At the recent Siemens Transform event in Manchester, a panel of industry heavyweights gathered to discuss their own digital transformation experiences, the lessons they have learned along the way and how to face down the challenges of net zero, supply chain disruption and skills.
Sustainability is deeply embedded in our corporate ‘Compass’ strategy at Unilever and we’re aiming to be net zero by 2039. When you have that objective so deeply ingrained in your company, net zero, decarbonisation and sustainability become an integrated responsibility across the organisation, and not that of any one single function.
There’s a lot of fossil derived carbons that go into cleaning products, for example, but we are creating digital twins of molecules to understand and predict how biodegradable they can become. The use of digital tools and AI is unlocking the pace at which we are decarbonising our products, such as increasing the value density so that we can use less packaging and make the transportation and distribution of our products more effective. We have a clear 2025 target of reducing the amount of virgin plastic that we use in our products and increasing the amount of recycled plastic that we use in our packaging.
We want to make sure that when we define our product specs, they can be manufactured in the most sustainable way, we can optimise the amount of energy that we use and reduce the waste that gets generated through the process. This is a team sport and, in our industry, these big challenges can only be tackled if different functions get together and optimise end-to-end – not just internally, but with external partners.
This is not something that the manufacturing side of the organisation can achieve on their own. We’re a consumer products organisation and globally we serve 3.4 billion people every day, so we need to work together to come up with new ways of engaging consumers to provide the transparency to understand what it is they’re purchasing, the science behind the product, assurance of provenance of ingredients, and how sustainable it is.
Alberto Prado, Head of R&D Digital Partnerships, Unilever
Firstly, the digital twin enables you to simulate in the virtual world before you use it, which is super important. Secondly, with the amount of data now being generated, the only way to make sense of it and make the right decision will be AI. And thirdly edge technology; all this data won’t be shuffled around the world, it will stay within your factory, and you need the right tools to be able to do it.
Cedric Neike, CEO Digital Industries, Siemens
We surveyed thousands of manufacturers, and I would say the biggest impact is actually around people. The problem with leadership in many SMEs is the ability to grasp concepts and make a change. We’ve been having many discussions with government about training and how we get that into the leadership psyche. There also needs to be investment in staff so they can cope with that shift to digital manufacturing.
Stephen Phipson, CEO, Make UK
Sustainability has always been there but it’s now front and centre in our strategy, and we’ve set a net zero target by 2050; it’s now our be all and end all. We are a chemicals company, we have six world scale production sites, with a seventh going up in China, and nearly 300 other production sites globally.
We’re producing 21 million metric tonnes of CO2 a year which is a huge challenge, and that’s just Scope 1 and Scope 2 emissions. If we take into account Scope 3, both up and down the value chain, there’s nearly 92 million metric tonnes of CO2, so we have to support our suppliers and our customers in abating that.
We also have the issue of how we get through the energy challenge that exists today. Do we have the right people to meet those challenges? And where’s the technology coming from? For example, last year we spent over €2bn in offshore wind to help decarbonise our sites.
However, as well as making products sustainably we also have to make products that our customers want. They are demanding products with a better carbon footprint, so in turn we have to demand that of our suppliers and technology providers.
Darren Budd, Commercial Director, UK & Ireland, BASF
It’s a very exciting moment for the car industry and I can’t remember a time when the sector was as agile as it is now. If you look at the car as an invention, we have spent 110 years making diesel and petrol perfect. But that innovation journey has started again. We’re now looking at how to make electric drive trains and to do so cost efficiently and sustainably. We’re also looking at the materials we use, and we’re working with BASF on upcycling consumer plastics into lower performance parts.
On the process side, factory automation, data flow and engineering data are all being used to maximise digitalisation opportunities. In some cases, we’ve had to take a step back and start from scratch because technology has progressed so fast we’ve often had to ask the question of whether we can drop the latest innovations onto existing technology.
Today, the biggest challenges for all of us is supply chain. This is the first year I can recall where business plans are made based on supply rather than demand. We have all had to rethink our business case, where we focus and what we build.
Frank Ludwig, Chief Transformation Officer, Jaguar Land Rover
In terms of sustainability, it’s important to understand what you want to achieve. For us at Siemens Congleton it’s achieving net zero by 2030 or sooner. A big part of that is getting the right team of people together. The first step for us was looking internally within our factory, so we had an energy efficiency programme which looked at where we could bring in new technologies to increase productivity, do things quicker and maximise energy efficiency savings.
