Ahmad Alshidiq catches up with Tommy Leong, Zone President of East Asia & Japan, Schneider Electric and discusses, among others, about the Southeast Asian opportunity for the industry and how is Industry 4.0 shaping up in the region.
What opportunities are you seeing in Southeast Asia right now?
Southeast Asian economies are forecast to grow at least five percent annually until 2020, exceeding global growth of 3.5 percent. The urban population in Southeast Asia is growing rapidly by almost 2.5 percent annually and the middle-income population is set to increase by 70 million to 194 million by 2020. Such demographic trends, coupled with the increased interconnectivity between the numerous technologies will serve as multipliers in the rate of success of the Fourth Industrial Revolution in Southeast Asia.
Asia is recognised as the manufacturing hub of the world and could therefore be a strong driving force for the Industrial IoT (IIoT) market, which is set to reach US$319.62 billion with a 8.15-percent growth rate from 2014 to 2020.
We see the robust pool of SMEs in Asia as a great opportunity for Schneider Electric. SMEs are a key driver and contributor to Southeast Asia’s GDP, accounting for more than 95 percent of all business establishments. The large number of SMEs means that harnessing technology and innovation is an essential part of remaining competitive in the trade. Enterprise technology solutions by Schneider Electric such as supply chain management and data analytics help to digitalise the operations of these SMEs, so they can focus on growing their business.
Schneider Electric has moved from being a global company to a multilocal one. Emerging markets make up 45 percent of our revenue, including Asia taking approximately 30 percent.
There are FOUR immediate opportunities to unlock IoT value:
- Maximum energy EFFICIENCY AND SUSTAINABILITY: Energy and sustainability professionals, as well as IT and operations management leaders alike, must balance energy and operational efficiency at all times. Buildings, factories, global supply chains, cities. IoT gathers precise data from these environments, turning it into actionable information that enables:
- quick knowledge of the efficiency status of an individual machine on a production line
- the collection of operational intelligence through IoT and data analytics
- enhanced decision-making capabilities to prioritize projects
- the development of business strategies that drive profitability and performance within the context of sustainability
- Asset availability AND PERFORMANCE: IoT delivers value in asset availability and performance. Through predictive analytics, mission-critical machinery can operate continuously, avoiding costly shutdowns. It also can run more efficiently, using less power and performing within specifications, to extend product life
- Smart, productive, PROFITABLE OPERATIONS: IoT delivers the long-standing barriers between the worlds of OT and IT, opening up better ways to operate a business. Essentially every asset across an enterprise now has “a voice,” shedding light on every corner of operations. Valuable information from field operations reaches the the CEO suite for effective decision making.
- Mobile insight and PROTECTIVE RISK-MITIGATION: One of the toughest jobs in any plant is troubleshooting and fixing machine problems. IoT facilitates a more user-centric plant. For example, dynamic QR code maintenance allows plant workers to access information about the product at their fingertips, thereby optimizing field service operations and productivity. The operator can know immediately what needs attention or service.
What are the challenges in the region?
To be attractive to multinational manufacturers and bolster its manufacturing economies, ASEAN cannot compete on low wages alone. It must also focus on improving productivity, which, along with making the region more attractive to foreign investment in manufacturing, can also support domestic improvements in wages and living standards. Although statistically ASEAN productivity has improved over recent decades, much of this progress was driven by a broad shift of labour from agriculture into more efficient sectors, rather than improvements within individual sectors. Beyond the overall metrics, manufacturing productivity remains low across the region.
Vietnam, for instance, seen by some as a close rival to China, is 87 percent less productive than China with respect to daily output per daily wage. Along with eroding the region’s competitiveness, low overall productivity ultimately hampers growth and, in turn, prospects for better living standards.
We see these productivity challenges facing countries in East Asia and Japan as great opportunities for us. Our EcoStruxure energy management and industrial automation solutions for manufacturers are specifically designed to improve productivity, efficiency and help companies drive their growth without sacrificing sustainability, which was often the case in the past when technology was not as advanced. Now, we offer our customers improved profitability as well as the chance to help reduce their carbon footprint in an increasingly polluted planet.
