics –all the disciplines and get them all to work seamlessly withyour system,” says Schaeffer. Pilot Purgatory That said,“there is alot of cutting-edge stuff to be doneinmanufacturing,” The manufacturing industry could use the help. “There is areason for the that can interest top talents suchasdata scientists and systems engineers, pilot purgatory,” saysEnnodeBoer,partner and head of global manufacturing he says. It is up to management to createthe environmenttoattractand at McKinsey.“It is literally the complexity they arefacing. When you try keep the right talent.They will not be able to do it allexternally,hesays, to move to Industry 4.0 you are immediately confronted with 10 or 12 so they will havetobuild theexisting skill setsintheir employees and different technologies that you needtomaster,from IoT to robotics and teach themnew skills. AI allthe way to blockchain. Younot only need to be at theforefront of “If Ihave onemessage it is CEOs reallyneed to understand this, take it theart of the possible, in order to drive impact you need to go beyond the seriously and stop tiptoeing around with pilots,” says Schaeffer.“It is time technologies and think in use cases. Typically you need 15 to 30 use cases to move forward.China is embracing theFourthIndustrial Revolution in asinglefactory. We have clients with over 200 factories so thenyou faster than otherregions andthe gapisgettingbigger.”

—P.9 FLEXIBLE MANUFACTURING

Siemens’ Chengdu electronics plant.

has led to greater flexibility, shorter anticipatedand embracednew time-to-market, higher efficiency and technologies as they develop. “We better quality,enabling afour-fold followanagile conceptand increase in output and aprocess methodology in theR&D and quality rate of 99.999%, says SEWC implementation of new technologies; General Manager Li Yongli. and usually start with pilot projects It has also earned the Chinese plant beforescaling up,” says Li. recognition as oneofthe most What’s more, he says, the plant has advanced factories in theworld. taken the necessary stepstohelp employees and managementprepare, Lessons Learned both mentally and physically,for Ninefactories, including SEWC and going digital.To thatend Siemens aBayer Pharmaceuticalsplant in offers an online program called Apply Italy,were recognizedinSeptember Digitalization to Our Business Going Digital by The World Economic Forum and Training, to help all employees have McKinsey fortheirstrides toward a“digital mindset,” orient them to —Fourth Industrial Revolution technologies enable embedding the technologies of the the new digital environment and highly efficient flexible production at Siemens’ Chengdu FourthIndustrial Revolution into establishone digital language. “We electronics plant. modernproduction, improving encourage every employee of SEWC operationalperformance in the to take partinsuch atraining process. (See the story about Bayer’s program,” says Li.The Chengduplant factory on page31.)Like theBayer alsocontinuously investsinthe Pharmaceuticals plant, the Chengdu research andapplicationoffuture planthas agreedtoshare what it technologiesbysettinguplearning has learned with other manufacturing centers.More than 10 technology Amanufacturingplant in controlled by around700 SIMATIC businesses, to aid the adoption of knowledge-sharing teams have been the heart of China’s Southwestern components, is recorded, monitored, technologies as part of anew program established at SEWC to impart Sichuan province owned by German analyzed andoptimizeddigitally. launched by the Forum. technical know-how,best practices, conglomerate Siemens makes Machines and robots handle some SEWC’s secret forsuccess? “Weat andthe results of research into cutting- Programmable Logic Controllers that 70% of thevaluechain independently. Siemens are also going throughour edge technologies to employees. The help factories all over the world Digitaltwin technology creates a own digital transformation in our digital age requiresdigital talent, control and automate their facilities holistic virtual model of the integrated ownfactories,” saysLi. “Weare a says Li. and machinery.Itpumps out eight product and production lifecycle– bigmanufacturer ourselves, with So factories needtofocus not just million such devicesayear.That from product design to production more than 250 factories worldwide. on howtomotivate management equates to about one every two planning, engineering, and execution, We not only use our own software butalsoemployees. “Digitalization seconds. The abilitytoefficiently and service. Afully autonomous and automation tools butalsotake is ajourney rather than aresult,”he supply the world’s factories with over logistics system is used duringthe advantage of the insightswegain says. “A holistic view is needed to 800variants of Siemens’ SIMATIC production execution cycle to ensure in daily usage and take this information define the long-term roadmapfor controllers and other electronic aregular supply of materials and back to R&D to continuously optimize thedigital upgrading of a components hinges on the fact that components for continuous production, our products.” SEWC has adopted manufacturingenterprise. the plant is not only aconsumer of with 100% traceability.Acloud-based some of the digitalizedproduction Digitalizationshould not happen its own equipmentbut has also Internet of Things (IoT) operating processes that Siemens operates at independently,but rather havea successfully implemented awhole systemconnects sensorsthroughout its electronics plantinAmberg, synergy effect across all departments array of Fourth Industrial Revolution the factory.And flexible technology Germany,where it has been of the plant and be interpretedand cutting-edge technologies. enables different products to be made manufacturing SIMATIC Programmable supported by each and every employee Production at Siemens Electronics on the same production line to increase Logic Controllers since 1989.And of thecompany.” Works Chengdu (SEWC), which is efficiency. Digitalizingproduction the Chengdu plant haseagerly J.L.S.

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| London | Paris | Munich | Zurich | New York | DIGITAL TRANSFORMATION

Transforming aGerman Giant An Interview With Rahmyn KRESS, ChiefDigital Officer and Chairman of The Digital Executive Committee at Henkel.

Rahmyn Kress is chiefdigital dedicated platform he designed for this to our business units?One of the mostimportant thing is not the officer and chairman of the digital Henkel’s entrepreneurial journey. the things that is very important to data itself but what are the problems executive committee at Henkel, a understand is that Henkelhas three you are looking to solve.What is the 142-year-old makerofchemicals and You joinedHenkel 17 months ago to different business lines: adhesive data you require to support your consumer goods headquartered in lead its digital transformation. technologies, beauty care and laun- hypothesis? Düsseldorf,Germany. Where are you on thetrajectory? dry,and home care. We started that process at theend Prior to joining Henkel, Kress was R.K.: Ithink the better way to frame In all of the business units we have of 2017. We arenow working with managing director of technology it is to ask “what are the goals that to look at the maturity of the techno- ourpartners on extractingdataout ecosystemsand ventures at the global have beenset forthe journey? And logies but also the skill sets of the in- of ourorganizationand are ready consultancy Accenture. Kress also are we executing welland at the dividuals driving the businesses. In for our first proof-of-concepts.We servedasthe CEO of Digiplug, a right speed?” The first phaseofour the short term the goal is to act as a havealignedthe processes, the digital technology company in Paris digital transformation is structured catalyst of change and use the entire governingstructures and the operating acquired by Accenture that provided aroundthree core pillars. The first activityasanupskilling exercise. model across thegroup globally.So digital services to theworld’slargest is digital technology.There the ques- Have you beenable to put the right we are at themoment where we mediagiants. tion is “Do we have the right tools technologies in place? haveideatedand built, we have tested Earlier in his career he was executive and capabilities to drive our business R.K.: We agreed across the group at and now –atthe end of the quarter vice presidentofphysical anddigital forward?” The second pillar concerns the beginningofthe yearonthe -- we can transferresponsibilityfor transformation, supply chain and our ability to become amoreda- initiativeswewould be launching. digital tech and data analysis as well operationsatUniversal Music Group. ta-driven organization. Are we able We selectedour globalpartners for as the digital experience formarketing He first gained experience in dealing to run analytics effectivelytohave digital technology and data analytics and customer engagement overto with exponential change whilethere, the right visibility on our operations? and after that we issued tendersto all of thebusiness units. It is a whenthe first waveofdigital Can we createdigital experiences the market and we started implementing tremendous achievement in arelatively disruptions hitthe music industry. for consumers and our business the digital architecture that will get short period of time. He recently spoke with JenniferL. partners in B2Cand B2B and B2B2C us to where we want to be.That is What about change Schenker,The Innovator’s editor-in- environments?The third pillar cen- an ongoing process, aprocess that management? chief,about Henkel’s digital ters on digital innovation and our youneedtocontinuously fine-tune R.K.: Digital innovation and the transformation and thelaunch of overall strategy.How do we build because technologyisalwayschanging. strategy around it is acore initiative Henkel X, anew operatingunit and innovationand eventually transfer Whenyou deal with data analytics that any organization needstodo

P.12 —THE INNOVATOR over the world and Henkel employees partners and employees to innovate from alldifferent levels got to talk cooperativelyand buildMVPs[minimal and shareexperiences with them. viable products], newbusiness In additiontothe mentorship club opportunities and services. It helps we have also introduced partnerships us install amindset of build, measure with academic institutes of andlearn. entrepreneurship such as ESCP,atop Last, butcertainly notleast,Ihave business schoolinEurope, which taken over the responsibility of driving allow us to present business challenges theHenkelventure business,together “Henkel Xisanopen which the faculty then take on board. with the business units, to look at We will havefurther partnerships what does venture really meanfor innovation platform that in Europe and the U.S. to announce acorporateand setthe right level soon. We are afounding partner of of expectations. distinguishes itself AccelerateHER, an initiativeinwhich Where do you go from here? males in leadingpositions stepup RK: My focuswillshift in 2019 to by being very open to to encourage more women in future opportunities in marketplaces collaboration with anumber technology.Ihave been very privileged andplatforms, in deeptech and in to be elected to become an active new digital technologies with afocus of different players. member of the WorldEconomic on retail B2B2C and B2C environments Forum’s platform economy initiative that are notasset-based. To make It is about dropping the that focusesonthe importance of that plain it will be all about, on a that for Europe and its businesses daily basis, how to identify areas that guard rail and working and and itsoverall future economy. coulddisrupt Henkel’sbusiness as collaborating with others.“ We have partnered with the Founders we know it today.Myjob as CDO Forum to bring –for the first time – will be to become theChief Disruption their conference to Germanyto Officersothatinsteadofbeing to transform itself.Itisabout amindset startthinkingabout collaboration encourage founders andC-Suite disrupted we can anticipate andbuild shift. Manycorporatestry copying and peers. HenkelXhelpsusto executivesfrom bigcorporates to andinvest in new areas and turn amodel where theysay “we want achieve that through three “e’s”:it worktogether.Our “experience” thethreatofbeing disrupted into a to act like astartup.” That is just is aboutcreating an ecosystem; it is initiativesincluderegular fireside proactive “innovate or disrupt from impossible. Large corporates, while about creating experiences to foster chats and briefings with mentors and within” culture. theyare undergoing the digital new ways of thinking, and different industry leaders. So far we have had What advicedoyou have for other transformation process, have legacy types of activitiesand formatsthat seven,and fromthere we have corporates? businesses that need to be run and foster innovation; and it is about launched18ongoingliveprojects RK: No matter how visible it is for dailychallengesthatneed to be experimentation, i.e. new ways of in which our business units are those of us who have been involved overcome. That doesn’t mean they working. From those three pillars working togetherwith startupsto in digital transformation for awhile, can’ttakewhatworks very wellat we are buildinganumber of different buildproof-of-concepts. We have you should never underestimate that startups and identify how to obtain productsand programs. launched our first live version of the it is stillverynew to many and an innovation culture by following Our Henkel XMentor programis Henkel app which our employees therefore you should notignore the theirown path.Thatiswhatled to one of theareas. The members of can access on theirmobilephone fear and discomfort of people.Itis my thinkingincreating HenkelXin theHenkel Xmentorship clubare and tablets for dailynews or very important therefore to be very February. thebrightest minds in entrepreneurship information on innovation topics and plainspoken in your communications What is HenkelX? andindustrial thought leadership we havedone anumber of other andinclusive.Itisparamount to RK: Henkel Xisanopen innovation with diverse backgrounds. Mentorship things that allow us to get digital bring as many peopleonboardas platform that distinguishes itself by Days offer aunique chance for our feedback from ouremployees. possible. Thesecond point is that being very open to collaboration with internal colleagues to discuss When it comes to experimentation the biggest and the most important anumber of different players. It is entrepreneurialideaswith these we are workingwith H-FARM [a part of digital transformation is culture aboutdropping theguard rail and mentors, get their adviceonacurrent globalinnovation hub on the outskirts andthe culturalchange required, working and collaborating with others. business challenge or have an of Venice, Italy that combines which includes different ways of That is oneofthe biggest changes exchange on any digital topic that innovation, entrepreneurship and working and giving more responsibility foranorganization –the shift from they are currently facing. We attracted education]. H-FARM allows us to tap to individuals so that they reallyfeel thinking about productstothinking over 100 mentors in only three months. into aglobal network of startups and empowered to make adifference and about servicesand marketplaces. To Forour firstmentorship day one- it givesusaplace –outside of our be apart of thechange. stop thinking about competitors and third of the mentors flew in from all own environment –togowithour J.L.S.

—P.13 CORPORATE VENTURE

Why Henkel Adhesive Technologies is Sticking With Startups

—The €9.38 billionunitisteaming withentrepreneurs to build new businesses in advanced materials.

In theSilicon Valley it is sometimes hard to differentiate the Technology Ventures, which has offices in Zurich, Switzerland and Toronto, venture capitalists from the entrepreneurs. Both often wear hoodiesand Canada, and focuses on industrial innovation, including advanced materials; Allbirds sneakers and are obsessed with what’s trending. That’snot the case Pangaea Ventures, an advanced materials fund which has offices in the U.S. at HenkelVentures, theventure capital arm of the 142-year old German and Canada; andFirstminute Capital, apan-European seed fund. conglomerate, which specializes in adhesives, laundry andhome care and beauty products. “Wedon’t do cool or hip,”saysPaoloBavaj, headofcorporate venturing at Henkel Adhesive Technologies. New Markets It all dependsonone’s perspective. In themovie aboutthe making of Facebook Throughthese fourfunds Henkel’s adhesive business has access to 2,500 the character based on the AmericanInternetentrepreneur Sean Parker startups.“We check which onesare strategic to our core business, usually famouslysays “You knowwhat’s cool? Abillion dollars.” around 200 per year,and we do detailed evaluations of 50,” says Bavaj. So The adhesives business unit, which makes adhesives, sealants and functional far HenkelAdhesives Technologieshas invested in five startups. coatings for consumers, craftsmenand industrial applications, reported Among them is Israel’s Copprint Technologies, which is in the field of printed revenues of €9.38billion in 2017,representing47% of Henkel’s total company electronics, one of the keyareas in which Henkel AdhesiveTechnologiesis sales. And Bajav’s mandate is to build new businesses in advanced materials searchingfor innovations. Copprint,anadvanced materials startup, has for the adhesives business that could have aturnover of hundreds of millions developed anoveltechnology for producing conductive copper inks that has of euros in five to eightyears. the potentialtoreplace silver-based inkmethods and provide substantial To feed those efforts with the right technologies HenkelAdhesive Technologies cost benefits foravariety of printedelectronics applications.Based on the conductsits own R&Dbut is also reaching out to universities andstartups. increasing demand for printedelectronics, the market for conductive inks is When Bavaj first startinginteracting with entrepreneursinearly 2014, “I projected to reach $2.8 billion by 2020, according to arecent IDTechEx was impressedathow scientificallysavvy the people in the startups were,” research report. Copper-based technologies have thepotential to significantly he says. “They were doing thingsthat we would never be able to do ourselves.” reduce costs.Today all solutions are still silver-based duetotechnical challenges Henkel created itsown company-wide venture fund in 2016, settingaside such as copper oxidation and expensiveproduction processes. atotal of €150 millionfor direct investments by all of its business units “Copprinthas foundaway to switch from silver to copper inks,” says Bavaj. between 2016 and 2020. As a first step, Henkel invested in the following “Silver is super expensive so if you can incorporate copper-based tech you venturecapital funds: China Materialia, which specializes in investing in can substantiallylower the cost of ink.” Copprint has demonstratedthat its advanced materialsstartups in China and adjacent Asian markets; Emerald copper ink can be applied without oxidation and it has already achieved

