COO INSIGHTS BEYOND MAINSTREAM 3D PRINTING Lucrative business in dynamic niche markets DREAM FACTORY Intelligent machines: Yesterday's Hollywood vision is today‘s reality CYBER- CRIME Strategies to guard against attacks from the internet INDUSTRY 4.0 BMW Board member and CEO designate HARALD KRÜGER on the potential of connectedness – AND the hard facts about going digital WHAT MAKES A COO AND A COMPANY SUCCESSFUL IN THE CONTEXT OF INDUSTRY 4.0? THINK ACT // COO INSIGHTS 0INDUSTRY 4.0 Q&As BASED ON TALKS WITH MANAGEMENT and associations, we know that companies are feverishly working on the hori- zontal integration of their business processes. Only then does the next step – vertical integration – drill down to the level of the ma chines. Industry 4.0, the comprehensive inter connec- tion of processes in production, logistics and services, is a "TACTICAL huge issue at practically every large manufacturer in Europe. Yet not all companies have identified and tackled the resultant SAVVY!" opportunities. JEAN-CAMILLE URING We are dealing with a powerful innovation driver. Manage- ment‘s creativity and its ability to think and act in an inter - connected way is what matters now. Although not everyone is moving at the same speed, we see positive pressure on com- panies in all industries. Because they want to continue being among the best, the demand for business model inno vations THE KEY TO SUCCESS in fiercely competitive markets lies in is rising. products tailored to the individual customer, globalized value The COO thus has the chance to assume a decisive leader- chains, shorter product lifecycles, quality, flexibility and time to ship role. Leadership means clearly communicating the urgency market. Industry 4.0 makes all that possible. of this topic, standing up for a digital vision, grasping the overall We can all see that existing models and standard procedures complexity and developing a roadmap that gives the company impose restrictions. Focusing on KPIs and strict reporting proce- focus and direction. Top managers need the courage to tread dures keeps our sights trained on the line between yesterday new paths. Mental barriers and institutional hurdles need to be and today – and leads us to neglect tomorrow. Yet the sheer overcome: employees who are worried about losing their jobs pace and complexity of change compels us to improve our inno- and influence; customers who fail to recognize the potential; vative capabilities. proven facilities and steady-state processes. It will be crucial to Industry 4.0 tools clear the way to better process control. determine new KPIs, build a business case for digital innovation They enhance quality and flexibility and reduce costs at the and find allies in the network economy. Industry 4.0 is a huge same time. If we want to take this path, the critical issue is to opportunity for the competitiveness of production "made in leverage the strengths of our highly educated people. We must Europe". The future has already begun. cultivate the skills we need to implement new techniques and technologies. Multidisciplinary skills and the ability to integrate specialized resources on the fly are vital if we are to be agile and efficient in the future. We have long since left a stable universe behind us. But Industry 4.0 may not be enough to make up for an unstable business climate. What we also need is a new style of manage- ment. A strategic vision and tactical savvy, the ability to act flex- ibly in modular organizations and relational intelligence. That is what makes a successful COO – and what will ultimately decide whe ther Industry 4.0 is to be or not to be. Small and medi- "THE um-sized enterprises (SMEs) are a good training ground, be- cause their pragmatic approach already helps many of them to COURAGE operate very successfully in volatile, uncertain markets. If you TO LEAD!" are targeting an ambitious career in management positions, you THOMAS RINN should therefore definitely spend a few years as COO at an SME. JEAN-CAMILLE URING is COO and member of the Executive Board of French industrial engineering company FIVES CINETIC. He also serves as President of CECIMO, the European Association of the Machine THOMAS RINN is Senior Partner and – jointly with Max Blanchet – Tool Industries. Global Head of Operations Strategy, Roland Berger Strategy Consultants. THINK ACT // COO INSIGHTS 3 COVER PHOTO: THOMAS DASHUBER; ILLUSTRATIONS: BEN KIRCHNER INDUSTRY 4.0 8 Radical integration HUMANS OR MACHINES? WHO WILL CONTROL TOMORROW'S PRODUCTION 50 THINK ACT // COO INSIGHTS CONTENT 24 "Leaner, INDUSTRY 4.0* faster, more stable" 6 STATEMENTS 24 INTERVIEW 37 EASTERN PROMISE Is 4.0 fact or fiction? How digitization is changing car Preparing a tour de force: China Politicians and business production: an interview with wants to become a high-tech leaders have their say Harald Krüger, Chief Production supplier Officer at BMW and CEO designate 8 COVER STORY 40 CYBER-CRIME Industry 4.0: How fully digitized 32 KPIs How businesses can guard production is revolutionizing Measuring the fourth industrial themselves against attacks the value chain revolution from cyberspace 19 PREQUEL 34 3D PRINTING 43 INTERVIEW Dream factory: Hollywood Where the really interesting Airbus' Chief Technology Officer Jean pioneers 4.0 business models are springing up Botti on new security requirements 4 THINK ACT // COO INSIGHTS INDUSTRY 4.0 40 The invisible threat * A FACTORY UNTO ITSELF INDUSTRIAL REVOLUTION IN FOUR ACTS 43 "Greater vulnerability" 1.0 End of the 18th century: In England, a STEAM ENGINE powers a loom for the first time – the dawn of mechanical production. 