That included LED lighting and looking at air leaks within the factory – things that sound quite simple. We introduced a new building management system and onboarded a new turbine using biogas to make ourselves less prone to being impacted by brownouts and power downs. We’ve also embarked on a community project on the river Dean which is harnessing the power of water, with an Archimedes screw installed at Havannah Weir, which supplies power to the Congleton factory.
Sarah Black-Smith, General Manager Motion Control, Siemens Digital Industries
How to cope with escalating employee costs and the labour shortage are discussions we have every day at Make UK, and the various sectors of manufacturing are reacting differently. If you look at food and drink manufacturing, for example, particularly the larger organisations, we’ve seen a big push over the last six months towards automation. We’ve seen a lot of projects in this sector that just weren’t there 18 months ago. It’s interesting to see how quickly that sector has moved towards automation.
We’re seeing many small companies starting to take digital efficiency seriously and implementing digital technologies, and the catapults have played a key role in helping companies improve productivity and efficiency in their operations. A way to counter escalating employee costs is definitely to improve efficiencies through digital technology.
Stephen Phipson, CEO, Make UK
At Make UK we run the largest apprentice training centre in the country. Traditional level three/level four engineering apprenticeships have been transforming over the last few years towards mechatronics. Approximately 40% of the apprenticeships we deliver are in this field, which is a big increase compared to two years ago.
There’s a push in the apprenticeship levy, at the vocational skills level, towards more digital capabilities; being familiar with using and maintaining robots, programming around digital implementation etc. However, we are receiving complaints from chief executives that following the onboarding of graduate engineers, another six months has to be invested to get them digitally ready, because they are often lacking the digital skills required when they leave university. Therefore, we are working with the Department for Education (DFE) to address the curriculum on engineering graduates in particular, to be able to equip them with those digital skills in the future – but this takes time.
Stephen Phipson, CEO, Make UK
Simpler, simpler, simpler is the answer I always give. You need to better train your people, use data processes and technology, but you also need to make capabilities simpler for people to use.
We need to give people the tools so that they can do the right things. We need to make technology much easier to integrate so that you don’t need a PhD to install it within SMEs. And we also need to make sure that this is an open ecosystem so you can mix-and-match technology. This is what we need to address the skills shortage which is not going to go away – for the next generation, especially in developed countries, there will be fewer people joining the workforce and we need to deal with that.
Cedric Neike, CEO Digital Industries, Siemens
For us at Unilever the digital transformation of R&D has three pillars – technology, data and people. As a society we often forget about the last one; we somehow think that if you throw technology at something people will automatically embrace it and start to operate digitally. The reality is that there’s a lot of explanation that needs to happen before you even train people – you need to explain very clearly why any transformation is happening and what their contribution on that journey will be.
In my experience, if people understand the ‘why’ and the rationale behind what we’re trying to achieve, they will want to learn, grow and acquire new skills. And it’s not just all about hiring in; it’s also about training what you have. There’s an enormous amount of corporate knowledge and experience that exists in the talent pool that you have today. These people can be equipped with an additional digital layer of skills and that can be really effective and very quick at delivering value.
Alberto Prado, Head of R&D Digital Partnerships, Unilever
As we continue our digitalisation journey, more and more elements of our business will be generating data that we can extract value from – that is going to be a challenge. But that’s why we have teamed up with partners for storage and processing – we work with Amazon and Azure for example.
That’s the kind of challenge that these companies are facing. And we work very closely to make sure that they’re doing their part – to establish that level of trust so we know that when we generate data it is going to be treated, stored and processed in the most sustainable way possible. That’s part and parcel of the integrated equation of net zero.
Alberto Prado, Head of R&D Digital Partnerships, Unilever
Factories sit on a treasure trove of data. A single Industry 4.0 factory produces 2.2 terabytes of data every month, which is the equivalent of half a million Netflix movies. However, nobody is watching all those movies, so how do we get this amazing amount of data into the production process?
The only answer will be the edge. The three laws of the cloud are the law of the land, the law of physics, and the law of economics. The law of economics means that if you push every piece of data you have in the factory up into the cloud, it will cost you billions, which clearly doesn’t make sense. The law of physics states that if you have real-time data which you have to act on immediately, even if you’re using a data centre which is close by, that’s still not good enough. The law of the land means you cannot just shift data out of the UK, into the US or China. Therefore, 90% of data will sit on the edge.
