28 May 2019

Industrial Digitalisation in the UK Steel Industry

Change is happening all around us, it’s triggered by the relative low costs of computing, data storage and sensors and this same trend that affects our daily lives is becoming new revolution in the manufacturing sector. If we get this right, the opportunity is huge, but more so than ever the solutions are complex and the answers not so straight forward.

The UK steel industry recognises the opportunity and faces similar barriers to the wider manufacturing sector. Due to the novel and cutting edge nature of this technology, looking to other sectors and the wider ecosystem in the UK will be part of the solution.

Before we get started, I’ll briefly introduce myself and Siemens in the UK. My role is key account manager for the UK steel sector. I have started this role at an exciting time as the sector feels dynamic, like there is a new lease of life and dare I say it optimism for the possibilities of the future.

To become more agile and adaptable, Siemens has recently announced a significant restructuring to focus on delivering digitalisation for our customers, 30% of R&D now  focuses on this area. From a UK point of view, Siemens employees around 15,000 people and has 14 soon to be 15 manufacturing sites, and these sites are also at varying stages of their digitalisation journey.  

Our UK CEO, Juergen Maier is a vocal advocate for a strong UK manufacturing sector, through the adoption of digitalisation technologies and this is embodied in a report he led called “Made smarter”. There are some great strengths in this country and UK steel can benefit from these too!

Firstly, what change? and what does it mean?

I’ll show you three pictures that have been widely used to illustrate the prevalence of the smart phone

In St. Peter’s Square is 2005 smartphones were basic, few and far between
Then in 2013 it seems everyone has a digital devices of some kind
Only 3 years later, in 2016 with Hillary Clinton on the presidential campaign. The Selfie generation has taken over. The way we view the world, communicate with each other, how we shop has all been disrupted…

It’s been companies like Apple, Amazon, Spotify and Uber that have seized the opportunity. And the same is happening for manufacturing…

Which is now widely known as the 4th industrial revolution or industry 4.0. To quickly explain where this term comes from…

During the times of industrialization since the late 1700 we have had disruptive steps (so called revolutions) with major leaps in productivity. Every time, most of the companies which were able to adapt fast to the new circumstances, succeeded

The 1st Revolution was triggered by the use of steam and water, the 2nd through the division of labour and electrification, and the 3rd Revolution started with the use of computers and information technology for automating production.

Now, the fourth revolution is triggered by digital Technologies – the most important are listed on the right.

The crucial point here isn’t really what it’s called, just to recognise this step change in technology and the opportunity it presents. And of course not to forget that without iron and steel there may not even have been an industrial revolution at all yet!

Looking back to 1964, UK steel was pioneering the use of computing then, with the world’s first fully automated hot mill in Llanwern. This was attributed to the management at the time being curious and enthusiastic about the possibilities – something that is needed now more than ever!

So is the feeling the same now as it was at the start of the last industrial revolution?

To answer this, in conjunction with the EEF we commissioned a short survey this year to collate the views from UK Steel at the senior technical level and compare these against global and national findings – these are broadly in line, although due to the smaller sample size, some of the results can be more extreme.

The perception of how impactful digital technologies will be on the competitive environment is motivating if nothing else, with the 72% of global metal CEO’s expecting digitalisation to have a significant impact over the next 5 years.

From UK steel the expectation shift is even more pronounced at 100%. This is reinforced with the feedback that technology will be key to being cost competitive, with the potential in areas such as intelligent use of data; enabling better planning and decision making; in operations and maintenance, through to increased use of robots and digital twins and adding value along the complete lifecycle of steel.

Succinctly summarised with the quote that “Technology is changing all aspect of business…”

The foundation for this change is integration inside and outside of the organisation.

The charts show the percentage of respondents reporting a high degree of digitalisation now and expected in the next 5 years in each area. The dark green bars are global survey feedback and the lighter green bars are UK Steel.

Vertical value chain integration, allows the vast amounts of field data from sensors to be analysed and valuable insight gained to better aid management decision making and optimise performance.