P.14 —THE INNOVATOR Production of adhesives at aHenkel factory

takes less than 20%. “Startups that acceptmoney from Henkel expect something elsebeside themoney,” says Bavaj.“They wantaccess to ourfootprint, our brand, our market channels and our customerbase.” Henkel Adhesive Technologies is well-positioned to help the startups it works with to scale, says Bavaj. It has 6,500 technical sales people on the ground and hooks into big industries such as automotive. “Veryoften largeautomotive OEMs are reluctant to embrace cool tech from ayoung startupbecause they are afraidthe companycould disappear in afew months,” he says. “Butif Henkel is behind the company as an investor it gives big clients some sort of security.This is why our brand is so important for them.” Henkel AdhesiveTechnologiesonlyinvestsinanoperatingcompany if there is sign-off from arelevant operating unit. “Wealways involve them in evaluating astartup because they need to provide the resources to help the startups scale up,” he says. “If they are not excited about aparticularinvestment it won’t work.” When the unit works with startup companies “we work as technical product qualifications for printed RFID (radio frequency identification) closelywith them as necessary and as loose as possible,”saysBavaj. “We antennas.Such antennas arepart of RFID tagsthat use electromagnetic fields don’twant to tie them too tightlytoHenkelbecause we recognize that they to automatically identify andtrack objectssuchasproductsmoving through have theirown business and theirown way of working.The point is we want asupplychain. Copprint saysits printedRFIDantennas offer significant to support them but if we interfere too much it will be the end of that startup advantagesincosts and sustainability compared to other existing methods. company.” The unit does not always take equity stakes. It has collaboration In addition to RFIDand near field communication (NFC) antennas, its agreementswithsome 35 startups. “Someofthem arenot looking for money technology has the potential to be used in abroad variety of applications and it is more aboutrolling theirproducts out to our customers or really such as 3D-printed electronics, wearables and smart clothing. jointly developinganew technology,” he says. “Theapplications are huge,” says Bavaj. “For example, this new type of ink Regardless of the arrangement, he says the goal is to develop new lines of could be used for printing electronicssystems used in next generation business forHenkelAdhesive Technologies out of startups’ technologies that photovoltaics, allowing us to enterinto market segments that were not lookpoised to be profitableand stick. available to us before.” When Henkeltakesequity stakes in startups it usually J.L.S.

COPPRINT TECHNOLOGIES KRIYA MATERIALS NBD NANO EXAMPLES OF ISRAEL THE NETHERLANDS UNITED STATES STARTUPS WHAT IT DOES : Acopper-based ink WHAT IT DOES : Nanoparticle-based WHAT IT DOES : Nano-materials that WORKING platform for printed electronics. coatingsthat can be used for avariety can repel water and oil on avariety of of applications, including flexible film services such as glass, plastics, leather WITH HENKEL and glass. and fabrics.

www.copprint.com www.kriya-materials.com www.nbdnano.com

—P.15 CONSUMER PRODUCTS

improve processes continuously.And, legacycontroller equipment is being Manufacturing upgraded so that factory printerscan produce serialized codes,using an app that tells the companywhere aproductisproduced, whichline, which the Future warehouse and for which customers. “Atthe moment eight printers in our Europeanfactories are testing this andweplan to roll it outtomore than 200 production lines by the end of 2020,” says Holbach. The company is of Laundry and Home experimenting with 3D printing in the production of its home care products and with augmented reality (AR). AR is being tested in factories in Spain Care and North America for changing products on production lines and maintenance. Using AR headsets to digitizepaper-based instructions is expected to reduce —Pilot first, then roll out fast globally. defect rates, decrease training times and increase yield. But “digitizing all of these different steps in the system takes alot of effort, money and resources for rather incrementalbenefits,” says Holbach. “Atthe moment it is not yet at the very top of our list.” Some 1,600 people working in Laundry &Home Care are using cloud- based, end-to-end analytics to visualize the supply chain. Machine learning algorithms are being used to improve demand forecasting capabilities. The business unit is also testingdigital twinningtechnology that involves creating adigital replica of physical objects. It has run one pilot in the U.S. where it operates some of its largest factories. Holbach says Laundry &Home Care is not yet ready to embrace digital In 1876 Fritz Henkelfoundedthe company Henkel &Cie in Aachen, twinning on agrand scale. “You have to pay six or seven digits just to license Germany. The company’s first productwas alaundrydetergent based on thetechnology and then pay seven-digit amounts to digitizealarge number sodium silicate called “Universal-Waschmittel” (universal detergent). Today of factories, so you need to have areal business case,” he says.“If you are Henkel’s detergents are used worldwide to do about 25 billion wash loads building acompletelynew digital plant for millions of dollars then the annually.The consumer goods business has growninto aglobally active investment for adigital twin is worth it, but we don’t see the margin of unit with well-known brands, suchasPersil, Purex and Pril,and encompasses benefitfor this technology at the moment. We are not pursuing this actively not just laundry detergents but laundry additives, dishwashing products, because we think asmart startup will come along and figure out afaster hard surface cleaners, toilet care, air care and insect control products. and cheaper way to digitize.” The Laundry &Home Care unit regularly These products —a€6.6 billion business —are produced in 31 factories workswith startups. (See examplesbelow.) “Weare using agood mix of around the world that are filledwith legacy equipment. So what is the traditionalbig industry players but also newcomers,” Holbach says. cleanest way to digitizeall of these plants? “Wehave deployed already on aglobal scalebut we don’t haveone single lighthouse factory, ”says Dirk Change from the Bottom-Up Holbach, senior vice president of Laundry &Home Care and managing But goingdigital “is not only about buying technology andputting it somewhere, director of Henkel’s global supply chain.“Our approach is broader.When we have to take the entire organization along,” he says. “It is abig change- we find something interestingwepilot it in two, three or foursitesand if management endeavor.Itisone of thereasonswedon’thavesingle lighthouse it works then we scale-up fast globally.” factories. We want to involve as many as possible. Youcan’t do this top The approach is structured around a“4+1” strategy that Holbach believes down. Youhave to have abottom-up process that comes with training and can help the company’s supply chain become “faster,better and cheaper”: skills assessment because the jobs of people will change. We usually recruit Analytics, robotics/automation, sensorsand visualization plusend-to-end mechanical engineers, now it is more and more about systems and data connectivity.“We aretrying alot of things,” saysHolbach. “Thespeed of analysts. We also need more systems engineers. We are hiring for these change is so fastwecan’talways bet on the right horse. We have to fail also profiles but many others are too, so you havetobecreative about how to and not get lost in all the opportunities, so we are going with aportfolio engage good people.” approach. This portfolio of application is constantly reviewed andadjusted Earlier industrial revolutions took several decades to fully materialize, notes over time.” The digitization process began in 2013 when the company Holbach. This one will happen faster but it is likelytotake more than a started systematically connecting all of its sites. The digital backbone extracts decade. “I personally believe we have way more to learn,” he says. “Weare dataabout the production process worldwide, giving the company insights only at the beginning of what technology can bring us.” that it uses to build applications. The unit is using machine learning to J.L.S.

P.16 —THE INNOVATOR The production of Somat dishwashing soap at aHenkel plant.

AT AGLANCE: HENKEL’S LAUNDRY &HOME CARE BUSINESS

The company’s first product in 1876 was alaundry detergent. Today Henkel’s detergent washes about 25 billion loads annually —The consumer goods business includes well-known brands Persil, Purex or Pril, and also encompasses laundry additives, dishwashing products, hard surface cleaners, toilet care, air care and insect control products. —The Persil brand, sold in more than 50 countries globally, generated sales of more than €1 billion in 2017. —Total sales generated by the Laundry &Home Care business were €6.651 billion in 2017. —The proportion of sales from products successfully launched in the last three years was around 45%. —19% of Henkel’s 53,000 Henkel employees worldwide work in Laundry & Home Care —Laundry &Home Care represents 33% of Henkel group sales (47% come from Adhesive Technologies, 19% from Beauty Care) —The Laundry &Homecare unit operates 31 factories worldwide

MICRO-BIOLYTICS DOKS INNOVATION ONE LOGIC EXAMPLES OF GERMANY GERMANY GERMANY STARTUPS WHAT IT DOES : Patented process WHAT IT DOES : Automated WHAT IT DOES : Provides adata WORKING WITH digitizesliquid substances such as stock-taking and inventory manage- science platform and data analysis detergents while theyare being ment based on smart multi-sensors experts to improve forecasting. HENKEL produced. Data collected provides fast, and different autonomous carrier reliable information on changesand vehicles such as drones. Henkel is impurities. testing the technology in Serbia and Spain. https://micro-biolytics.com https://www.doks-innovation.com https://www.onelogic.de

—P.17 systemic attacks on shared public infrastructure, says aWorld Economic En Garde Forum report on secure market incentives for IoT. As today’s economy continues to prioritizetime-to-market and the profitability of solutions over security,the threat of serious physical, financial and —Industrial control systems are an easy, tantalizing institutional harm grows, making factories and other types of critical target forhackers. infrastructure an increasingly tantalizing target for state-sponsored hackers, cybercriminals and politicalactivists. “There is more and more need for security,” says Philippe Duluc,chief technology officer,big data and security, at ATOS, the European IT services giant. “The surface of attack is increasing every day because we have this convergence between IT and objects. And with this evolution of global interaction we have more and more risks.” Just how big the risk is can be hard to quantify.But in September,Germany’s digital association Bitkom released astudy that gives atroubling window into the magnitude of the problem. It revealed that 66% of the country’s manufacturers havealreadybeen hitbysome kindofcyberattack, resulting In 2017NotPetyaransomwarecausedanestimated $10billion in $50 billion in losses to the German economy. in damage as it shutdownports, disrupted shipping, infected factories and Groups like Bitkom arecalling on manufacturers to take such threats seriously. hit power grids. Such havoc is entirely predictable. The Industrial Internet As networks expand and more objects get connected, the ripples from any of Things (IIoT) is expected to transform manufacturing, energy,agriculture, attack can spread rapidly. Yetit’seasytooverlook such dangers.Manufacturers transportation and other industrial sectors of the economy that, together, look out over factory floors filled with machines and control systems that accountfor nearlytwo-thirds of the global gross domesticproduct.Unfortunately, in some caseshavebeeninplace for decades and are dazzled by the potential many of these companies are unprepared for the potential risk and liability to revolutionize that equipment by packing everything full of sensors, installing that may be brought on by connecting new technologies with old-world robots, harvesting rich data sets, and using artificial intelligence to optimize systems, including new threats to public safety,physical harm, and catastrophic it all. The problem, say security experts, is that the old equipment never

P.18 —THE INNOVATOR CYBERSECURITY

required much security,since it was manually operated, or only connected leaders to develop specificsolutions and expertise for Industry 4.0. Trend via internal networks. Criticalinfrastructure providers suchasfactories are Micro of Japan, for example, offers extensive guidance to industrial customers then adding sensors, robots, or other types of IoT equipment that also lack on how to design their networks to limit access and potential fallout by basic security,introducing yet more weak entry points for hackers. “When segregating some operations. The company has also developed computing you have alarge volume of operating systems, it creates vulnerabilities,” equipment that can be installed on ICSnetworks to monitor trafficaswell says Adam Kujawa, director of malware intelligence at Malwarebytes. as software to continually scan for vulnerabilities and mischief. The older Industrial Control Systems, or ICS, make the security industry “The exponential growth of highly-available wireless networks coupled with especially nervous. ICSrefers to the technology that triggers amachine to an equal growing market of cheap and commercially available IoT devices perform atask or operate in some way.Such controls were at the center of is changing the risk equation,” says Ed Cabrera, the chief cybersecurity an infamous hack on asteel mill that Germany’s federal agency for digital officer for Trend Micro. “The threat landscape is changing, making it more security disclosed in great detail four years ago. profitable for cybercriminals to hold factory floors and hospitals for ransom.” In that case, hackers launched the attack by sending “phishing”emails that Unfortunately,cybersecurity firms face the challenge of explaining these looked legitimate, but which included an attachment that installed malware issues to executives in industrieswhere the knowledge base and experience when opened. This got them into the office network, and from there they is low.Christian Polster,chief strategy officer for the Vienna-based cybersecurity were able to navigate into the software inside the steel mill. Once there, firm RadarServices, says the company has developed awide-ranging platform they seized the control systems and were able to stop ablast furnace from that allows industrial customers to monitor operational and informational activating security settings, which caused systems to fail and damaged the technology from asingle security center.But reactions vary widely when mill. Those tactics have evolved, leading to the more recent attack that shut Polster explains to afactory owner why such acomprehensive approach is down aMiddle East plant late last year.Security firms said they detected a needed.“Very oftenthey are in the stagewhere theysay they have ascanner piece of malware called TRISIS that was optimized to attack ICS. While andafirewall, and that’s it,” Polster said. “And then it’s very hard to convince other attacks had targeted controls, TRISIS targeted the safety systems, them. But if they have aCIO and compliance programs, then it’s asignal meaning that the systems that might trigger alarmsoremergency shutdowns that they are on their way to understanding what they need to do.” had been compromised. Urgency may be growing as Industry 4.0 adoption accelerates. San Francisco- based Nozomi Networks was founded in 2013 to focusspecifically on industrial Mitigating Mischief security.Ithas developed acomprehensive industrial security platform that More than twodozen companies, governments, organizationsand universities monitors all aspects of the network for vulnerabilities and malicious traffic, have been collaborating with the World Economic Forum to co-design the and pulls it all together into acentral management console. The company Industrial IoT Safety and Security Protocol. This first-of-its-kind policy has raised $54 million in venture capital, including anew round of $30 framework generates an understanding of how insurance might facilitate million at the end of September.Investorswerenodoubtrespondingtothe the improvement of IIoT security design, implementation and maintenance huge market opportunity. practices. It also sets forth auniversal set of security best practices that “Next year is going to be the first mainstream year for industrial cybersecurity, ” should be incorporated in all IIoT deployments. The next steps are to pilot says Edgard Capdevielle, Nozomi’s president and CEO.“We have passed these incentive structures with governments, insurance firms and other the tipping point.People want moreintegration andalot moreintelligence private sector companies, refine the underlying operating models, and then in the production process, which creates more risk. Everyone has to care share theseoutcomes to scale-up adoption internationally and acrosssectors. about security.Ifit’s connected, it’s exposed.” In the meantime this complex security puzzle has ledtraditional cybersecurity Chris O’Brien

NOZOMI NETWORKS CLAROTY CYBERX INDUSTRIAL UNITED STATES UNITED STATES UNITED STATES CYBERSECURITY WHAT IT DOES : Monitorsnetworks WHAT IT DOES : :Specializesinsecurity WHAT IT DOES : Provides an industrial STARTUPS which blend Industry 4.0 connectivity software to protect critical infrastruc- cybersecurity platform for ongoing with traditional machinery controls. ture such as electric grids, transporta- risk assessment that has the ability to TO WATCH Its SCADAguardian appliance scans IT tion networks and factory floors from detect unusual traffic sent between and operationaltechnology networks cyber attacks. Customersinclude two machines, or M2M. Behavior for unusual traffic,pulling data into its electric utilities, oil andgas companies, analytics model industrial control Central Management Console. chemicalmanufacturers, water systems to determine whether there companies,and manufacturers. is suspiciousactivity. www.nozominetworks.com www.claroty.com www.cyberx-labs.com

—P.19 RETAIL

manufacturing.” “In the past,itwould be impressive if an assemblyline Fast Fashion couldproduce 2,000 of the same garments in five minutes,”Masaidina speech in Septemberduring Alibaba’s annual cloud computing conference Takes on aWhole in Hangzhou, China. “Today onwards, making 2,000 differentgarments in five minutes will be more impressive,” Ma said, adding that modern consumers aren’tsatisfied with mass-market fashionand aredemanding New Meaning unique outfits. Closely related to Alibaba’s New Retail strategy,aconsumer-centric approach —Going forward,robots willspeedily make custom that merges online with offline for seamless shoppingexperiences, New orders forpeople in thecolor, shape and size they want. Manufacturing willgreatlyimpact traditionalmanufacturersinthe next 10 to 15 years,Masaid.“NewRetail seeks to redefine theretail sector,” Ma said in his speech. He added that new manufacturing“will soon bring awaveofthreats andopportunities to the manufacturing industry in China, andaround the world. We must be prepared.” According to Ma, the lines between different industries will be increasingly blurred, and themanufacturing,tech and servicesectorswillbecome more interconnected. “You can’t have one withoutthe other,” he was quotedas saying. “Dataanalysts and algorithm engineers of the future will not be working in-house at Internet companies, but in manufacturing facilities.”

