Transcript of a discussion on how IoT innovation impacts modern factories and supply chains.

1. How IT and OT Collaborate to
Usher in Factory of the Future Now
Transcript of a discussion on how IoT innovation impacts modern factories and supply
chains.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: Hewlett Packard Enterprise.
Dana Gardner: Welcome to the next edition of the BriefingsDirect Voice of the Customer
podcast series. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host
and moderator for this ongoing discussion on digital transformation success stories.
Stay with us now to learn how agile businesses are fending off disruption -- in favor of
innovation. Our next Internet of Things (IoT) technology trends interview explores how
innovation is impacting modern factories and supply chains. We’ll now learn how a
leading-edge manufacturer, Hirotec, in the automotive industry, takes advantage of IoT
and IT combined to deliver dependable, managed, and continuous operations.
Here to help us to find the best factory of the future
attributes is Justin Hester, Senior Researcher in the IoT
Lab at Hirotec Corp. in Hiroshima, Japan. Welcome, Justin.
Justin Hester: Thanks for having me.
Gardner: What's happening in the market with business
and technology trends that’s driving this need for more
modern factories and more responsive supply chains?
Hester: Our customers are demanding shorter lead times.
There is a drive for even higher quality, especially in
automotive manufacturing. We’re also seeing a much
higher level of customization requests coming from our
customers. So how can we create products that better
match the unique needs of each customer?
As we look at how we can continue to compete in an ever-competitive environment, we
are starting to see how the solutions from IoT can help us.
Gardner: What is it about IoT that allows you to do things that you could not have done
before?
Hester: Within the manufacturing space, a lot of data has been there for years; for
decades. Manufacturing has been very good at collecting data. The challenges we've
had, though, is bringing in that data in real-time, because the amount of data is so large.
How can we act on that data quicker, not on a day-by-day basis or week-by-week basis,
but actually on a minute-by-minute basis, or a second-by-second basis? And how do we
take that data and contextualize it?
Hester

2. It's one thing in a manufacturing environment to say, “Okay, this machine is having a
challenge.” But it’s another thing if I can say, “This machine is having a challenge, and in
the context of the factory, here's how it's affecting downstream processes, and here's
what we can do to mitigate those downstream challenges that we’re going to have.”
That’s where IoT starts bringing us a lot of value.
The analytics, the real-time contextualization of that data that we’ve already had in the
manufacturing area, is very helpful.
Gardner: So moving from what may have been a gather, batch, analyze, report process
-- we’re now taking more discrete analysis opportunities and injecting that into a wider
context of efficiency and productivity. So this is a fairly big change. This is not
incremental; this is a step-change advancement, right?
A huge step-change
Hester: It’s a huge change for the market. It's a huge change for us at Hirotec. One of
the things we like to talk about is what we jokingly call the Tuesday Morning Meeting. We
talk about this idea that in the morning at a manufacturing facility, everyone gets together
and talks about what happened yesterday, and what we can do today to make up for
what happened yesterday.
Instead, now we’re making that huge step-change to say,
“Why don't we get the data to the right people with the
right context and let them make a decision so they can
affect what's going on, instead of waiting until tomorrow to
react to what's going on?” It’s a huge step-change. We’re
really looking at it as how can we take small steps right
away to get to that larger goal.
In manufacturing areas, there's been a lot of delay,
confusion, and hesitancy to move forward because
everyone sees the value, but it's this huge change, this
huge project. At Hirotec, we’re taking more of a scaled
approach, and saying let's start small, let’s scale up, let’s
learn along the way, let's bring value back to the organization -- and that's helped us
move very quickly.
Gardner: We’d like to hear more about that success story but in the meantime, tell us
about Hirotec for those who don't know of it. What role do you play in the automotive
industry, and how are you succeeding in your markets?
Hester: Hirotec is a large, tier-1 automotive supplier. What that means is we supply
parts and systems directly to the automotive original equipment manufacturers (OEMs),
like Mazda, General Motors, FCA, Ford, and we specialize in door manufacturing, as
well as exhaust system manufacturing. So every year we make about 8 million doors,
1.8 million exhaust systems, and we provide those systems mainly to Mazda and
General Motors, but also we provide that expertise through tooling.
For example, if an automotive OEM would like Hirotec’s expertise in producing these
parts, but they would like to produce them in-house, Hirotec has a tooling arm where we
can provide that tooling for automotive manufacturing. It's an interesting company and
Why don’t we get the
data to the right people
with the right context
and let them make a
decision so they can
affect what’s going on,
instead of waiting until
tomorrow to react?