In other words “to better understand where the value is and how to maximise it”

It’s encouraging to see UK steel striving to be more advanced internally, as this is a precursor to integrating Horizontally along, or indeed around, the value chain.  By connecting with both suppliers and customers, there is potential to increase the efficiency of all; with more transparency about inventory levels, track and trace, quality information, and forecasting. This can support and…

…enable New Digital business models, products and services to disrupt the industry.

New design and simulation tools to create digital twins are improving Product development & engineering, and the use of VR/AR is already being piloted at several UK steel companies.

There is an expectation that Customer access, the channels & marketing will also be affected,with a trend towards better understanding and getting closer to the customer.

As with the previous early adoption of computing in the 60’s, there is great potential now…

Accenture found that in the global metals industry there is up to €130bn value at stake over the ten year period to 2026, Or increased EBITDA by 6 to 8% for the first movers who take advantage.

If we look to the UK, the same group of technologies could boost UK manufacturing by £455bn; this is the headline figure from the Made Smarter review, which was commissioned to discover and set out the opportunity, and how, as a country, we could take advantage.

There are some generic and fundamental barriers to overcome, and to conclude the presentation over the next few slides, we’ll see how these compare with UK Steel….

The bar charts show the top rated barriers to adoption identified in the made smarter review, with UK steel’s perception of the strength of each barrier overlaid with green dots.

Firstly, Standards and security; something that is exacerbated with legacy equipment, is recognised as a barrier, especially to horizontal integration. A recent survey shows nearly 30% of the businesses had suffered a cyber-attack which resulted in lost revenue, so it’s unsurprising that there is reluctance to provide access to information outside the company.

The ideal setup is a digital enterprise where all processes are communicating right through the organisation on industry standard networks, robust to cybersecurity threats, with a digital twin of the product being manufactured and of the entire plant… in certain sectors e.g. automotive or aerospace this is reality; for UK steel a more bite size approach is called for….

Because of cost constraints, the long tail of legacy equipment persists today

While the goal is the previously described digital enterprise, an interim step utilising  ‘low cost legacy system digitalisation’ where, for example using an IIoT plaform such as Mindsphere, third party companies with domain knowledge and data science expertise can be securely granted read access to data from specific operational systems and to provide new insight and value from the data…examples of already active partners in this space are MPI, TCS and universities – and this creates an ecosystem to enhance UK steel and create new revenue streams.

Unsurprisingly with the myriad solutions, stretched budgets and resources, and technologies that are often unproven in use – the strategic direction towards the adoption of these is a challenge.

There isn’t a universal answer for the skills and strategy in the steel industry as each company has its own challenges and unique opportunities, although there is recognition for the need for a more cooperative approach with suppliers and external competencies as part of an ecosystem.

Cost is clearly a barrier, however applying modern technology to an aging mill is significantly less than a new mill and done right in many cases can still provide a good business case.

New, as a service delivery models exemplify how collaboration can develop new practical ways of bringing solutions into the business. For example, we can provide a holistic service to reduce energy or operational costs for a customer. These can be financed and include performance guarantees as reassurance, so the customer pays a monthly fee and enjoys a positive cashflow throughout… New technology and the ability to track and gather performance data throughout a products or service life is opening up new possibilities.

This same principle can also be applied to steel by thinking what your customers value, which of these you can provide, and bundling this into a service model… Perhaps the next disruption is “Steel as a service”?

And finally, how digital can breaks down silos

It can be uncomfortable for experts to understand impacts at a system level with technologies and processes where they are not experts.  We all need to approach this with humility and accept that no one company has everything for all the solutions.  We will have to work together in new ways and with new collaborators, including firms and people who have never done anything in the metals industry. 

At Siemens we are going through this transition ourselves and are finding that it is through co-creation that we find the win-win opportunities that we can tackle first; be that optimising energy efficiency, looking at and deploying new sensor technologies or integrating suppliers in new ways.

It’s time to keep an open mind, join in, and be enthusiastic about the possibilities for the future

Thank you

Find out more on http://siemens.co.uk/digitalenterprise

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