Upending an Entire Industry The clothing retailersZara,Forever 21 and H&M improved supply Holman is blunt about why he launchedBombsheller: “Westartedthe chain management, famouslyreducing product cycletimes from ninemonths company to upend an entire industry.” “That is what disruption is,” he to nineweeks. It is calledFast Fashion–orinindustrial parlance just-in- says. In Silicon Valley theattitude is “weare not goingtotry and fixyour time –which means the fabricfromthe mill doesn’tsit in awarehouse industry.Weare going to startfromscratchand we aregoing to create a but shows up at the factory precisely when it is needed. parallelindustry using allthe superpowersweget fromour computers.” Bombsheller,which claims to be the world’s first fully-programmable clothes The apparel manufacturing industry is ripe for disruption, he says. “When factory designed to deliver customized garments, cuts nine weeks to nine we show Bombsheller [to traditionalretailers] they allwish they had this hours. It is an example of how traditional business-to-consumer manufacturing company,” says Holman.The reason? Inventory management. “Theyall is settoshift to faster, more-personalized manufacturing,largely driven havetoguessninemonths ahead what willsell and sendbackorders to by consumer demands. China. Andtheyalwaysguess wrong,” he says. Thatleadstoliquidation “Weliterally nevermakeaproduct until someone clicks ‘buynow’and sales,which “devalues their brands.” On theother hand, if theydon’t tells us what colorthey want. Usually,within24hours it is on its way to order enough, “theyare spending moneytomarket things thathave sold you. That’s the model,” says Pablos Holman, ahacker,inventorand futurist. out… Thewinnersare the companies that have lost theleast.” He now worksfor formerMicrosoft Chief Technology OfficerNathan Bombsheller uses micro-productiontechnology to makeonly one customized Myhrvold at the IntellectualVentures Laboratoryonthe West Coast of the productsonoone is expectingittoovertakethe likesofZaraorH&M U.S., where awide variety of futuristic inventionprojects are underway. anytime soon. Butthe fact that it can make customized productsfrom Holman built Bombsheller alittle over five yearsago on his own time and quality fabricand turn them around in aday at apricewithinreach for on his own dime –toprove it was possible and would likely be the future many people underscores thechanges thatIndustry 4.0 will bring. of manufacturing.Holman’s hunch proved to be prescient. Customized Bombshellerautomates alot of what both factories and retailers do. Patterns manufacturing is moving from possible to probableand looks poised to uploadedbydesignersgoonsaleonline within one hour.People still do disruptthe $2 trillion apparelindustryaswellasthe production of many the sewing but Holmansuspects that will not be the case for long. Forthe other goods. Jack Ma, executive chairmanofAlibaba, callsit“thenew moment producersofrobots are focusing on automating high-value tasks

P.20 —THE INNOVATOR Amodel wears made-to-order leggings produced by U.S.-based Bombsheller, which claims to be the world’s first fully-programmable clothes factory competitive industry observers say factories will have to accommodate designed to deliver customized garments. custom designsand be abletomakerapidchangestothe products being produced. To do thattheywill have to:use theInternetofThings and other technologiestodigitizethe entire process; reducetime to market; integrate their supplierand production networksthroughInternet-based productlifecycle managementsothat employeesthroughout the network can collaborate; have semi-autonomousrobots working alongside humans like surgery.But,hesaysitmakesmore sense to focusonautomating to accelerateproduction while ensuring quality; and analyze data collected sewing. “It is atwo trillion dollar industryand nearly everyhuman on about customers to offer aplethora of new digital services. “Customization Earth will come back every year for something new,” he says. Going forward, is akey trend,” says Olivier Scalabre, asenior partner and managing robots will increasingly make custom orders for people in the color,shape director at theBostonConsultingGroup (BCG). “And with new Industry and size theywant, he says. 4.0 manufacturing it will be possible to satisfy this demand.” Early examples include Adidas’ high-tech Speedfactory, whichuses automation and 3D printing technology to support small-batch production of customized Customization is Coming running shoestailored to-consumersnear the production sites.The first That’s radically different fromthe way manufacturing is done right now. Speedfactorywas opened in Ansbach, Germany in early 2017, andanother Butsoon, saypundits, no manufacturer anywhere in the world will be hassinceopened in theU.S. Clothesand shoes are notthe onlyitems unaffected by Industry 4.0.This new industrialrevolution is drivenby being personalized.BCG hasopened 10 innovation centersaround the changesinconsumer expectations –they want customizable products worldtoshowcase howproduction lines will change. Among them is a delivered in Internet time–as wellasthe convergence of new technologies facility near Paris that produces customizable scooters. “Weare doing this such as The Internet of Things, collaborativerobotics, 3D printingand the cloud, together with the emergenceofnew business models.Toremain

—P.21 RETAIL

“In the past, it would be impressive if an assembly line could produce 2,000 of the same garments in five minutes. Today onwards, making 2,000 different garments in five minutes will be more impressive.”

Arobot holds acustomized shoe in an Adidas Speedfactory

to demonstrate the impact of Industry 4.0 to ourclients,”saysScalabre. next 10 years is basically thinking about this at this very moment,’ he says. During the third industrial revolution factories were designed according “There will not be 100% mass customization –itwill likely impact maybe to afew guiding principles: make alot of oneproduct and getbetterand 15%to30% of the market--but it is happening. The traditional value better at doing it whiledecreasing costs. The objective wastospecialize chain will be broken apart and allthe downstream manufacturers will factories by product andmovethemoffshore,where labor costsare less moveclosertothe consumermarket.” expensive.Sothe world ended up with megafactories, specializedby China is among the fastesttoembraceIndustry 4.0 technologies, says product, far away fromconsumer markets. Scalabre. “It will be one of the few countries in the world thatwilllead Technology is changing that. In theold system, switching aproduction theway,” he says. “It will no longer be thefactory of theworld.Itwill linefrom one product to another required stopping the line,cleaning it, build local factories for localcustomers.” Given that the nextbillion consumers and resetting all the tools and theparameters. Thankstocollaborative in China are projected to inject more growth into the economy in the next robotsand augmented reality tools,manufacturerscan switch products five years than the top five mature European marketstogether, targeting at almost no cost, Scalabre says. What’s more, the introduction of IoT and their homemarket will make economicsense. digital twinningcan boostproductivityby20% to 30%.Manufacturers now have alot more flexibility. They don’t need to go offshoretoobtain productivity gains because the new factories are much smaller so theycan ALesson in Disruption be closer to consumer markets. All this means thatwhereasproductswere So what can other industries learn from the disruption of manufacturing? once made to specifications, now they can be made to order,says Scalabre, “You maynot careatall about apparel butyou shouldconsider this as a driving the trendtoward personalization. roadmap for technology-based disruption,”saysBombshellerfounder Take beauty products.Now,aconsumer can go intoashop, havetheir Holman. “If we have surgical robots and self-driving cars thenwewill skin analyzed and order aspecial blend that asmall, nearby factory delivers have self-driving sewing machines that allow us to re-engineer the apparel within afew hours. Or running shoes.Consumers cangointoaNike or industry.Thatiswhatweare trying to showpeople.” Adidasstore,have a3Dmodel made of their feet andorder customized He warns industry leaders,“you are not immune. Don’t fixate on sewing 3D-printed sneakers. While todaysuchorders only represent asmall machines becausewith theadoption of machinelearningthere will be percentage of globalproduction there is aclear demand from consumers something analogousinyourindustry and people you never heard of who for “my cream, my shoes, my clothing,” Scalabre says.“Every industrial havejust dropped outofcollegewill do an end-run around you.” company that is making achoice about adesign of anew factory in the J.L.S.

P.22 —THE INNOVATOR Factory -in-a-Box

—Nokia andits partners are offeringanagile–and portable –form ofIndustry 4.0 production.

Arobotic assembly line inside Nokia’s Traditionalmanufacturers with the launch of Nokia’s Digital Factory-in-a-Box business aportable plantcan help areunder market pressure to to work CreativityLab in Munich, Germany, deliver critical customer orders. fasterand be more flexibleatthe toward the end of 2017. The final —Ramping up and down: Factory- same time they aremaking theslow, stepinthe proof of concept was the in-a-box can be ahandy standby and sometimes painful, transition creation of amoveable mini solution, helpingenhance capacity to digital. Enter Nokia’s Factory-in- electronics factory that was able to when needed. a-Box, whichturnscargocontainers complete the full manufacturingof —Training: The portable unit can into mini-manufacturingsites,replete aprinted circuit board as well as be used to train factory workers. with high-speed Internet of Things robotic assembly and testing. A —Limited trials: Universities could (IoT)connectivity, robotic assembly Nokia-led group –which includes anything that requires 3D printers use the mobile units for specific and other Industry 4.0 technologies. Factory-in-a-Boxpartners Beta Layout, to be connected together. projects or experiments. The factory-in-a-box can be packed, DHL, Fuji, HARTING, Isel, Isolec, “Thereare endless use cases,”Giloth The containers are Lego-like so transported and brought intoservice MTEK Consulting, Mycronic, Rehm says. Among them: manufacturerscan easily configure at anew location within amatter Thermal Systems, Viscom and 42Q —Assembly in country of origin: more than one on-site. Pricing of hours. –showcased this application at Acontainer can be driven or depends on use cases, Golith says. Research firm Gartner calls it “a creative Hannover Messe, aGerman industrial shipped to alocation, build the Nokia expects that big manufacturers way to decentralize manufacturing technology trade show,inApril. required volumelocally,and then like FoxConn or Flextronics might capacity into smaller,portable sites be moved again. be interested in buying 10 or more supported by an ecosystem of partners.” Industry Agnostic —New product introduction: Time of the portable factories and keep Nokia’s idea originatedasitlooked Manufacturing inside the containers to market is acompetitive them on hand to enhancecapacity toward thesupplychain of the future, is not limited to making electronics, advantage. The Factory-in-a-Box as needed, Giloth says. Smaller with the introduction of robotics, says Giloth. “Westarted with can be used for fast prototyping manufacturers, startups or universities IoT solutions, and the cloud. It is electronics due to the specificneeds of new products and quick fixes, are likely to rent them. The rental part of Nokia’s Conscious Factory of that industry but the Factory-in- services that could appeal to fee will depend on what kind of project, the company’s vision of how a-Box is industryagnostic,” he says. startups as well as traditional equipment and connectivity is factoriesand networks should work Manufacturers can’t use the portable manufacturers. When they are requiredfor particular applications. together, says Johannes Giloth, senior factories for die casting, ametal ready for mass production,they Giloth says Nokia expects to sign vice president of global operations castingprocess thatinvolves forcing can go elsewhere. its first commercial contracts for its and chief procurement officer at molten metal under high pressure —Disaster recovery:When anatural Factory-in-a-Box in the coming Nokia.The project was accelerated into amold, but they can make or man-made disaster strikes a months.

—P.23 KONUX MAANA FETCH ROBOTICS GERMANY UNITED STATES UNITED STATES WHAT IT DOES: Offers an end-to-end Industrial WHATITDOES: Maana’sknowledge graph, coupled WHAT IT DOES: Develops autonomous mobile Internet of Things solution combining smart with advanced AI algorithms, semantic search robots that provideon-demandautomation for sensors and AI-based analytics to enable and deep learning, help industrial companies warehouses, factories anddistribution sectors. predictive maintenance for industrial make faster and more relevant decisions. Cloud-based software allows robots and rail companies. Investors include Shell,Aramco and Intel Capital. to be operationalwithin 24 hours. It raised $20 million seriesBfinancing last April. SoftBank and Sway Ventures are among its investors. www.konux.com www.maana.io www.fetchrobotics.com

CARBON 3D FOGHORN SYSTEMS SEEGRID UNITED STATES UNITED STATES UNITED STATES WHAT IT DOES: This 3D printing companyhas WHAT IT DOES: An Internet of Things application WHAT IT DOES: Self-driving,vision-guided robots developed asystem of connectedmanufacturing platform forremotemonitoring and diagnostics, that handleand deliver materialsfor warehouses, unit operations that enablesrepetitive predictive maintenance, anomaly detection, alarm factories andthe distributionsector. manufacturingofend-useproducts at any scale.Its management,and asset and yield optimization Clients includeAmazon, GM, Whirlpool, Boeing, technology is usedtoproduce Adidas’ 3D sneakers solutions. It targets the manufacturing, mining, Jaguar, BMW and Daimler. as wellaselectronics, industrial componentsand energy and utilities, transportation, healthcare, medical devices. retail, oil and gas, and aviationindustries. www.carbon3d.com www.foghorn.io www.seegrid.com

3DSIGNALS ISRAEL WHAT IT DOES: Developedapredictive maintenance platform using acoustics. Hardware TOP 25 that includes wireless ultrasonic sensorsis mounted near industrial rotating equipment. Its software technology collectsand processes the sound signals in order to detect issues before INDUSTRIAL machines breakdown. Global researchfirmGartner named it acool vendor in Juneofthis year. www.3dsig.com INTERNET STARTUPS

SCADAFENCE TO WATCH ISRAEL WHAT IT DOES: Protects Industrial IoT/Industry 4.0 networks from cyber threats. Customers include Global Fortune500 companies in the automotive, pharmaceutical, chemical and energy industries. www.scadafence.com