3. strategy that allows us to take advantage of data both in our facilities, but then also work
with our customers on the tooling side to provide those lessons learned and bring them
value there as well.
Gardner: How big of a distribution are we talking about? How many factories, how many
countries; what’s the scale here?
Hester: We are based in Hiroshima, Japan, but we’re actually in nine countries around
the world, currently with 27 facilities. We have reached into all the major continents with
automotive manufacturing: we’re in North America, we’re in Europe, we’re all throughout
Asia, in China and India. We have a large global presence. Anywhere you find
automotive manufacturing, we’re there supporting it.
Gardner: With that massive scale, very small improvements can turn into very big
benefits. Tell us why the opportunity in a manufacturing environment to eke out efficiency
and productivity has such big payoffs.
Hester: So especially in manufacturing, what we find when we get to those large scales
like you're alluding to is that a 1 percent or 2 percent improvement has huge financial
benefits. And so the other thing is in manufacturing, especially automotive
manufacturing, we tend to standardize our processes, and within Hirotec, we’ve done a
great job of standardizing that world-class leadership in door manufacturing.
And so what we find is when we get improvements not only in IoT but anywhere in
manufacturing, if we can get 1 percent or 2 percent, not only is that a huge financial
benefit but because we standardized globally, we can move that to our other facilities
very quickly, doubling down on that benefit.
Gardner: Well, clearly Hirotec sees this as something to really invest in, they’ve created
the IoT Lab. Tell me a little bit about that and how that fits into this?
The IoT Lab works
Hester: The IoT Lab is a very exciting new group, it's part of our Advanced Engineering
Center (AEC). The AEC is a group out of our global headquarters and this group is
tasked with the five- to 10-year horizon. So they're able to work across all of our global
organizations with tooling, with engineering, with production, with sales, and even our
global operations groups. Our IoT group goes and finds solutions that can bring value
anywhere in the organization through bringing in new technologies, new ideas, and new
solutions.
And so we formed the IoT Lab to find how can we bring IoT-based solutions into the
manufacturing space, into the tooling space, and how actually can those solutions not
only help our manufacturing and tooling teams but also help our IT teams, our finance
teams, and our sales teams.
HPE
Deploys
The IoT advantage

4. Gardner: Let's dig back down a little bit into why IT, IoT and Operational Technology
(OT) are into this step-change opportunity, looking for some significant benefits but being
careful in how to institute that. What is required when you move to a more an IT-focused,
a standard-platform approach -- across all the different systems -- that allows you to eke
these great benefits?
Tell us about how IoT as a concept is working its way into the very edge of the factory
floor.
Hester: One of the things we’re seeing is that IT is beginning to meld, like you alluded
to, with OT -- and there really isn't a distinction between OT and IT anymore. What we're
finding is that we’re starting to get to these solution levels by working with partners such
as PTC and Hewlett Packard Enterprise (HPE) to bring our IT group and our OT group
all together within Hirotec and bring value to the organization.
What we find is there is no longer a need in OT that becomes a request for IT to support
it, and also that IT has a need and so they go to OT for support. What we are finding is
we have organizational needs, and we’re coming to the table together to make these
changes. And that actually within itself is bringing even more value to the organization.
Instead of coming last-minute to the IT group and saying, “Hey, we need your support for
all these different solutions, and we’ve already got everything set, and you are just here
to put it in,” what we are seeing, is that they bring the expertise in, help us out upfront,
and we’re finding better solutions because we are getting experts both from OT and IT
together.
We are seeing this convergence of these two teams working on solutions to bring value.
And they're really moving everything to the edge. So where everyone talks about cloud-
based computing -- or maybe it’s in their datacenter -- where we are finding value is in
bringing all of these solutions right out to the production line.
We are doing data collection right there, but we are also starting to do data analytics
right at the production line level, where it can bring the best value in the fastest way.
Gardner: So it’s an auspicious time because just as you are seeking to do this, the
providers of technology are creating micro datacenters, and they are creating Edgeline
converged systems, and they are looking at energy conservation so that they can do this
in an affordable way -- and with storage models that can support this at a competitive
price.
What is it about the way that IT is evolving and providing platforms and systems that has
gotten you and The IoT Lab so excited?
Excitement at the edge
HPE
Deploys
The IoT advantage