Cedric Neike, CEO Digital Industries, Siemens
Make sure all your plants have long-term planning, so when you’re looking to retrofit it’s been factored in. It is quite difficult because technology is moving so fast, but even when we put new technology in, we’re always looking at where the next piece of innovation is going to come from; not only in terms of where and how to deploy it but also where training comes in, so that we have the right people to build it forward.
Darren Budd, Commercial Director, UK & Ireland, BASF
Mindset could be a barrier if you approach it the wrong way, but it comes back to asking why you’re transforming in the first place. What’s the burning platform? Is it about remaining competitive and keeping manufacturing in the UK, for example?
It’s vital that you communicate with people and be open about what it is that you’re doing, why you’re doing it and what the plan is. When we were introducing automation we did it on the shop floor and communication was very clear – we wanted to engage people on that journey. Communication, communication, communication.
Sarah Black-Smith, General Manager Motion Control, Siemens Digital Industries
Give people access to tools. We’ve had a really interesting experience using an enterprise licence on a software product. This allows people on the shop floor to mine their data across their systems. They’ve understood it, and we now have some 2,000 editors who write themselves programmes to understand their data. Once you find some super users on the shop floor who are really enthusiastic, just give them airtime – they will drag people in and the rest will happen automatically.
Frank Ludwig, Chief Transformation Officer, Jaguar Land Rover
If you unpack mindset, it’s about trust, fear and all those deep-rooted emotions that need to be addressed, and even explained. Often there tends to be fear or lack of trust in technology, that prevents it from being embraced and used in a more transformative way.
It’s a process that human beings need to go through, but it can be coached, and it can be accelerated. It’s a lot to do with communication and proving the value that trust can actually deliver. You can’t expect people to automatically embrace technology, particularly if they fear that their job is going to change or even made redundant because of it.
Alberto Prado, Head of R&D Digital Partnerships, Unilever
We still have this idea that there’s blue collar and white collar; that somebody in Silicon Valley can programme better than someone on the shop floor. We need to change this; we need to make technology so simple that we have citizen developers – a state where people on the shop floor are not just execution; they know their processes and they can continuously optimise them.
Cedric Neike, CEO Digital Industries, Siemens
What’s your burning platform? Put a strategy in place, engage with partners and really bring people with you. Communicate with them and create the trust that it’s the right way to go to keep manufacturing in the UK and in Ireland.
Sarah Black-Smith, General Manager Motion Control, Siemens Digital Industries
In terms of collaboration, we’ve come a long way. But we realise, as a chemicals company, we can’t do this alone; we have to work with partners – whether it’s upstream or downstream, it doesn’t really matter. We can only achieve our goals of net zero and sustainability if we work in partnership, and digital has a huge role to play in achieving that.
Darren Budd, Commercial Director, UK & Ireland, BASF
We are at a transformation stage – transforming to be more digital, more sustainable and run more productive businesses. The responsibility for net zero sustainability cannot just be carried by the manufacturing side of the business, it is integrated within the responsibility of the entire company. When doing that you start discovering opportunities to drive that strategy in more effective ways; not only as a team sport within the company, but in an ecosystem. We need to be open and collaborative and that’s a muscle that we need to train.
Alberto Prado, Head of R&D Digital Partnerships, Unilever
We have spoken a lot about technology and transformational processes etc. But from my perspective, the next couple of years for our sector will be about one thing, and that’s going to be access to skills and people. I would advise chief executives and managing directors around the country to transform themselves into their main HR director going forward. That’s going to be the basis of how we compete in the future. And digital transformation will only work if you’ve got the right people around you.
Stephen Phipson, CEO, Make UK
Digitise, simplify and focus – do what you’re good at, and do it well. Make sure you engage with your people because they’ve been through many challenges with COVID and Brexit etc. People are worried so take them on the journey with you and explain what you do and why you do it. Make sure that you don’t spend too much time explaining how they should do their job. Focus on the what and the when, they will deal with the how.
Frank Ludwig, Chief Transformation Officer, Jaguar Land Rover
The UK and Ireland are very proud and capable manufacturing hubs, but we are at a crossroads. The crises that we are currently facing around energy, people, COVID etc, will define if we’re actually going to move in the right direction, or if we’re going to lose more capabilities.
One thing that is amazing, especially in the UK, is that in times of crisis we show our best side. So embrace the technology, move software at speed, be purposeful, and then you will be able to attract people.
Cedric Neike, CEO Digital Industries, Siemens
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