TULIP MNUBO DESKTOP METAL UNITED STATES CANADA UNITED STATES WHAT IT DOES: It has developed amanufacturing WHAT IT DOES: DevelopedanIoT insights platform WHATITDOES: Developed a3D-printing system app platform that introduces Industrial Internet of that helps companiesrapidlytransform their that can mass produce metal components, Things (IoT) and advanced analytics into the connected equipment datainto actionable allowing teams to go directlyfrom compu- workflow. An intuitive drag and drop interface lets businessoutcomes. Investors include HSB Group, a ter-aided designtorapid prototyping and volume process engineersbuild apps,connect to the IoT, part of Munich Re. production. integratewith their systems and collect real-time data,withouthaving to write any code. www.tulip.co www.mnubo.com www.desktopmetal.com

P.24 —THE INNOVATORINNOVATOR COMMONSENSE ROBOTICS UPSKILL ELECTRIC IMP ISRAEL UNITED STATES UNITED STATES WHAT IT DOES: :Develops urban warehousesand WHAT IT DOES: UpSkill has developed Skylight, an WHATITDOES: Ahard-and-software operates the sites with autonomous mobile augmented reality platform forindustrial usethat platform-as-a-service purpose-built for the robots and acloud-based software. promises to cut production time by Internet of Things that enables commercial and The idea is to enable retailers to more easily 25% and reduce errors to nearly zero. industrial applications. The aim is to empower deliver products in city centers. It recently Customers includeBoeing and GE. manufacturers to manage and quicklyscale their launchedits first automated center in Tel-Aviv. connected products and services to millions of users. www.cs-robotics.com www.upskill.io www.electricimp.com

PROGLOVE ACTILITY SEEBO GERMANY FRANCE ISRAEL WHATITDOES: Connected gloves that enable WHATITDOES: Manages Internet of Things WHAT IT DOES: Process-basedIndustrialAI manufacturing and logistics staff to work andscan connectivity for large corporate clients. Actility’s solutions for predicting and preventing products at the same time. Itsintegrated low-power, wide-area networking technology manufacturing disruptions. user-friendly scannerenables users to gain time allows long-range communicationsbetween Customers include Decathalon and Ralph Lauren. as they work. ClientsincludeBMW, Thyssenkrupp connected devices whilepromising to optimize both andLufthansa. costs and power-consumptionrequirements. www.seebo.com www.proglove.de www.actility.com

UWINLOC PRESENSO KITOV SYSTEMS FRANCE ISRAEL ISRAEL WHAT IT DOES: The Toulouse-based startup WHATITDOES: :Uses AI and machine learning to WHATITDOES: Usescomputer vision, AI, advanced created an indoor location system that tracks deliver predictive analytics for industrial systems. robotics andBig Dataanalytics to conductvisual large volumes of assets with connected Its technology collects dataathigh speedand inspection of industrial manufacturing plants. battery-lesstags. Applications include provides real-time asset failure predictions based It just raised $10 million in a Series A round, ledby manufacturing,healthcare, logistics and on the monitoring of sensor’ signaldata in the HAHN Group. e-commerce. In July it won aVolkswagen and cloud. Siemens Startup challenge. www.uwinloc.com www.presenso.com www.kitovsystems.com

NEXDEFENSE SIGFOX ELEMENTAL MACHINES UNITED STATES FRANCE UNITED STATES WHAT IT DOES: Originally funded by the U.S. WHAT IT DOES: Aleading global, low-power, WHATITDOES: This spinoff of MIT uses the cloud, Department of Energy, it develops cybersecurity wide-areanetwork thatpowers the Internetof InternetofThings and machinelearning technology software for automation and control systems Things by enabling objects to communicate.The to modeland understandhow processes in a used in factories or energygrids. Utilities and companyisabouttolaunchanew service for laboratory or factory work.Itthen usesthat companies in the oil and gas, defense, tracking objects basedonbattery-less stickers and knowledge to helpobtain consistent, repeatable manufacturing, water/wastewater and hotspotscalled Bubbles. results, savingcompanies timeand money. pharmaceuticals industries use its technology. www.nexdefense.com www.sigfox.com/en www.elementalmachines.io

CLAROTY MOV. AI UNITED STATES PORTUGAL WHAT IT DOES: Specializes in securitysoftwareto WHAT IT DOES: Asoftware framework for mobile protect criticalinfrastructure such as electricgrids, robots used in warehouses and on production transportation networksand factoryfloors from lines. Features such as easy mapping, By Esther Attias cyber attacks. Customers includeelectric utilities, oil autonomous navigation and obstacle avoidance andgas companies, chemical manufacturers, water enable industry-grade deployment of robot fleets. companiesand manufacturers. Acontributing writer at The Innovator. Attias works as afreelance journalist for www.claroty.com www.mov.ai Les Echos and Les Echos START

—P.25 THE FACTORIES OF THE FUTURE

Waze for Factories

—The slightest variable canleadtobatch yieldissues in factoriesand R&D labs. ElementalMachines is using acombination of Internet of Things and machine learning to ensure consistent outcomes.

Serial entrepreneur Sridhar drugstore chain, as acustomer. Boston-based startuppulls dataout Iyengar’s firstexposure to quality control AgaMatrix went on to create the first of machines that aren’tcurrently problems in manufacturing came not medical device (a glucosemeter) connected to anything, collates it long after founding his first company, that could be plugged into an iPhone, with data from equipment that is AgaMatrix. The startup, which counted and was bought out by Sanofi.Next, already monitored, analyzes what the French drugmaker Sanofi among Iyengar founded MisfitWearables, is happeninginreal timeand displays its customers, specialized in disposable together with John Sculley, the ex- it on dashboards. The company, test strips to calculate the blood CEO of Apple. The company’shealth which has so far raised$11.5 million, glucose levels of people with diabetes trackers created adata-rich, globally has 100 customersranging from or hypoglycemia. It contracted with distributed sensor network. For small startups to big pharmaceutical, afactory to make severalmillion Iyengaritwas an “aha”moment. petrochemicaland food manufactuers. strips aday butquicklyran into batch Why not create aFitbit for machines “Weare building the hardware and yieldissues. “I spent 53 nights in and use that data to improvethe software tools that allowcompanies 52 weeks in the same hotel in South yield of R&D trials in biotechand to model and understand how Korea trying to fixthe problem,” life sciences as wellasmanufacturing complex processeswork and very remembers Iyengar.Heand his co- anything requiringprecision and rapidly zero in on what went wrong, founder gathered all the data from repeatable results? or right,” saysIyengar.“If thingsare thecontractor, augmentedthatwith done correctly there is no waste and sensors in the factory,and built their high yield, and it can also help prevent owndashboard and prediction No Waste, High Yield drugs and other products from being algorithms. The yield wentupto So, Iyengar foundedElemental recalled.” virtually 100%, he says. Machines, which uses the cloud, Whenvalves or other parts fail “Wewere able to predict the quality Internet of Things and machine machines don’t always automatically of output two to threemonths in learning technologytomodel and report the error.Many times errors advance and if we saw ahigh risk understand howprocesses in a are only discovered after abetatrial, we were able to useour own tech laboratoryorfactory work and then whichcan cost hundreds of thousands tools to pinpointwherethe issues use that knowledge to help obtain of dollars, says Iyengar. Take the were,” says Iyengar.That helped the consistent,repeatable results,saving case of asynthetic biology company, company snag CVS, alarge U.S. companies time and money. The one of Elemental Machine’s customers.

P.26 —THE INNOVATOR potential problems when conditions change. While Elemental Machines started by focusing on helpingR&D laboratoriescontrol variables it has since branched out into manufacturing. One of its manufacturing customers, amaterials science company,was not measuringtemperature, humidity or light in the areas where it was mixing chemicals. «Turnsout the microclimate made “Weare ahuge difference,» says Iyengar. Now the manufacturer is using the building the startup’s technologytomeasure those hardware and elements and analyze the data. software tools that allow Turn-by-Turn Navigation Iyengarsees many more applications companies for the technology.“Nowthat we have away to collect and analyze to model all of this data it allows us to generate and understand anumerical representation of quality and use that to train our models on how complex the way the process is actually run,” processes work.” he says. While it is still early days, Iyengar says he believes it will be possible to develop asystem for R&D trials and manufacturing that would operate much the same as Waze, a GPS navigation software that works on smartphones and tablets to provide drivers with turn-by-turn navigation information. Elemental Machines’ “Waze for When it growscells it warms them shakesthe mixtures. The shaking affect their yields and outcomes.” factories” could prove crucial not to 37 degrees celsius andthe flasks vibrations and therate of aeration Earlier this monthElemental Machines just to traditionalR&D labs and are gently shaken to both blend and were alittle bit different so the cells announceditispartneringwith manufacturers but to avariety of aeratethe cellmixture. grew at adifferent rate, expressed PerkinElmer to allow scientists, as emerging fields, such as personalized “Thecompanywas consistently themselves differently, impacting well as lab and facilities managers, medicine and next generation getting bad results and couldn’t figure the purity rate.“It tookthem months to accessinformation at any time materials like lab-grown leather and out why,” says Iyengar.Finally,they to figure this out,” says Iyengar.“Now from acomputer or mobile device meat, where preciseand repeatable discovered that atinyscrew was they are using our technologyto about what is happening inside their results are crucial, he says. loose in one of the machines that measure all the variables that may laboratories and be notified of J.L.S.

—P.27 additivemanufacturing technology, the term used to refertoindustrial 3D How 3D Printing printing. Some1,768 metal additivemanufacturingsystemswere sold in 2017, up 80% from 2016, according to 3D printinganalyst firm Wohlers is Impacting Associates. The 2018 report notesthere were 135 companies selling industrial 3D printing systems in 2017, up from97the previous year. Demand is particularly stronginindustries such as medical devices, Manufacturing automotive,aerospace, defense and heavy industrial equipment. Align —The technologyisbeing used to manufacture Technology, the orthodonticcompany thatmakesInvisalignalignersand everything from orthodontic devicestocarsand rocket retainers, apopular alternative to braces,manufactures everyunitusing a engines. 3D printing process. Last yearLocal Motors,adesign startup, began3D printing its self-drivingshuttle Olli at its Knoxville microfactory.The company says 3D printing will costhalf as much as traditional productionwhile By Chris O’Brien allowing it to customize eachshuttletofitthe needs of customers. SpaceX, founded by Silicon Valley entrepreneur Elon Musk, has created the engine chamber for itsSuperDraco rocketby3Dprinting it fromanalloy that combines nickel and iron. The companysaid 3D printingallowed it to dramatically reducethe time fromdesigning to manufacturing thechamber. At the more fantastic end of the spectrum, the European Space Agency has announceditwill create avillage on the moon by placing 3D printers there MakerBot was among the first to develop desktop versions of 3D to “print”the various structures. printers that putadditivemanufacturing within reach of anew generation of entrepreneurs and product developers. Initially it sawsales grow fastbut The Prospect of Lower Cost, Greater Flexibility and theyhit awall when widespread consumer interest failedtomaterialize. Imaginative Designs Stratasys, aleader of industrial additive manufacturing, acquired it in 2013 3D printing hasexisted in some form fordecades. Usingplastics, resin or for $604 million.That’s not surprising because the industrial space is where metal, amachine reads acomputer-design pattern andplaceslayer upon analysts believe therealpotentialof3Dprinting lies. Research firm Gartner layer of materialtocreateathree-dimensional object. As early as the projects that by 2021 at least 40% of factories will embrace some kind of 1980s, large companies were turning to costly industrial 3D printingfor

P.28 —THE INNOVATOR THE FACTORIES OF THE FUTURE

Airbus’ 3D printed mini plane THOR was designed to test the ability to use additive “3D printing manufacturing in aeronautics. All the parts except for the engine were made by a3Dprinter, can save money, Photo courtesy of Airbus. reduce time to market, prototyping. Later,inthe ‘90s, 3D printing allowedmasscustomization of and result items such as hearing aids. Overthe past decade advancesinmaterial science anddesign software, in higher-quality coupledwiththe fallingcostoftoolstopower industrial printers, have products.” put thetechnology within reach of morecorporate customers.The draw is the tantalizing prospect of lower costs, greater flexibility and customization, and imaginative new designs. Manufacturers eagertotransition to industrial 3D printingstill face barriers such as material limitations, regulations, and alack of awareness among industrial designers. But producerswho are among the first to find ways to overcome those challengescouldgaina majormanufacturingadvantage in theyearstocome. “When using it correctly, 3D printing cansave money,reducetimetomarket, andresult in higher quality products,” says Wohlers Associates President Terry Wohlers. “Usingitfor production volumescan resultinnew typesofproducts and businesses.” The opportunities inspiredthe Obamaadministration to make additive manufacturing acriticalpart of the $1 billion plan announced in 2016torevitalize the American manufacturing economy.That initiative included creatingthe National Additive Manufacturing Innovation Institute (NAMII) in Youngstown, Ohiotoencouragefurther development of and plants. In 2016,GEHitachi Nuclear Energy wasselected by theU.S. investment in this technology.But agrowing number of private industry Department of Energy to spearhead this $2 million project.Fran Bolger, players aremaking sizable investments on their own. GE Hitachi’s Manager of New ProductIntroduction, says the nuclear group will try to take advantage of additive manufacturing alreadyusedinthe Airbus Helps Industrial 3D Printing Take-Off conglomerate’sother businesses.With the nuclearprojectthough, any Aeronautics giant Airbus has even created aposition called Innovations’ new 3D printed part would have to be reviewed by energy regulators ALM (Additive Layer Manufacturing) RoadmapLeader to spearheadits before it could be deployed. Still, optimism about 3D printing runs high aggressive efforts, whichincludeopeningamaterialresearch laboratory at GE. “Wehavetofind therightopportunities and theright levelofcost,” near Munichthat focuses in part on additivemanufacturing. Bolger says. “The more complex the part is,the more savings you can Sincethatlab openedtwo years ago,Airbushas outfitted oneofits airplanes potentiallyget. There is work to be done in terms of qualifying the material with atitanium 3D-printed bracket in the sectionbetween thewings and in ahighly regulated industry.But we’re starting to think about applications engines. It hasalsoinstalledseveralother 3D printed productsinvarious where we can deployit.” planes. The company’sDefenseand SpaceDivision in theU.K. has developed aluminum 3D printed components for its satellites. And APWorks, Airbus’ An Opportunity for Startups 3D printingsubsidiary,has even built an electric motorcycle, called Light The surge in additivemanufacturing has attracted agrowing number of Rider, made primarily from 3D-printed components including hollowed entrepreneurs who are tackling issues like developing printers for different frames that are super strongand lightweight.More widespread3-D printing industries, as well as new materials, services and design software. “When couldmassively reduce wasted material,generatebig fuelsavingswith we started in 2013, we felt 3D printing was an amazing technology,” says lighter aircraft and vehicles, andreducethe cost of replacement parts Stephan Kuehr,CEO of 3Yourmind, aBerlin-based startup.“Butthe tools which could be created on-demand rather than built in bulk and stored. you neededtoaccessthe printers wereway too complicated.”The company, “Thereare about1,000 parts manufactured withinanaircraft,”says Gartner which hascreatedaplatform to streamline 3D fromthe design stageto analyst Pete Basiliere.“It reallyaddsup.” analyzing materialsand poweringthe printers,has raised $13 million in venture capital. Industrial 3D printing startups have attracted $1 billion Chain Reaction in venture capital across 133 deals since 2013, according to research firm GE hasalso invested heavily in additive manufacturing, pumping areported CB Insights. Alargechunk is coming fromcorporations. GE Ventures, for $1 billion intoprojects that span itsbusinesslines. One notableinitiative instance, has made six investments while its corporate parent has acquired is aproject to design 3D printed replacement parts for nuclear power