5. Hester: With IoT and IT platforms, originally to do the analytics, we had to go up to the
cloud -- that was the only place where the compute power existed. Solution providers
now are bringing that level of intelligence down to the edge. We’re hearing some exciting
things from HPE on memory-driven computing, and that's huge for us because as we
start doing these very complex analytics at the edge, we need that power, that
horsepower, to run different applications at the same time at the production line. And
something like memory-driven solutions helps us accomplish that.
It's one thing to have higher-performance computing,
but another thing to gain edge computing that's proper
for the factory environment. In a manufacturing
environment it's not conducive to a standard servers, a
standard rack where it needs dust protection and heat
protection -- that doesn't exist in a manufacturing
environment.
The other thing we're beginning to see with edge
computing, that HPE provides with Edgeline products,
is that we have computers that have high power, high
ability to perform the analytics and data collection capabilities -- but they're also proper
for the environment.
I don't need to build out a special protection unit with special temperature control,
humidity control – all of which drives up energy costs, which drives up total costs.
Instead, we’re able to run edge computing in the environment as it should be on its own,
protected from what comes in a manufacturing environment -- and that's huge for us.
Gardner: They are engineering these systems now with such ruggedized micro facilities
in mind. It's quite impressive that the very best of what a datacenter can do, can now be
brought to the very worst types of environments. I'm sure we'll see more of that, and I
am sure we'll see it get even smaller and more powerful.
Do you have any examples of where you have already been able to take IoT in the
confluence of OT and IT to a point where you can demonstrate entirely new types of
benefits? I know this is still early in the game, but it helps to demonstrate what you can
do in terms of efficiency, productivity, and analytics. What are you getting when you do
this well?
IoT insights save time and money
Hester: Taking the stepped strategy that we have, we actually started at Hirotec very
small with only eight machines in North America and we were just looking to see if the
machines are on, are they running, and even from there, we saw a value because all of
a sudden we were getting that real-time contextualized insight into the whole facility. We
then quickly moved over to one of our production facilities in Japan, where we have a
brand-new robotic inspection system, and this system uses vision sensors, laser
sensors, force sensors -- and it's actually inspecting exhaust systems before they leave
the facility.
We very quickly implemented an IoT solution in that area, and all we did was we said,
“Hey, we just want to get insight into the data, so we want to be able to see all these
data points. Over 400 data points are created every inspection. We want to be able to
It’s one thing to have
higher-performance
computing, but
another thing to gain
edge computing that’s
proper for the factory
environment.