In the near future, ASEAN’s youthful population will expand the region’s workforce and support economic growth, but this impetus will eventually diminish. Unless the region builds a more globally competitive manufacturing sector, it could miss a critical opportunity to increase its overall level of prosperity and well-being.
How is Schneider Electric helping its customers in their transition to Industry 4.0?
Schneider Electric is a technology company leading the charge in a digital world. We drive innovation and we are here to help companies transform digitally. Our innovations and solutions are based on customer needs, and we have various programmes and solutions that cater to different “IoT readiness” levels of our customers.
Working with our partners is in our DNA. Globally, we have more than 20,000 system integrators who are the local experts in their fields and we rely on our partners to close the loop about the needs of their customers.
Our technology solutions, such as the open IoT-platform Ecostruxure Machine Advisor and the Ecostruxure Augmented Operator Advisor, help our customers manage complex plants and factories. With these solutions, the assets and operations of manufacturing plants and factories can be managed remotely and digitally from one smart control centre.
Schneider Electric also believes in equipping our customers and our customers’ industries with information that will guide them in navigating the challenges in comprehension and adoption. One area that we observed to be a challenge for many of our customers’ business leaders is in deploying edge computing. This is an essential element to achieve Industry 4.0 success, yet it is one of the hurdles that we see business leaders struggle with.
We published a whitepaper titled “Solving Edge Computing Infrastructure Challenges”, in the hope of providing insights and solutions supporting IT professionals in deploying IT at the edge. The paper creates a structured framework for anticipating potential issues at the edge and details how to identify an ecosystem of partners with which to collaborate, integrate and deliver all of the essential infrastructure components required.
Asia has moved from labour-intensive to sustainable manufacturing. What is your view on this?
Sustainable manufacturing – or “Green Manufacturing” as we call it in Schneider Electric – is primarily about changing business and manufacturing practices, as well as the mindset of stakeholders, to mitigate the industrial impact of climate change and other environmental concerns. There are tangible ways to drive sustainable practices both within manufacturing facilities, across the supply chain, and through the customer base.
The Fourth Industrial Revolution and IIoT present new opportunities to unlock process innovations to develop sustainable, environmentally-friendly materials; decarbonize energy; tap digital innovation for doing more with less; and extend the life cycle of goods within a “zero waste to landfill” framework.
With digitised process innovation, even energy-demanding industries such as concrete production can push toward more efficient, climate-friendly practices. China National Building Materials Group is a model in this regard, cutting energy use by 10 percent.
When it comes to making meaningful change, we all are in it together. An extended enterprise approach is essential. We can look to Singapore as a model here.
Countries such as Singapore are embracing connected devices. Bringing the potential of automation, these devices could increase productivity, reduce waste and subsequently deliver better products or services. It’s developed digital infrastructure, forward-thinking government and government agencies such as the recently established Government Technology Agency (GovTech) are going to be important competitive advantages for the state-country to become a leader in Industrial IoT.
Singapore’s manufacturing industry sits at a very critical time in its advancement. It no longer has the advantage on cost and quality, because of the surrounding competition and global trends. However, it can transform itself into a data connected manufacturing powerhouse. With this infrastructure, manufacturers can quickly tap on new innovative and provide boosts in productivity, cost reductions and quality improvement.
As a global technology company that drives innovation for energy management and industrial automation, Schneider Electric is here to help companies transform digitally. Our innovations and solutions are based on customer needs and help power the digital economy. To survive and to lead in today’s business environment, they need to innovate and transform how operations are run. This is why, at Schneider Electric, we have tech solutions such as the open IOT-platform, Ecostruxure Machine Advisor and the Ecostruxure Augmented Operator Advisor which uses Augmented Reality, to help our customers manage complex plants and factories. With these solutions, the assets and operations of plants and factories can be managed remotely and digitally from the smart control centre, and its energy efficiencies can also be better managed through data-informed decisions.
Are you seeing a wide adoption of IoT systems in the industry right now?