—P.29 THE FACTORIES OF THE FUTURE

three related startups. BMW invested in 3D printing startups Desktop Local Motors, adesign startup, Metal,Carbon and Xometry.Siemens, the Germany-based industrial giant, began 3D printing its self-driving shuttle Olli at its Knoxville microfactory. has also been active,investinginstartupMarkforged and acquiring Materials Photo courtesy of Local Motors. Solution. Siemens’ and Henkel’s Roles in the Market Siemenssits at an interesting crossroads in the additive manufacturing movement. While the company sells awide range of software and services, also seem daunting. And Gartner’s Basiliere said there is stillalimited choice including additivemanufacturingsolutions,toother manufacturers to of materialsthatcan be used in additive manufacturing. To address that, help them reinvent theirfactories,Siemens alsouses additivemanufacturing Henkel,the German chemical and consumer goods giant, earlier this year across awide range of its own businesses. The company announced earlier announced new 3D Printing material solutions for industrial manufacturing. this year it was investing $35 million in anew manufacturing facility in The materials, such as acrylic, silicone, epoxy and polyurethaneadhesives, the U.K. focused on materials solutions.The facility will produce components will increase the possible uses for additive manufacturing. The company is for aerospace, automotive and other industries.Yet Siemens still has plenty also working to create customized materials for customers’ specificneeds. of challenges, saysHeinzNeubert, who overseesadditive manufacturing there. The skills needed to design and conceiveof3D-printed products Enormous Opportunity are still in short supply.SoSiemens created an internal designlab to help ForPat Dunne, vice president of advanced application development at different divisionsnavigatethe development process. Neubertnotes that Rock Hill, South Carolina-based 3D Systems, this frenzy of activity and thetechnologyisadvancingsorapidly thatadaptingand staying current interest in additive manufacturing is the realization of adream.Founded represents amajorchallenge for manufacturers accustomedtoevolutions in1986, 3D Systems was atrue pioneer of 3D printers.Today, it provides that took decades. additive manufacturing systems used to produce artificial teeth, dentures, “Everyyear the machines are changing alot,” he says.“You’re not talking orthodontics, race carparts, replacement componentsfor vintage autos, about drilling machines which might remain the same for years. In additive and evensome parts of theMarsExhibition Rover. manufacturing, there is atremendous amount of innovation happening Fornow,Dunne says his biggest challenge is educating industrial clients rightnow.” Other industrial players remain worriedabout the initial costs about thepotential. “Asmoreand more designers become aware of the involved, unsure if the promisedsavings or design breakthroughs will really capability to usethis to engineer products in anew way,that’s what’s materialize. Thesprawlingrange of software,machinesand materials can reallygoingtodriveadoption,” he says.

3YOURMIND DESKTOP METAL CARBON 3D ADDITIVE GERMANY UNITED STATES UNITED STATES MANUFACTURING WHAT IT DOES : Createdaplatformto WHAT IT DOES : HSystem can print 3D WHAT IT DOES : Developed a3D STARTUPS streamline3Dprinting by speedingup metalprototypesorsmallbatches of printing alternativethatuseslight and the workflow, from designtoanalyzing products. Alarger version promises to oxygen to allow users to produce TO WATCH materialstopowering theprinters. print metals at apace and scale to productsfrom resin. The company says Thegoal is to make 3D printingmore replace traditional manufacturing itscombination of hardware and efficient and accessible to all team methods. software allowsfor more economical members. printing at alarger scale. www.3yourmind.com www.desktopmetal.com www.carbon3d.com

P.30 —THE INNOVATOR PHARMACEUTICALS

be prepared: different data sources Using Data as need to be “cleaned” and connected to be applicable for advanced analytics. Next, the algorithms had to be set up an Asset through amodeling process. Different machine learning techniques were —Aplantrun by Bayer’s Pharmaceuticals division in Italy is considered oneofthe implemented to enable thealgorithms world’smost advanced factories. to make predictions. Finally, the company needed to figureout how Aworker at the Garbagnate plant to visualize the insights in ways that using augmented reality employees on the factory floor could technology to reduce changeover times when switching interpret easily. product lines. That is where technologies like the digital twin come in. Amachine learning-powered digital replica of a laboratory now takes care of employee scheduling to maximize efficiency. “Output increased by 40% and people love it because it makestheir work better and easier,”says Hoehl.“We want to make this readily available to labs across the whole network.” AR, another visualizationtool, is helping significantlyreducethe time it usually Bayer’spharmaceuticals employeelaboratoryscheduling, and manufacturing businesses, to aid the takes to change from producing one division, like units of most big augmented reality (AR) devices to adoption of technologies, as part of product to another, increasing the corporations, generates lots of data reduce changeover times when anew program launched by the World utilizationoffactory machines,says but, until recently,managed to switchingproduct lines. In each case Economic Forum. The aim of the Hoehl. Notonlywas the production leverage onlyasmall amount of it. the front-end applications are connected program is to build anetwork of the time reduced but employees no longer Thanks to apilot project –part of the to 15 data sources and integrated most advanced manufacturers to have to follow lengthy, complicated company’s Advancing Digital into the plant’s IT infrastructure. address problemsconfronting industries paper-based instructions, he says. transformation initiative –it’s making Ongoing operations are now more when they invest in advanced That is not to say that digitizing a better use of data, and its plant in transparent to employees on the factory technologies. Earlierwork by the factory is without challenges. Garbagnate, Italy has become a floor and they get real-timeupdates Forum found that over 70% of Structuring the data and putting the “lighthouse” factory teaching others on performance, helping themmake companies do not take pilots beyond necessary connectivity in place is a how to do the same. smarter decisions, react faster and the implementation stage due to lengthy process but competition for The plant, which produces and utilize resources more efficiently,says unsuccessful implementation strategies. skilled data scientists is fierce. Digital packages pills,was named one of the Hans-Walter Hoehl, head of efficiency, Digitizing factoriesgoes far beyond transformation also requires lots of most advanced factories in the world innovation and projects within the implementing technology.“When employee training. Internal experts in September by theWorldEconomic productsupply unit at Bayer’s there is muchmore available data it on quality control, packaging and Forum and McKinsey.Nine factories pharmaceuticals division. also requires achange in the culture engineering need to be an integral were recognized for their strides toward “The first results are very promising,” of decision-making,” says Hoehl. part of the process and managers must embeddingthe technologies of the says Hoehl. “In certain areas, such learn to make decisions based on data Fourth Industrial Revolution into as coating tablets, we couldfurther Making the Most of Data rather than on prior experience only. modern production, improving optimizethe manufacturing process Data scientists played akey role in Hoehl’s advice to factories embarking operational performance in the process. and eliminate rootcauses for potential digitizing Bayer Pharmaceutical’s plant on adigital journey? “Start by designing The Garbagnate pilot, which was variations.Bayer’s pharmaceuticals by developing thealgorithms that turn use cases for the technology and then launched in September2017,uses division planstoroll out the digital data into usefulinsights to enable select apartner that can help you machine learning and analytics to initiatives to other major sites in the more efficient production of drugs. rather than trying to do everything increase operationalefficiency,adigital near future. And, it has agreed to Three steps were required to develop on your own.” twin (digital replica technology) for share what it has learned with other the algorithms. First, the data had to J.L.S.

—P.31 ADDITIVE MANUFACTURING

At awarehouse in the French city of Bordeaux, Skypod, arobot Man createdbystartup Exotec Solutions, carries abin that can holdupto30 kilograms as it wheels around using alaser scanner for navigation. When and Machine it reaches inventory racks, it grabs ontorails andglides upward until it finds thecorrect shelf to retrieve themerchandise. The Skypodthenzips —Robotsare increasinglyworkingnexttohumans, to aconveyorbeltwhere ahuman usesascanner to verify thegoods. raising efficiencyinwarehouses, factoriesand labs. Theserobots save physical wear and tear on employees, who walk an average of 15 kilometersaday fetching goods. The robots can retrieve 400itemsper hour,comparedto80for humans. Theyalsoallow French By Chris O’Brien ecommerce retailerCdiscount,which is trying to transform its logisticsto stay ahead of competitors,tobuildshelveshigherand pack items much closertogether,making betteruse of space in itsexisting warehouses. Vincent Valloir,head of supply chain planning and innovation for Cdiscount, saysusingExotecSolution’srobots is helping it avoid the expense of building additional warehouse space.Itisalso increasingthe number of same-day deliveries it canhandle, by improving order processing speed. But, rather than replacing employees with robots, the company is redefining their roles, training them to do new tasks such as managing the robotic systems or monitoring digital systems. “Thisinnovationchanges the approach and the rolesofeveryoneinthe The Panda is acollaborative robotic arm designed by Munich-based Franka organization,” saysValloir. Emika to perform repetitive tasks that Forseveral decades, talkofautomation it can be taught by pushing afew buttons on its arm. has conjured ableak vision of afuture in which robots steal jobs from workers as machines battle humans for economic dominance. But, as the Cdiscount example illustrates, the emerging reality is a pictureofcooperation, rather than conflict, as robots and people increasingly workside-by-side in warehouses, factories and labs. As at Cdiscount, robotsare fetching inventoryinwarehousestospeed

P.32 — “There is areal fulfillment. They’re also being installed in production facilities to perform synergy agrowingrange of tedious, repetitivetasks. And in some cases, they’re even being attached to humansinthe form of exoskeletons to helpwith between lifting and avoiding injuries. robots “Robots allow enterprises to be more competitive and to run better,especially small and medium-sized businesses,” says Adrien Poinssot,UniversalRobot’s and employees.” sales development manager for France.“Andifthe work goesbetter,the company hiresmorepeople. There is areal synergy between robotsand employees.” Robots have been part of manufacturing for decades, primarily usedinheavy production lines for things likeautomobiles. Early models were considered hazardous to humans and somehad to be caged. And their size and cost meant they onlymade economic sense for such massive operations. Over the past decade, things have changeddramatically. Accordingtothe International FederationofRobotics’ latestannual report, to fill that gap. Among themisLos Angeles-basedinVia Robotics, which globalannualsales of industrial robots grew to 387,000 units in 2017, up hasdesigned awarehouse robotics platform for e-commerce distribution from 294,300the previousyear. That includes69,000robots installedfor centers and other fulfillment facilities. Founded in 2015, the company, use in logistics, up from26,300 in 2016, making adoption of robots in this which has raised$29 millioninventurecapital,saysits inVia Picker sector one of the highest for any sector.Overall, robot sales areprojected autonomous mobilerobotscan help clients increase fulfillment by as much to riseto630,000 annually in 2021,benefitting establishedindustrial as 500%. “Warehouse automation is critical for retail businesses to streamline robot-makers such as Germany’sKUKA(nowowned by Chinese electrical workflows, increase throughputand keep up with consumer demand,” appliance manufacturer Midia), as wellasahostofnew players. saysLior Elazary,the company’s co-founder and CEO. The market is not without casualties. Rethink RoboticsofBoston,which The founders of Lille-based Exotec Solutionssaw asimilar opening. Founded was co-founded by Rodney Brooks, an Australian robotics pioneer,announced in 2015,the companyhas raised$21 million in venturecapitalfor its in early October it would shut down. Its robots were intended to usher in robotic fleet of order preparationrobots, which it co-designed with Cdiscount. anew age of automation;one where machines wouldwork safely next to Exotec Solutions CEO Romain Moulinsays such systems are quickly moving humans, ratherthanbeconfined to theirown sectionsonthe factory floor. from being considered anovelty to an essentialtool for allwarehouses. Thattrend looks here to stay even though RethinkRobotics couldn’t get “Thedemand from themarket is huge,” Moulinsays.“Andit’sgoing to enoughmarket traction. play abig roleinleveling theplaying fieldfor everyone.” Beyond just findingand movingitems, robots areincreasinglybeing employed to perform straightforwardchores likepacking boxesand doing Filling the Fulfillment Gap some basic assemblyofcomponents. Aseminalmoment in industrial robotics came in 2012 whenAmazon Forexample, Munich-based Franka Emika, which wasfounded in 2016, acquired Kiva Systems for $775million. Kiva had emergedasaleader in makes Panda, acollaborative robot designedtobeeasy to use out of the the robotics revolution, having developed an inventorymanagement system box. (See the photo on pages 32 and33.)The Pandacan be programmed that allowed machinestoroamawarehouse, find goods, and thenbring to perform tasks by pushing several buttons on thearm whileguidingit them to ahuman packer waiting in front of adelivery truck. The acquisition through aseries of maneuversto“teach” it theprocess. gaverisetoAmazon Robotics,aMassachusetts-basedcompany that The mostwell-known player is UniversalRobotsofDenmark, whichhas manufactures mobile robotic fulfillmentsystems. It nowreportedlyhas becomealeaderin“cobots,” robotsdesigned to physically interactwith producedmorethan 100,000robots used in the e-commercegiant’sfulfillment humans in asharedworkspace. Launchedin2005, the foundersofthe centers.The acquisition created avoid because Kiva is no longer selling its Danish companywanted to find away to makelarge industrial robotic robots to anyoneelse. As aresult,alarge numberofstartups have rushed

—P.33 ADDITIVE MANUFACTURING

systems more accessible to small and medium businesses and manufacturers. The inVia Picker grabs items Today,the company sells threemodels of cobots,ranging from atable-top from warehouse shelves at afar greater pace than humans, increasing efficiency versionfor light assembly to alargeversion designed for packaging and and freeing people for other tasks. placingitems on pallets.The cobotscan handle painting, assembling,and Photo courtesy of inVia Robotics. attaching labels, among other tasks. Most importantly,the cobots are relatively simple to set up and can be reprogrammed for different jobs as abusiness evolves. The company,which was acquired by Teradyne in 2015, has sold 25,000 cobots. “More and more there is aneed to produce the rightproduct at the right moment,” says Universal’s Poinssot. “The collaborative robot is oneofthe bricksofthis new industry.” California. The company originally got its start designing exoskeletons for Poinssot says the company is continuing to trytoexpand the market the military and then moved into medical versions to help disabled patients. throughanonline digitallearningplatform called Universal RobotsAcademy Eksomore recently began getting inquiries from industry and manufacturing. as well as an onlinemarketplace that sells accessories fromthird-party While companies have been focused on making workplaces safer,reducing developers. As with logistics robots, Poinssot says abig part of the appeal thenumber of accidents, they stillwantsolutions to protect employees is relieving employeesofthe most dreary, repetitive parts of their jobs. It’s fromthe long-term injuries that could prevent them from doing repetitive that focus on employee well-being that is adriving forcebehind another or heavy work. In 2015, the EksoVest forindustry was introduced. The brandofmachinesthataugment workers: Exoskeletons. passive device uses gas-filled springs to giveemployees aboost rather than using anyelectronics.Asthe number of workplace injuriesdrops, Suiting Up “companies are turning their attention to quieter problems like ergonomic ABI Research has projected that sales of exoskeletons will grow from 5,000 issues,” says Zach Haas, seniorproduct manager for EksoWorks. “This is units in 2017tomorethan 100,000 in 2025. Strapped to the outside of something that occurs when someone is doing their job absolutely correctly.” employees’ bodies, exoskeletons vary in design and sophistication. Some This past summerFord announced it would roll out EksoVeststoemployees contain enough sophisticatedcomputing to justifythe use of the term in 15 factoriesaround the world.The company saysitwantstoreduce robotics, serving as akind of merger betweenman andmachine. thephysical toll on employeesfromtaskslikeholding power tools over Forinstance, LG recentlyannounced it was developing theCLOi SuitBot, their headsall day.Haas saysthis is justone indicationthat exoskeletons an exoskeletondesignedtoreduce strainonhuman workers. Employees that augment human capabilities are on their way to becoming standard strap it around theirlegs andlower back and the wearable robot automatically equipment. adjusts itself as it senses awearer’s movement. It can also connect to other “There was atime when people didn’twear hard hats at construction LG service robots, becoming apart of anetwork of automated devices. sites,”hesays. “Nowthat’s standard. Ithinkitwillbethe same for this. Oneofthe firstcompanies in this fieldwas EksoBionics of Richmond, We’re havingahard time keepingupwiththe demand.”