2.0 End of the 19th century: ELECTRIFICA- TION enables mass production to be broken down into specialized activities on the pro- duction line – in American abattoirs to begin with, and later in the auto industry. Quality improves, prices decline. 3.0 50 years ago: Aided by microelectronics and IT, and in particular by programmable logic controllers, the AUTOMATION of produc- tion gains ground. Machines take ever more complex tasks out of human hands and raise productivity. 19 More science than fiction 4.0 Today: Cyber-physical systems (CPS) are cen- tral to the DIGITIZATION of production. Workpieces, tools, production plant and logistics components with embedded soft- ware are all talking to each other. Smart prod- ucts know how they are made and what they 46 COO WORKSHOP will be used for. Customized mass production Opportunities spawned by – in "segments of one" – is on the march on digitization: projects and affordable terms. Nor does the creation of publications value still end at the factory gate. Smart, interconnected products that can stay in touch with the manufacturer even after they 50 34 FAMOUS LAST WORDS Print-ready are sold open up the possibility of new ser- Insights and prospects as seen by vices and business models. Producers are futurologist Andreas Neef offering value-added services to their cus- tomers. Companies no longer sell an engine: They sell thrust – including preventive mainte- 51 SERVICE nance, for example. Trust in a secure and reli- Publishing information able technological infrastructure is allowing Online publications deregulated and highly competitive markets to emerge. THINK ACT // COO INSIGHTS 5 INDUSTRY 4.0 THERE WON'T BE MANY "4.0" WHO BUILD GREENFIELD – INDUSTRY 4.0 FACTORIES. FOR THIS REASON, ONE FACT OF THE KEY THEMES OF INDUSTRY 4.0 WILL BE OR RETROFITTING EXISTING FACTORIES AT LOW COST. Dr. Thomas Kaufmann, Vice President Corporate Supply Chain, FICTION? Factory Integration, Infineon Technologies (… AND WHERE DO WE GO FROM HERE?) THE COMPANIES — AND NATIONS STATE- — THAT ACT NOW TO SEIZE ITS MENTS PROMISE WILL THRIVE IN THE 21ST CENTURY. THOSE WHO ARE DEVOTED TO INCREMENTAL The internet of things CHANGE AND FAIL TO ENGAGE IN is a huge transformative SMART MANUFACTURING WILL RAPIDLY FALL BEHIND. development. Sujeet Chand, Chief Technology Officer, David Cameron, British Prime Minister Rockwell Automation LIKE ALL REVOLUTIONS, INDUSTRY 4.0 IS EFFECTING A REDISTRIBUTION OF WEALTH. Tom Comstock, Vice President of DELMIA Strategy & User Experience, Dassault Systèmes 6 THINK ACT // COO INSIGHTS INDUSTRY 4.0 STATEMENTS We need not just INDUSTRY 4.0 scientific excellence, IS LIKE AN INTERNATIONAL not just detailed RACE. TEAM GERMANY solutions here and HAS LINED UP, BUT JUST there, but ideas we BECAUSE YOU START FIRST can earn money with. DOESN'T NECESSARILY MEAN YOU'LL BE THE WINNER. Prof. Dr.-Ing. Dr. h.c. Detlef Zühlke, Scientific Director, German Research Prof. Dr. Dieter Wegener, Center for Artificial Intelligence Head of Advanced Technologies and Standards, Siemens WE NEED THE KIND OF START-UP CULTURE YOU SEE IN AMERICA. Eberhard Veit, Chairman of the Management Board, Festo We must not let things get WHEN EVERYTHING AND EVERYONE to the stage where Google BECOMES CONNECTED, AND manufactures products such COMPLEXITY IS FREE AND INNO- as cars and televisions and VATION IS BOTH DIRT-CHEAP AND European companies are left CAN COME FROM ANYWHERE, to play the part of suppliers. THE WORLD OF WORK CHANGES. Günther Oettinger, EU Commissioner for Thomas Friedman, author and journalist, Digital Economy & Society New York Times In Industry 4.0, service isn't Virtual factory, about making repairs. It's about the promise of real value. avoiding defects. Arnold Stokking, Director Industrial Innovation, Dr. Jochen Schlick, Head of TNO, Netherlands Cyber-Physical Systems, Wittenstein THINK ACT // COO INSIGHTS 7 INDUSTRY 4.0 COVER STORY INDUSTRY 4.0 RADICAL INTEGRATION Products and processes, data and services, factories and methods: INDUSTRY 4.0 means non-stop communication – on all levels. That is revolutionizing the way value is added and creating room for new business models. 8 THINK ACT // COO INSIGHTS 9 PETER KRÄMER ILLUSTRATION: ILLUSTRATION: INDUSTRY 4.0 COVER STORY INDUSTRY 4.0 every level – in product portfolios, in cus- sibility lies with IT in the form of integrated tomer and supplier relationships, in pro- manufacturing execution systems (MES) cess technologies, in IT systems and in and production machinery, electronic kan- production locations.