In a 2018 McKinsey survey of more than 200 business leaders throughout the 10 countries that make up the ASEAN bloc, the transformative potential of Industry 4.0 was clearly confirmed. Almost all the respondents (96 percent) believed Industry 4.0 will bring new business models to their industries and 90 percent said improved performance will be one of the main benefits from these new technologies. Additionally, in manufacturing-based economies such as Indonesia, Thailand, and Vietnam, respondents were generally optimistic about prospects of Industry 4.0.
However, even as there is acknowledgement of the potential, respondents showed slow adoption. Only 13 percent said their companies had begun an Industry 4.0 transformation.
The survey highlighted five major challenges: These were a limited understanding among managers of the key value drivers for Industry 4.0 use cases; compartmentalised data within companies and difficulties in consolidating information, as well as siloed organisations; general difficulties in evaluating and addressing security risks and data-protection requirements; scarce talent with the required digital skills; and an inadequate understanding of how to align incentives with the new processes.
What is your outlook for the industry in the next two to three years?
ASEAN manufacturers cannot risk failing to capture the large opportunities made possible by new technologies. Industry 4.0 offers ASEAN countries the chance to recapture a larger share of global manufacturing activity. By embracing Industry 4.0, ASEAN manufacturers can become the next leaders in their fields.
In the long term, Schneider Electric hopes to build an ecosystem of local and regional certified partners under the EcoXpert Partner Program, trained in their fields of expertise such as power monitoring, building automation and data connectivity, coupled with skills and expertise in the latest IoT technologies and solutions, such as EcoStruxure. Globally we have 3,000 EcoXpert partner companies across more than 40 countries, with about 150 of them at “Master” certification.
Let me conclude with five predictions from the recent IoT 2020 Business Report we released:
- The next wave of DIGITAL TRANSFORMATION: A robust network of connected devices. The cost of connected sensors has plummeted, allowing companies to deepen their digitization programs and leverage a highly mobile work force. IoT enables …
- faster, more agile communication networks
- quicker adoption of cloud and edge computing
- advanced data analytics
- speedy delivery of meaningful information at the right time
- INSIGHTFUL data: Taking the customer experience to new levels. Access to data — including previously untapped and highly granular data — and the ability to translate it into actionable insights is the hallmark of IoT. Expect …
- the transformation of customer service
- new opportunities to build brand/service loyalty
- highly enhanced customer satisfaction
- SITE-TO-CLOUD confidence: Meeting mission-critical computing needs. IoT will promote an open, interoperable, and hybrid computing approach, fostering collaboration on cybersecurity standards. As a result, IoT will …
- flourish across systems, both at the edge and on premises, as part of both private and public clouds
- help end users adopt IoT solutions in the way that best suits their security and mission-critical needs
- offer those with legacy technology infrastructures a logical and manageable path forward, allowing them to transform over time
- Innovations that LEAPFROG INFRASTRUCTURE: Fueling disruptive innovation. IoT enables enterprises, cities, and emerging economies to work with systems of the past in ways that don’t preclude them from integrating systems of the future. Look for:
- new business models and spurred growth
- profitable and productive IoT-enabled services
- freedom from weighty, legacy infrastructure — particularly in emerging economies
- A BETTER planet: Solving societal and environmental issues. IoT empowers countries and their economies to respond to the biggest challenges facing our planet. Global warming. Water scarcity. Pollution. IoT can help the 195 countries that pledged their commitment to the COP21 agreement meet their objectives.
The next wave of DIGITAL TRANSFORMATION: A robust network of connected devices. The cost of connected sensors has plummeted, allowing companies to deepen their digitization programs and leverage a highly mobile work force. IoT enables …
The Internet-connected, Internet-dependent world already is upon us. Companies are piloting IoT initiatives to get more from their existing OT and IT investments and processes — and this approach is working. Adopters are finding asset and energy management to be fertile ground for IoT initiatives that deliver meaningful results quickly and at relatively low cost. Businesses are closing the gap between OT and IT and are gaining access to a rich new data set that will produce higher quality insights across the enterprise.
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