COMMONSENSE ROBOTICS INVIA ROBOTICS EXOTEC SOLUTIONS INDUSTRIAL ISRAEL UNITED STATES FRANCE ROBOTIC WHAT IT DOES : :IBuilding asystem for WHAT IT DOES : Robotics-as-a- WHAT IT DOES : Designed an inventory STARTUPS autonomous sorting andshipping service platform provides ecommerce system thatusesautonomous robots usingacombination of robotic sorting fulfillmentcenters with warehouse and speciallydesignedshelving to TO WATCH systemsand artificial intelligence automation technologies. The InVia make warehouses more efficient. The software to prepare orders. Picker retrieves goods from shelves robots roam the warehouse and then and carries them to humans. slide up rails on shelves to finditems.

www.cs-robotics.com www.inviarobotics.com www.exotecsolutions.com

P.34 —THE INNOVATOR technology to digitizewhat had been An App Store 30 pages of assembly instructions at an aviationfactory near Tours, France. With Tulip’s technology each step is for the Factory Floor now presented onto the work space, turning it into an immersive IoT —AU.S. startup brings people, machinesand processestogether forlarge andsmall experience. manufacturerswith its platform-as-a-serviceoffering. Additionally,every movement of the worker and all the surrounding conditions aremeasured using IoT technology. That’s important because certain conditionsand parameters have to built to order and can be retrofitted be validated before aworker can with hardware and software for a go to the nextstep,saysFabrice factory’s specificneeds. Danigo, methodology anddigital Initial success with largemanufacturers transformation managerfor Thales’ prompted Tulip to introduce what it Avionics.Hesays that during ayear- says is the industry’s first platform- long test employees were able to work as-a-service, allowing manufacturers faster,saving 15 minutes per hour, of allsizestostart using the service and Thales could measure variables directly from any Webbrowser.The at each step,avertingproblemsbefore monthly plans, priced at $95 and they happened. $195, also includeaccess to Tulip’s Based on the success of the proof-of- “app store”, amanufacturing app concepttrial, Thalesplans to introduce library comprised of customizable Tulip apps at its five avionics plants, real-world apps. There’s a30-day free fourinFranceand one in Singapore. trial for all apps, which the company The roll-out will take ayear,says says is unique in the industry. So far Danigo, the time needed for Thales, the library includes over 25 apps with Tulip’s help, to migrate the that are ready to use or customize solutions and transform all its manual around major use cases such as processes into interactive ones. Despite all the hype around apps, connect to the IoT,integrate work instructions, quality,lean Tulip, which wasnameda2018World Industry 4.0,manufacturingisstill a with theirsystems andcollectreal- manufacturing, machine monitoring, Economic Forum TechnologyPioneer, paper-basedworld.Most of the time data,withoutwritingany code. production visibility, training and aGartner Cool Vendor,IDC Innovator, workforcestillrelies on paper-based Global manufacturers across multiple auditing. andFrost and Sullivan Entrepreneurial instructions and operating procedures industries, including electronics, Manufacturersusing Tuliphavereduced Company of the Year,is“ramping whilemanagers collect data manually aerospace anddefense, medical devices, defect rates by up to 98%, cut training up as fast as we can as we are on paper and whiteboards. footwear,pharmaceuticals,and contract times by over 90%, and increased expecting our business to grow very Nowthere areapps forthat. Tulip, a manufacturing, are already using yield, says Natan Linder,the company’s quickly in the monthstocome,” says spin-out of the Massachusetts Institute Tulip’s app platform. And Tulip recently CEO and co-founder. Linder.“There is huge demandfrom of Technology (MIT), has developed announced it is teaming with Bosch Thales, aFrenchconglomerate that manufacturerstochangethe way amanufacturing app platform that Rexroth on an IOT-enabled “smart” builds electrical systems and provides they work. The technology is here introducesIndustrialInternet of Things workstation for the factory floor,which services for the aerospace, defense, now,simple to use, relatively (IoT) and advancedanalyticsinto the combinesBosch’s manual production transportationand security markets, affordableand can be deployed workflow.Anintuitive dragand drop system with Tulip’s manufacturing is one of Tulip’s customers. It began overnight.” interface lets process engineersbuild app platform.The workstations are with two employees using Tulip’s J.L.S.

—P.35 INDUSTRIAL INTERNET OF THINGS

Everything is Connected

—The Industrial Internet of Things links the machines, factoriesand infrastructure that drive business.

In the next10years, the InternetofThings revolution is expected to dramatically alter manufacturing, energy,agriculture, transportation and other industrial sectors of the economy which, together,account for nearly two-thirds of the global gross domestic product (GDP). It combines the global reach of the Internetwith anew ability to directly control the physical world, including the machines, factories and infrastructure that define the modern landscape, saysaWorld Economic Forum report. It will also fundamentallytransform how people will workthrough new interactions between humans and machines. Dubbed the Industrial Internet information from the ambulance back to the National Healthcare Service. of Things or IIoT,thislatestwave of technological change “will bring “I am pretty sure we save lives,” says Soley. unprecedented opportunities, along with new risks, to business and society,” The smart building testbed connects some 35,000 sensors that collect says thereport. 300 Terabytesofdata ayear.The project aims to determine if the data As more connected devices come onlineand new services are developed can be used to bothmake people more comfortableand lower the for them, many important questions remain, including how the IIoT will maintenance costs of the building, he says. impact existing industries, valuechains, businessmodels and workforces. That is where the Industrial Internet Consortium comes in. The IIC is building testbeds that cost in the $10million to $50million range, to Improving Order Fulfillment explore new technologies, new applications, new products,new services In Octoberthe IIC announcedresultsand updates to aSmart Factory and new processes and rigorouslytest them to establish their viability Testbed thatisoperational at twosites in Germany and at two sites in before coming to market, says RichardSoley,the IIC’sexecutive director. South Korea. The testbed’s network of factories allows manufacturers The testbeds represent the multiple use casesfor the Industrial Internet who want to improve order fulfillment and create new businesses to of Things. Theyinclude smart buildings in Japan, asmart city in Ireland, assign flexible productionresourcesacross multiple sites, according to an energy grid project in California and an agriculture site in India. an IIC announcement. The testbed also allows factories to use “plug and The smart city project in County Cork,Ireland focuses on ambulance work” functions and data analytics. management. The service allows National Healthcare Service data to be Also in October its Track &Trace Testbed generated the requirements uploaded directly into ambulances and for paramedics to transmit live for anew IIoT standard for tracking and tracing assets.

P.36 —THE INNOVATOR Electric grids, cars and smart buildings are being connected by the Industrial Internet of Things

bills itself as the first open-source distributed ledger –atype of blockchain “The testbeds technology that is being built to power the IoT with fee-free microtransactions that guard the integrity of the data. [...] include The foundation,which is based in Germany, aimstohelp big corporates useblockchain technology to create new business models andnew revenue smart buildings streams.“We don’t yethave anyIOTAtestbeds butacouple arebeing in Japan, asmart designed,” says Soley. As blockchain adoption has increased over the last decade, earlyadopters city in Ireland, an Through itswork on that testbed a have been hit with sluggish transaction times and skyrocketing fees. energy grid need emerged for the manufacturers IOTAsays its technology better positions it to speedily handle large of sensors to be able to agree on a volumes. Its distributed ledger does not consist of transactions grouped project in way to publish the required into blocksand stored in sequential chains, but as astream of individual California and an interpretation of the data that they transactions entangled together called The Tangle. produce via an Electronic Data Sheet. agriculture site The testbed, led by Bosch with the IIC member participantsCisco and Enabling the Emerging IIoT in India.” SAP,developed the requirements The main focus of IOTAistoenable the emerging IIoT,according to the from alogistics use case, which foundation. But it says it also plans to be the transaction settlement and gathers data from transport-related data integrity layer for the “Internet of Everything.” This includes smart assets to ensure transport-service- cities, smart grids, infrastructure, supply chain, financial services, peer- level agreements are met and logistics to-peer payments and insurance. It is just one example of how new chains optimized. entrants are attacking the needs of industry by developing sensors, cloud The IIC has also just set up anew interface and web-based tool that platforms, networking infrastructure, as well as machine learning software guides users through the analysis and planning of their own IIoT projects. to transport or extract insights from the deluge of data that is now Soley is also amember of theexecutive board of the IOTAFoundation emanatingfrom the world’s machines. (along with Johann Jungwirth, Volkswagen’s chief digital officer), which J.L.S.

—P.37 INTERNET OF THINGS

Ignoring The Herd

—Sigfoxispioneeringnew ways to trackassets with The Bubbles Bubblesand stickers communicate with state-of-the-art battery-free stickers Sigfox has developed that France’s Sigfox made we want to cover the whole planet solutions,” saysLeMoan, “because headlines in 2014 when it piercedthe we cannot rely only on ground can be attached to thereisaneedtotransfer data at ears of cows in the Pyrenees so that antennas.” everything from a the lowest possible cost.” Services tiny modems could be insertedand Sigfox is gearing up for assettracking, suitcase at an can then be built around it. For theirwhereabouts tracked via its which Le Moan considers “the biggest example, Sigfoxsensors currently dedicated Internet of Things cellular opportunity nowfor IoT.” airport to goods track Michelintires from the factory network. The info was transmitted in afactory that to theend-customer.The conceptof to researchers studying the moving need to be Bubblesisanew way for customers patterns of herds, an application that Bubbles and Stickers to know where the device is, he says, wasconsidered novelatthe time. The French startup, which is inventoried. “Whenyou cross the path of aBubble Fast forward four years and Sigfox’s headquartered near Toulouse, recently with astickertracking device, like Low-PowerWide-Areanetwork “cow- announced anew movable hardware at an airport,the sticker on your nectivity” has beenextended to transceivercalled aBubble which luggage will know that it is passing millions of objects in over 50 countries. servesasahot spot.The Bubble uses by aBubble it trusts, saysLeMoan. It’s rooftop base stations, which serve Sigfox’s low-power wide-area network He says he believes it will be possible as transmitters, cover about one to connect to thecloud instead of to get the cost of the sticker down billion people. “With Sigfox you can GPS, WiFi or Bluetoothtechnologies. to three cents or less, since they are move from Johannesburg to New “Wehave asimple vision,”saysLe battery-free. “There are many,many York to Singapore and always be on Moan. “You take data, you send data ideas to link what we are doing with the same network,” says CEO and overthe air,and our many antennas blockchain,”says Le Moan.For Co-FounderLudovic Le Moan,a will catch the data.The fact that (RFID) tags whichwere heralded as example, he says, if you want to be scheduledspeaker at the Founders there is no connectionnecessary ahigh-tech way of tracking goods assuredthatyourluggage will not Forum xIndustry In Partnership With makes us unique.” in stores and in supplychains but be openedwhen you leave it at the HenkelConference in Düsseldorf on The Bubbles communicate with state- havefallenout of favorbecause they airport, an insurance company could November 8and 9. of-the-artbattery-free stickersSigfox use alot of power,only operate at give aconsumer aguarantee. Attaching Early next year Sigfox plans to launch has developed that can be attached shortrange and when grouped close blockchainapplicationstothe data afourth satellite. to everything fromasuitcase at an together can cause interference with in our network is something that “This way we will have afull airport to goods in afactory that each other.Hesays Sigfox’s stickers makes sense. But,hesays, the company constellationofsatellites thatwill need to be inventoried. can track assets without any of those will sticktotracking goods, including complement thegroundnetwork Le Moan says the stickersaim to side effects. “moo-vable” assets. that we arerolling out,” he says. “If replace radio frequency identification “Thechallenge of IoT is thecostof J.L.S.

P.38 —THE INNOVATOR Christine Lagarde BrunoLeMaire J. VanOvertveldt ViliusŠapoka Managing Director Ministerof Minister of Finance Minister of Finance International Economy&Finance (Belgium) (Lithuania) MonetaryFund (US) (France)

F. Villeroy de Galhau CarlosTorresVila JL. Bonnafé Laurent Mignon Governor CEO CEO CEO Banque de France (FR) BBVA (ES) BNP Paribas (FR) BPCE (FR)

ThomasBuberl FrédéricOudéa Gottfried Leibbrandt Vanessa Colella CEO CEO CEO CEO Axa (FR) Société Générale (FR) SWIFT(BE) Citi Ventures (US) 220+ CEOspeakers

Kathryn Petralia Valentin Stalf DavidVélez Nikolay Storonsky 150+ Chairman CEO CEO CEO Kabbage (UK) N26 (DE) Nubank (BR) Revolut (UK) fintechs on stage 60+ countries Kristo Käärmann Anne Boden Charles Egly Rishi Khosla CEO CEO CEO CEO 2600+ TransferWise (UK) Starling Bank (UK) Younited Credit (FR) OakNorth (UK) attendees

TICKETSONSALE MarkMullen NunoSebastiao ViolaLlewellyn Yoni Assia CEO CEO President CEO www.parisfintechforum.com* AtomBank (UK) Feedzai (PT) Ovamba (CM) eToro(IL)

*dehaut en bas et de gauche adroite :Paris Fintech Forum •29et 30 janvier2019 •220+ CEOs orateurs •150+ fintechs sur scène •60+ pays •2600+ participants •Billets en vente embraced blockchain as away to make their supplychains more transparent How Blockchain is in ordertobuildmore trust with customers. Ahostofstartups haveseized on this trend to demonstrate that blockchain is more than justthe foundation Changing Supply for cryptocurrency. The technology serves as an immutable distributed ledgerthatallowsan almost limitless number of participants to record transactions. It is perfect Chain Management for supply chains because the transactions are transparenttoeveryone on the platform,allowing for easy verification and ahigh degree of trustand —The technology is addingtransparency security.Any change to the record has to have the agreement of all parties. andefficiencytoasystem that still runs on phone calls “Global supply chains are some of the most complex, multi-party ecosystems and handshakes. in theeconomic landscape today,” saysMaersk’sMikeWhite, who heads the TradeLensblockchain project thecompany is co-developing with IBM. byChris O’Brien “Blockchain is one of the technologiesthat really changes thegame.” The blockchain revolution is coming just in time for supply chains. Astudy by Transparency Market Research projects that thevalue of goods moving across the supply chain will almostdoublefrom $8 trillion in 2016 to $15.5 trillionin2023. The projected growth is likely to strain thecapacity of shippers butbuilding The industriesthat power the global supply chain have stubbornly more ships,ports or other infrastructure can be acostly and risky proposition. resisted radical change fordecades despitebeing plagued by fraud, buried Blockchain is appealing because it makes existing resources more efficient. under mountainsofpaper,and suffering mind-boggling inefficiencies. Today,aproduct moving across the globe could involve 200separate This conservatism makes their sudden love affair with blockchain technology exchangesofdata or paperwork and pass through30different partiesas oneofthe crypto era’s most surprising twists. IBMand shippinggiant it moves from factory,towarehouse,toport, to customs, to aship,and Maersk have teamed up to develop an industry-wide blockchain platform so on. Thesetransfers are still often marked on paper,arranged by phone theybelieve can finally modernize an industrythat stilloften runson calls, verified with ahandshake,ormaybe typed into aspreadsheet. When phone calls and handshakes. Retailers likeCarrefour and Walmarthave somethinggetslost, or broken, or delayed, there is virtuallynoway for a