6. see this data, compared in historical ways -- so let’s bring context to that data, and we
want to provide it in real-time.”
What we found from just those two projects very quickly is that we're bringing value to
the organization because now our teams can go in and say, “Okay, the system is doing
its job, it's inspecting things before they leave our facility to make sure our customers
always get a high-quality product.” But now, we’re able to dive in and find different trends
that we weren't able to see before because all we were doing is saying, “Okay, this
system leaves the facility or this system doesn't.”
And so already just from that application, we’ve been able to find ways that our
engineers can even increase the throughput and the reliability of the system because
now they have these historical trends. They were able to do a root-cause analysis on
some improvements that would have taken months of investigation; it was completed in
less than a week for us.
And so that's a huge value -- not only in that my project costs go down but now I am able
to impact the organization quicker, and that's the big thing that Hirotec is seeing. It’s one
thing to talk about the financial cost of a project, or I can say, “Okay, here is the financial
impact,” but what we are seeing is that we’re moving quicker.
And so, we're having long-term financial benefits because we’re able to react to things
much faster. In this case, we’re able to reduce months of investigation down to a week.
That means that when I implement my solution quicker, I'm now bringing that impact to
the organization even faster, which has long-term benefits. We are already seeing those
benefits today.
Gardner: You’ll obviously be able to improve quality, you’ll be able to reduce the time to
improving that quality, gain predictive analytics in your operations, but also it sounds like
you are going to gain metadata insights that you can take back into design for the next
iteration of not only the design for the parts but the design for the tooling as well and
even the operations around that. So that intelligence at the edge can be something that
is a full lifecycle process, it goes right back to the very initiation of both the design and
the tooling.
Data-driven design, decisions
Hester: Absolutely, and so, these solutions, they
can't live in a silo. We're really starting to look at
these ideas of what some people call the Digital
Thread, the Digital Twin. We’re starting to
understand what does that mean as you loop this
data back to our engineering teams -- what kind of
benefits can we see, how can we improve our
processes, how can we drive out into the
HPE
Deploys
The IoT advantage
As you loop this data back
to our engineering teams
— what kind of benefits
can we see, how can we
improve our processes,
how can we drive out into
the organization?

7. organization?
And one of the biggest things with IoT-based solutions is that they can't stay inside this
box, where we talked about OT to IT, we are talking about manufacturing, engineering,
these IoT solutions at their best, all they really do is bring these groups together and
bring a whole organization together with more contextualized data to make better
decisions faster.
And so, exactly to your point, as we are looping back, we’re able to start understanding
the benefit we’re going to be seeing from bringing these teams together.
Gardner: One last point before we close out. It seems to me as well that at a macro
level, this type of data insight and efficiency can be brought into the entire supply chain.
As you're providing certain elements of an automobile, other suppliers are providing
what they specialize in, too, and having that quality control and integration and reduced
time-to-value or mean-time-to-resolution of the production issues, and so forth, can be
applied at a macro level.
So how does the automotive supplier itself look at this when it can take into
consideration all of its suppliers like Hirotec are doing?
Start small
Hester: It's a very early phase, so a lot of the suppliers are starting to understand what
this means for them. There is definitely a macro benefit that the industry is going to see
in five to 10 years. Suppliers now need to start small. One of my favorite pictures is a
picture of the ocean and a guy holding a lighter. It [boiling the ocean] is not going to
happen. So we see these huge macro benefits of where we’re going, but we have to
start out somewhere.
A lot of suppliers, what we’re recommending to them, is to do the same thing we did, just
start small with a couple of machines, start getting that data visualized, start pulling that
data into the organization. Once you do that, you start benefiting from the data, and then
start finding new use-cases.
As these suppliers all start doing their own small
projects and working together, I think that's when we
are going to start to see the macro benefits but in about
five to 10 years out in the industry.
Gardner: Well, I can certainly see why the projections
for the growth in IoT deployments are so large, and maybe even underestimated. So
really thanks for that.
I am afraid we will have to leave it there. We have been exploring how innovation is
impacting modern factories and supply chains. And we’ve learned how leading-edge
manufacturers like Hirotec in the automotive industry are making the most of IoT and IT
combined to deliver dependable, managed, and continuous operations.
So please join me in thanking our guest, Justin Hester, Senior Researcher in the IoT Lab
at Hirotec Corp. in Hiroshima, Japan. Thank you, sir.
Hester: Thank you for having me.
We are going to start
to see the macro
benefits in about five
to 10 years.

8. Gardner: And thanks to our audience as well for joining this BriefingsDirect Voice of the
Customer digital transformation success story discussion.
I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing
series of Hewlett Packard Enterprise-sponsored interviews.
Thanks again for listening. Please pass this along to your IT community, and do come
back next time.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: Hewlett Packard Enterprise.
Transcript of a discussion on how IoT innovation impacts modern factories and supply
chains. Copyright Interarbor Solutions, LLC, 2005-2017. All rights reserved.
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