P.40 —THE INNOVATOR SUPPLY CHAIN

company or consumer to know why.“We’retrying to address one of the developpilotprojects such as aprogram to verifythat fishermen are bigchallengesofthe movement of cargo, which is the lack of visibility of meeting socialsustainability goals when theycatchtuna. acontaineratany given time,” says Todd Scott, IBM’s vice president of In shiftingtobuilding afor-profitcompany,Baker decided to focus on blockchain globaltrade. trust between brandsand consumers. Provenance offers aplatformthat That led to IBM’s official announcement of TradeLenswith Maersk earlier blends blockchain, mobile, and social technologies to allow companies to this year. Maersk andIBM beganexploringdevelopment of ablockchain show consumers aproduct’s entire journey. Such asystem can offer proof, service in 2016 before officially announcingTradeLens in August.The for example,thatthe beef you are eatingreally comes from Argentina, companies say 94 organizations have agreed to participate, including and not from Scotland, whichreportedanoutbreak of mad cowdisease shippingcompanies, ports,customs agencies, freight forwardersand trucking in October. Consumerscan contribute comments, reviews,orpersonal companies. In some cases, the partnerssay the shipping time for items storiesthat are verified and attached. wasreduced by 40%,while the querytime about the location of acargo The reasoncompanies arebecoming Provenance clients is “they want to item wasreducedfrom10steps to one. be trustedbytheir customers,” saysBaker. “What’s interesting to me is thebreadth of participation across allparts Trust is also at the heart of the IBM Food Trust project, another of thetech of the ecosystem,” says White of Maersk. “It shows me the market is ready, company’s major blockchain efforts.This was developed in tandem with theindustryisreadytoembraceasolution.” Walmart,and wasmotivated by an outbreak of E.coli in preparedlettuce WhileTradesLenshas gotten themostattention, it’snot theonlyeffort. afew years ago. Amassive recall was orderedinlarge part because officials Last year, agroup of logistics veterans founded ShipChain, which is developing couldn’t determine the origin of the contaminated lettuce or where it was asupply chain platform on atype of blockchain technology called Ethereum distributed. with agoal of bringing together all links of the supply chain.Scheduled With theIBM Food Trust,companies can trackevery item of food from for release later this year, the company’s platform willcreate smart contracts farm to table.Following anotherE.colioutbreak in the U.S. lettuce supply designed to automate all recordkeeping. This will allowusers to arrange this yearthatislinked to the deaths of five people,Walmart recentlytold payments once acontract is fulfilled and verified. To fund its development all suppliersofleafy greens they must have blockchain technology in place ShipChain raised $30 million earlier thisyearthrough an initialcoin by next year if they want to continueworking withthe company. The offering (ICO), the cryptocurrency world’s rough equivalent to an initial companysaid it would offerguidance, resourcesand training to help publicoffering. suppliers onboard to the IBM Food Trust platform. “With blockchain,there’s aunified,single layer of trust,”saysShipChain French retailer Carrefourannounced in October it was joining theIBM CEOJohn Monarch. “Right now,that doesn’texist…there’s no way to Food Trust. Carrefour stated that it will continue to use ablockchain verify anything.” platform it developed itself when dealing with smaller, localsuppliers. But it makes sense to join the IBM program to work with bigger,international Building Consumer Trust brands,says Emmanuel Delerm, director of Carrefour’sblockchain program. London-based Provenanceistaking adifferent tack. The company grew Carrefour saysitisembracing blockchain to promote trust with end- out of research Jessi Baker conductedfor her PhD in computer science. consumers. “This traceability andthisvisibility is really away to sayto Shebecame one of the firstpeopletouse blockchain for the supply chain customers that we reallywant to share this with you andshow we care,” as partofher research. Since then,Baker has workedwithnon-profits to says Delerm.

SHIPCHAIN PROVENANCE CARGOX BLOCKCHAIN UNITED STATES UNITED KINGDOM SLOVENIA FOR SUPPLY WHAT IT DOES : Building ablockchain WHAT IT DOES : Usingacombination WHAT IT DOES : Introducing documents CHAIN STARTUPS platform to improve tracking items of mobile, APIs, and blockchain, it is basedonEthereum blockchain across the entire supply chain. It will creatingaplatform thatrevealsa technology to replacepaper BillofLading, TO WATCH blend blockchain with an API to allow product’s journey whileallowing the document ports issuefor every variousparticipants to connect their consumers to attach verifiable stories container. It is critical to theindustry, but records to the platform. and experiences. dependence on physicaldocuments createsaslow and inefficient process. www.shipchain.io www.provenance.org www.cargox.io

—P.41 ENERGY

Going Digital —AGerman startupishelping European utilitiesoffer newtypesofservicestocustomers.

Tado, aGerman startup that makes smart thermostats, is helping data,some 50%ofthe time that repairmen show up to fixsomething they energycompanies offernew kinds of digital services to theircustomers. enduphaving to order apart from awholesalerand come back asecond Thestartup’s smart thermostat has been engineered to be able to connect time. “With Tado the first-time fixrate is 95% because the engineer knows to aheating system’sdigital serialinterface.Through Tado,utilities can up front what is wrong,” says Deilmann. monitor the healthofahouse’s boiler remotely and collect diagnostics The heating system has 120 codes and an error code is transmittedanytime that can be used by engineers or repairmen. there is afault somewhere.“If the repairman knows your pump is broken And Tado, acompetitor to Nest, asmart thermostat company acquired by and shows up the first time with asparepart it gives your customer avery Googlein2014for $3.2 billion, hasambitiousplans to do morewith good feeling,” he says. utilities. Tado and theenergy companies split revenues from the service.“We really The company–whichhas just raised anew $50 million round of financing want to back this up with more services,” Deilmann says. It’s agoodbet from Amazon, the French energy company Total, the UK energy company that at least one of the new serviceswillbevoice-based and work on Alexa, E.ON, EIC and the European Investment Bank –has so far struck partnership Amazon’scloud-based service, which is available on tens of millions of dealswith30energy companies. devices. People whoare used to controlling temperature through theirs The deals are helping utilities increasecustomer retention, says Tado’s co- phone are also likely to want to control by voice,“therefore there is a founderand managing director,ChristianDeilmann. strong correlation and it is veryinteresting to them,”Deilmannsays. The deregulation of the energy sector in Europe is leading to high customer Amazon likes smart-home customers because researchshows that the churn.“With much more competition coming ontothe marketpeople engagement rate goes up by afactor of four when there are daily interactions. really start to switch providers based on price,”hesays. “In the UK a quarter of the people switch providers everyyear.Ifitisjust about buying acubic meter of gas or some kilowatts of electricity they don’t care where Helping to Balance the Grid there energy is coming from.” Tado helps utilitiesoffer amoreholistic Thesmart thermostat business is part of abooming sector.Gartner forecasts serviceand build amuchstronger customer relationship, saysDeilmann. that consumers and businesses willbespending almost $3 trillion on Underthe partnership deals, Tado delivers the maintenancedatatothe connecteddevicessuch as smart-home hardware by 2020. utilitycompany so thatitknowswhen there is aproblem in ahousehold Aroundathird of allglobal energy consumption goes to the heating and and whatisbroken, and Tado even calculateshow much time it might coolingofbuildings.Smartertechnologiesallow more efficient control take to repair it. With maintenance contractsthat are not basedondigital and can save up to 31% of that energy.But Tado wantstodomorewith

P.42 —THE INNOVATOR Tado’s intelligent thermostat devices allow consumers to control the temperature in their homes. Utilities can tap into the devices to monitor the health of consumers’ home heating systems in order to provide more efficient maintenance services.

TADO’S UTILITY CUSTOMERS INCLUDE : “Gartner forecasts that —E.ON UK, Germany and Italy by 2020 consumers —SSE UK —Naturgy Spain and businesses will be spending —Essent Belgium —OVO Energy UK almost $3 trillion on connected —Badenova Germany —Vattenfall Germany devices such as —Nuon Netherlands smart-home hardware.” —Energie Oberösterreich Austria —IREN Mercato Italy

its smart thermostatsthan help fixboilers andenable consumers to say constitutes alevel of comfortinhomes –amounts to alot of energy when “Alexa, turn down the heat in thelivingroom.” It wants to help balance you add up all the buildings in the country,says Deilmann. “It is not ideal the grid. when you have to think about what time you should load the dishwasher Heating or airconditioningsystems arethe largest consumersofenergy but in our case it is really using flexibility assets in the background without in buildings, says Deilmann. “The good thing is that there is some flexibility having any effectonthe comfort level.” .“It is amassivemarket.Ithas in the heating and AC systems and this flexibility is of value to the energy huge potential andwewant to grab it.” grid, especiallyinareas where you haveproduction in solarand wind.” Ashiftof20% of energy –while keepingtothe boundaries of what J.L.S.

—P.43 ARTIFICIAL INTELLIGENCE

and we give them the technology to fight with the same gear as they do,” The Strategic saysBoos. Boos, amember of the digital council consultingthe German federal government, hasbeenworkingonAItechnology for more than Implications of AI 25 years. He launchedaragoin1995. And he knows what it is like to go head-to-head withGoogle. He has been doing it for years. Arago helps businessesmanageand automate every —Can aEuropean AI company help corporatestake on processwithin acompany,from IT operations to business processes and thelikes of Google, Amazon, Facebook and Alibaba ? transactions. Its AI platformHIRO usesreasoningand aknowledge-based problem-solvingenginetodeliver enterpriseautomation solutions to clientssuch as UBS, Lufthansa Technik,SAP and Klöckner. The company,whichraised $55 million in 2014fromthe private equity firm KKR, was named in 2017asaleader in semantic intelligencebythe research firm Frost &Sullivan. Arago is on amission to dispel misconceptions about AI, which Boossays can lead to dramatic mistakes. Forstarters, AIsdonot “understand”anything about the world. “If an AI is agood chess player, that does not mean it also is an analytical thinker,” he says.“Similarly,ifanAIcan answer Jeopardy [questions] it does not mean it canlisten to aboardconversation and make sense of it.” Businesses need to recognize the different flavors of AI and the consequences of adopting them, he says.NarrowAI, an alternativetoGeneral AI, typically uses one algorithmtosolve aparticular problem. There are major The German artificial intelligence (AI) guru Chris Boos has a limitationstothisapproach. Applying machine learning to aproblem message for executives at big corporates. If you are worried about being means having adataset to explaintothe machinewhatdesirable results disrupted by so-called platform companies –Amazon, Google,Facebook, are. If that is possible the machine will find optimal solutions for problems Amazon, Alibaba,Baidu–you shouldbe. Allofthe big platform players in that space. But the more complex the problem, the more data one needs have aGeneral AI platformand are workingtomakeitmore versatile to describe the current situation. Most real-life problems are too complex every day. for thistypeofmachine learning,Boos says. General AIs are built from multiple algorithms that are designed to offset General AIs are the only way to automate entire businesses and allowfor the limitations of individual algorithms and enable the AI to tackle different completely new business models, says Boos. But all General AIsoperated tasks while learning on the fly. TheseAIare usually built on top of large by big platformsare used to disrupteverysector thatthey can. Thatis data poolsactingasakind of world description. Everytimeanew field where arago comes in. is added, the AI’s“world” getsbigger andithas an exponentially better Boos argues that it is important to have an alternativetothe big disruptors. learning curve.The very cleargoal of these General AIs is to disrupt Arago only competes on AI and has no intention of entering into any other business in any vertical, says Boos, the CEO and founder of the AI company sector,hesays. arago and ascheduled speaker at the Founders ForumxIndustryin Partnership with Henkel conference in Düsseldorf November 7to9. “It makes sense to partner withthese platforms in business areasthatare Automating the Future no longer strategic because they will give the best result possible,” he says. The way to thinkabout AI is to realize that it is notabout pattern matching “Butitissuicidal to work with them in any part of the business that is or prediction. “It is all about automation,” says Boos.“But notthe kind of strategic or core because as soon as they own theknowledge and data automation we areuseddo. AI is about dramatically increasing productivity theywillreimplement thebusiness model.” without the need to leverage economies of scale. That means AI is the Arago claims to be theonly neutralGeneral AI platform built for established end of theera of industrialization.” enterprises. “Wewant corporates to succeed in competingwith the platforms J.L.S.

P.44 —THE INNOVATOR “AI is about dramatically increasing productivity without the need to leverage economies of scale. That means AI is the end of the era of industrialization.”

Chris Boos, arago CEO and Founder

—P.45 LOGISTICS

shipping. The company is also experimenting with thingslike an on-demand A$4Trillion delivery service dubbed “Amazon Flex,” an Amazon Air fleet of planes, and aDelivery Service Partner program for franchise delivery businesses. It has Opportunity also built 744 operational facilities around the world and ordered 20,000 Mercedes-Benz vans that it planstouse as part of aleasingprogram targeting —Adigitally-optimized logisticsindustry could add huge small businesses. value to theworld economy. Brian Solis, aprincipal analyst at the Altimeter research firm, says retailers and logistics players have no choice but to adapt. “You as aconsumer are By Chris O’Brien being constantly taught to expect immediacy and personalization,” Solis said. “You’re constantly wanting something more and faster and better. Everything is being reinvented to cater to this accidental narcissist. No matter what business you’re in, this is happening.” The World Economic Forum has tried to sound the alarm, urging logistics companies to move faster or risk squandering amassive economic opportunity. With e-commerce penetration projected to grow from 7% in 2015 to 17% in 2025, the Forum says adigitally-optimized logistics industry could add $4 trillion in value to the world economy.“Logistics has introduced digital innovations at aslower pace than some other industries,” says aForum Fromthe time aproduct leaves afactory in some distant corner report. “This slower rate…brings enormous risks that, if ignored, could be of the world to the moment it reachesyour doorstep, it uses adizzying number potentially catastrophic for even the biggest established players in the of services, with dozens of companies exchanging hundreds of different business.” Indeed, there is agrowing list of new entrants in areas such as datapoints. It is aremarkablejourney madeevenmoreepicbythe fact that shipping, warehousing and delivery with big ambitions. so many logistics services remain in adigital dark age, completingtransactions via phone, paper and fax machine. No wonder logisticscompanies are being targeted from all sides for massive SHIPPING: disruption. Startups as well as some of the world’s biggest corporates are Making it Easy, Transparent and Efficient marshalling financial and technical resources to transform logistics through Israeli entrepreneur Zvi Schreiber got the idea to disrupt the world of the use of autonomous cargo ships, Uber-like shipping platforms, artificial international freight shipping when, as amanager of an electronics company, intelligence-driven warehouses, delivery drones and modular self-driving he spent days calling shipping agents, trying to get price quotes. delivery vehicles. The experience inspired him to found TelAviv-based Freightos in 2012, These sweeping efforts have the potential to accelerate the delivery of just whichhas since raised $92million in venture capital. Itsfundamental mission about every good, reduce deliverytimes, shrink costs,and eliminate waste. is to make freight booking as easy as ordering an Uber.But so few shippers Yetthis momentum is being sapped by avast legacy infrastructure that is have even basic digital tools that Freightos in 2013 launched AcceleRate, so antiquatedthat it’shard forcompaniestotransition into this new world. acloud-based servicethat allowed freight companies to digitizeand centralize The challenge for participants in the logistics revolution is to get all the their internal information. Since then Freightos has launched amarketplace pieces to align to deliver the promised benefits. that letsadopters share their pricesand book services acrossthe Web. Making The World Economic Forumestimates thatanaverageof85million packages booking faster and more transparent helps ensure capacity on ships is being or documents are shipped every day.The system is coming under strain as efficiently used, Schreiber says. fuel prices rise and consumers come to expect fast delivery of any product Rather than try to draw industry players into the modern world, Berlin- at any time. This requires a flexibility and agility that is simply impossible based FreightHub became afreight forwarder itself and entered directly for many logistics players, according to arecent studyco-authored by Shanton into the business of shipping.Via its Web-based platform, customers -including Wilcox, Partner &Manufacturing Segment Head for Infosys Consulting. small and medium-sized businesses -can book shipping. FreightHub, which Most shippers understand the need for agility but, the report says, 42% has raised $23 million in venture capital, helps arrange the entire process haven’tmade changes in the past five years. “A lot of the basicsare broken, through anetwork of agents, says CEO and co-founder Ferry Heilemann. and the foundation is just not there to allow them to get where they want Other startups such as Flexport, which has raised $300 million, and Fleet, to be,” Wilcox says. Frustrated by the slow pace of change, e-commerce are also entering the freight forwarding business. “People think it’s too giant Amazon has registereditself as afreightforwarder, allowing it to help complicated and that startups can’ttackle that,” says Heilemann, ascheduled partners manage the regulations and logistics associated with international speaker at Founders Forum xIndustry in Partnership with Henkel conference

P.46 —THE INNOVATOR Rolls-Royce has partnered with Intel to build autonomous cargo ships that promise to bring savings and efficiency to an often clunky logistics industry. Courtesy Intel/Rolls-Royce in Dusseldorf,November 7-9. “But that’s what they used to say about fintech sensors and cameras needed, plus theservers necessary to process the data startups and the financial industry.” Disruptions from startups are forcing in real-time, which could be as much as one terabyte per day per ship. stalwartstoadapt. Shippinggiant Maersk’s freight-forwarding unit Damco launched adigital platform last year called “Twille”Likewise, freight forwarder DHL earlier this year released MySupplyChain, asoftware and service designed WAREHOUSES: to allow for greater tracking of shipments as well as enhanced data analytics. From Clunky To Instant Fulfillment Even vessels are getting an overhaul. U.K.-based Rolls-Royce is developing Once merchandise clears aport, it is almost guaranteed to pass through autonomous and remote-controlled cargo ships that it hopes to deploy by one or more warehouses as it winds its way to ahome or business. The 2025. The autonomous system is being developed at the company’s R&D traditional, clunky methods of inventory distribution, fulfillment, and centers in Finland and Norway. According to the United Nations,about 90% preparation for delivery create another painful bottleneck. of the world’s trade is carried over the seas, and Rolls-Royce believes Traditional players are taking steps to change that. Forexample, United autonomous fleets of ships can increase safety and efficiency. Parcel Service has announced it is developing an analytics and machine “We’ve proven alot of the technology that’s required,” says Kevin Daffey, learning project to better leverage the vast amounts of data it generates to Director of Engineering, Technology and Ship Intelligence at Rolls-Royce. create better predictive tools and better manage storage andcapacity across “Now it’s about convincing businesses that there’s abusiness case and that itswarehouses and vehicle fleets. And, to remain competitive, French retailer it can revolutionize their business model.” Cdiscount, founded almost 20 years ago in Bordeaux, created its own in- Still, it’s an enormous undertaking to equip ships with the array of visual house lab called “The Warehouse.” It brings in startups that can help it make

FREIGHTOS FREIGHTHUB FLEXPORT LOGISTICS ISRAEL GERMANY UNITED STATES STARTUPS WHAT IT DOES : Runsanonline WHAT IT DOES : An official freight WHAT IT DOES : Afull-service air and TO WATCH internationalfreight marketplace, trying forwarder, it canarrange all details and ocean freightforwarder.Its platform to make booking shippingaseasyas paperwork connected to shipping offersanend-to-end service for ordering an Uber. It also offers a goods internationally. Its online logistics teams,delivering real-time cloud-based service called AcceleRate platform helpsorganize all aspects of tracking, structured data, and to help logisticscustomers centralize thelogisticschain, including quotes, shipment-specific communication. anddigitize datasuch as rates. booking, managing documents, and tracinggoods as they travel. www.freightos.com https://oceanprotocol.com www.flexport.com

—P.47 LOGISTICS

better use of data and robotics in its warehouses, better manage peak sales cycles and improve delivery via technologies such as autonomous vehicles. Forcompanies who don’t have the resources or expertise Mumbai-based FractalAnalytics hasdevelopedalgorithms andartificial intelligencetomore accurately predictinventory needs and management. In one case, acustomer was able to save $5 million by reducing the inventory it kept on hand, says thecompany. That kind of smarter fulfillment alsoallowssuchwarehouses to be more responsive to on-demand orders. Other startups are trying to reinvent the very concept of awarehouse. Israel’s Commonsense Robotics just recently launched a6,000 square-foot micro-fulfillment center in downtown TelAviv that provides autonomous sorting and shipping.Using amix of robotics, AI and humans, the company Boxes are lifted into aprototype can more efficiently use its tiny warehouse to deliver goods in city centers. of Renault’s EZ-Pro, an electric self-driving modular van that can be adapted to different sizes Chaldal is going one step further, by using robotics and AI to create networks for last-mile delivery to homes and businesses. of singleroom“nano-warehouses” in crowdeddeveloping cities like Dhaka, Courtesy of Renault Bangladesh, where it is based, to do on-demand fulfillment. And Austria- based Logsta launched last year to create warehouses that are at the center of aservice that helps small businesses with everything from learning how to get their products into Web-based marketplaces like Amazon to helping arrange all aspects of shipping and last-mile delivery. Transforming warehouses is critical for businesses to stay competitive as last-mile delivery options explode. In the U.S. alone companies like grocery- Vera, aself-driving truck concept for well-defined routes in limited spaces delivery service Instacart, which just raised $600 million in venture capital, such as ports or warehouse districts that could carry freight. Vera is atruck and Postmates, which now offers delivery of food and goods in 550 cities, tractor that can pull atrailer but has no cab for ahuman. Mercedes-Benz are making instant fulfillment the default expectation. Vans is taking ahybrid strategy, creating aself-driving platform called “Vision URBANETIC”that offers one module for carrying people and another that can hold ten pallets of goods. Renault, meanwhile is developing its own Transforming the Last Mile modular,self-drivingdelivery pod called “EZ-Pro.” These can be reconfigured Formany consumers, much of the logistics revolution looks like ayoung with different pods and run separately,orinaplatoon. In some cases, a college student furiously pedaling abicycle around city streets carrying a human could ridealong to carry the packages fromthe pod to the customer. larger Deliveroo or Uber Eatsinsulated backpack. While this analog solution Startups are also targetingthe opportunity.According to CB Insights, trucking- is indeed fueling an ecommerce expansion, the mobility industry has far related startups raised more than $1 billion in 2017, up from the $763 more ambitious plans to reimagine this end of logistics. million invested in 2016. Each of these investments is building toward the Amazon has been experimenting with drone technology,ashas China’s larger logistics revolution by creating delivery networks that will expand JD.com, which has been delivering small packages to remote areas. Meanwhile, the types of goodsmerchantscan send on-demand, says Paul Asel, amanaging Israel’s Flytrex struck adrone delivery partnership with Icelandic ecommerce partner at Nokia Growth Partners in San Francisco, which has invested in startup AHA in August 2017. Mostly,the packages tend to be smaller goods, Peloton,astartup developingautonomous systemsfor long-haul trucks.As like food, or new smartphones. Currently,AHA is approved to fly13routes more vehiclesbecomeautonomous, andmore inefficiencies are eliminated around Reykjavik. across logistics, consumers will reap enormous benefits. But drones are still often limited to one item under acertain size. Awide “Webelieve as the marginal cost of delivering goods and services declines, range of automotive makers believe they can have an even bigger impact there will be alot more services that people choose to use in terms of last- on logistics by introducing fleets of self-driving trucks for long-haul shipping mile delivery,” Asel says, “Assoon as you start thinking through the ripple and autonomous vans for last-mile deliveries. Volvo Trucks recently introduced effect of this, it really becomes exciting.”

P.48 —THE INNOVATOR GUEST ESSAY

By Brent Hoberman Rob Chapman Executive Chairman and CEO of Founders Intelligence Co-founder, Founders Forum What Can Startups Teach Industrial Companies?

Does your company play? With data? With ideas? With and market access to scale the innovation. Large industrial companies can technology? Many of the most valuable companies and technologies arise learn from all three advantages startups have when it comes to playing from amateur enthusiasts havingagoatsomething no industryprofessional, and experimentation: no matterhow well funded, would attempt.. The officesofthe most Focus: Startups don’t have the resources to solve everything, so they successful startups feel likecreative chaos, an atmosphere corporations go after one thingreally well. Because of this their teams maintain an end- can’t tolerate. to-end view of the problem to be solved, avoiding the fragmentation of But if industry leaderscan’t findaway to access this unstructured energy, working separately on different parts of theproblem. Many clients we their companies are unlikely to be the leaders of the next breakthrough work with add big teams to aproject and include many who aren’t directly industries. They put at risk their leadership positions in their own industries invested in the product’s success. To avoid that Amazon Chairman and if they don’t makethe transition to becoming technology companies. CEO Jeff Bezos has thetwo pizza rule–never haveateam workingona Forexample, foryears people have been hailing the transformation that problem thatneeds to order morethan two pizzas. the InternetofThingswill have on business and society.Businesseshave Closeness: Successful startups understand their customers in detail connected millions of sensors but use them only for marginal optimization and solveavery particular and acutereal-world problem. Theirmis sion or command and control. Transformational use cases are out there, but inthe early days is to gather as much dataaspossibleonthe problemand they aren’tlikelytobeinventedbythe engineeratheadquarters. Instead, its solution during their short funding window. This brings them naturally hackers trying to solve something important for acustomer will create close to their customer,asthe customer is theonly source of validation. them whentheycombine datafrom15sensorsfrom 15 different companies. And the onlysource of survival. Today though, almost no industrial company hastrulyopenedits data Integration: When somethingisgenuinely new,start-ups need to control and processestoallow this play,this opportunity. the end-to-end process to solve acustomer pain point. It is only once the Thisisthe biggest lesson industrialgiants can learn from thephilosophy proposition is at scale and thevalue chain becomescommoditized that of consumertechnology companies. Develop platforms thatallow others companies begin to modularizeand eventuallycreate platforms to allow to experiment, create andplay.Watch carefully whatissuccessful and thenextwave of innovation.Teslaisaperfectexample of acompanythat help scale the mostpromising. If youtry to control everything you are managed to getadifferentiated product to marketyearsbeforeothers by limited to the (often brilliant) minds of theteams who work for you.If controlling the core technology. Boom, amakerofsupersonic jets,isdoing you open your data or your platform to others, you remove those limits thesame in aviation. Startups have learned discipline from industrial and gain100x morebrilliant minds to solve problems for yourcustomers. companies: theleanmethodologyhas been translated to thestartup world Opening to theoutside is newand uncomfortable, butessential. Industrial and is nowgospel. It is time forindustrialcompanies to learn creative companies have been designed to optimize aset of processes andtechnologies chaosfromstartups. to do something highly efficient and no sensible CEO will allow those to be disturbed for ahigh-risk idea. This is why the play-spaces need to be Founders Intelligence (FI) helps large companies such as Shell, Visa, Henkel and Fannie Mae to benefit from the new ideas, technologies and business models that will transform as separate as possible but as integrated as necessary to assure autonomy their industries. FI is apart of Founders Forum, aprivate network of some of the world’s and freedom while also allowing the core business to provide the data most successful founders.

—P.49 POUR NOS LECTEURS FRANCOPHONES

P.04 EN BREF P.31 VUE SUR UNE USINE PHARMACEUTIQUE DE POINTE P.06 L’AVENIR DES USINES

P.10 LA FABRICATION FLEXIBLE P.32 L’HOMME ET LA MACHINE Les robots travaillent de plus en plus aux côtés des humains, aug- P.12 QUESTION –RÉPONSE AVEC LE CHIEF DIGITAL OFFICER DE mentant l’efficacité dans les hangars, usines et labos HENKEL P.35 UNE APPSTORE ÀL’USINE P.14 LA RECHERCHE POUR L’INNOVATION DES NOUVEAUX MATÉRIAUX P.36 INTERNET DES OBJETS :TOUT EST CONNECTÉ Laventeaudétail, lasanté,les servicesfinanciers,ledivertissement P.16 LE MÉNAGE RENCONTRE L’INDUSTRIE 4.0 et les services publiques sont transformés par la technologie et les nouveaux modèles de business. P.18 CYBERSÉCURITÉ ET L’INTERNET DES OBJETS Les systèmes de contrôle industriel sont une proie facile pour P.38 PIONNIER DE L’IoT les hackers. P.40 L’IMPACTE DE LA BLOCKCHAIN SUR LA CHAÎNE LOGISTIQUE P.20 LA MODE RAPIDE PREND UNE TOUTE NOUVELLE DÉFINITION Bientôt, les robots prendront les commandes des clients selon P.40 LE QUOTIDIEN AU DIGITAL leurs goûts. P.44 UNE PERSPECTIVE STRATÉGIQUE DE L’IA P.23 «FACTORY-IN-A-BOX » Une compagnie d’IA européenne peut-elle aider les corporations Nokia et ses partenaires proposent une solution agile et portable àconcurrencer Google, Amazon, Facebook et Alibaba ? pour la production industrielle 4.0. P.46 UNE OPPORTUNITÉ À$4MILLE MILLIARDS P.324 TOP 25 DES STARTUPS DE L’INTERNET DES OBJETS Une industriedelalogistiquedigitalement optimisée peutajouter une plus-value énorme àl’économie mondiale. P.26 LE WAZE DES USINES P.49 CE QUE LES INDUSTRIELS PEUVENT APPRENDRE P.28 L’IMPACT DE L’IMPRESSION 3D SUR LA FABRICATION INDUS- DES STARTUPS TRIELLE Latechnologieestutiliséepourtout–desmachinesorthodontiques, aux voitures, aux moteurs de fusées.

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P.50 —THE INNOVATOR