Smart industry is all about digital integration

Smart industry is all about digital integration

By Paul Grefen - Atos Digital Transformation Consulting

Smart industry is an omnipresent concept in contemporary business, encountered for example in specific forms like smart manufacturing (also known as Industry 4.0) and smart logistics. In general, smart industry refers to performing industrial processes by leveraging modern information technology and boosting overall process performance to achieve your business goals faster and more efficiently.

Smart industry is sometimes referred to as “intelligent industry,” which may lead some to erroneously interpret it narrowly as the application of artificial intelligence (AI) in industrial settings. AI is an important technology these days and has significant applications in industry, but smart industry is much, much more than this. 

The foundation of smart industry lies in using digital technology to connect operational business elements into an integrated industry business system that effectively and efficiently reacts (and possibly even proacts) to its environment. To arrive at a truly smart business fabric, there are two aspects that need to be carefully considered: horizontal and vertical integration. 

Horizontal integration helps you create more coherent and reactive business processes, enabling a real-time coupling between various steps in the process, such as sales, procurement, inbound logistics, production, outbound logistics and after-sales service. This primarily pertains to the scope of your organization, but also extends to your entire business chain or business network. After all, your procurement function is connected to your provider’s sales function. 

Adequate digital connections help streamline the overall processes, enabling faster chain-level responses, leading to the possible conversion of a supply chain into a demand chain. All of these play a business-critical role in serving your customers’ exact needs – both product-wise and time-wise – while making your operations more efficient. For example, by safely reducing intermediate stock to ensure minimal impact on the existing production line.

On the other hand, a vertical integration in your organization is all about connecting the high-level, customer-facing functions (as outlined in the processes discussed above) to the internal operations of the back-end functions. In smart industry, these internal operations typically have a physical aspect. Consider this: physical goods are produced in smart manufacturing, while in smart logistics, physical goods are transported. Hence, vertical integration is about connecting the intangible world of enterprise information systems to the physical world of the systems that control your shop floor, whether in a manufacturing hall or a logistics distribution center. This is often referred to as the IT-OT connection — the link between information technology and operations technology. However, for several reasons, this link is quite challenging to realize in its best form.

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First, the IT and OT worlds are vastly different, with different technologies, different concepts and standards, different people and different cultures. When talking about connecting, an IT engineer thinks about technologies like an enterprise service bus, whereas an OT engineer thinks about machine interfaces and now even robot interfaces. 

In the IT world, a process is understood as a business process that spans the entire organization and may take as long as one week to complete. In the OT world, a process may be the execution of a robot script that is finished in one-and-a-half seconds. Even the perception of execution time is quite different. It may help to think of the IT people as white-collar digital workers, while the OT people are the blue-collar ones.

Secondly, the boundary between the IT and OT worlds is blurring even as we speak. This is caused by the tight coupling of functionality required from both worlds. We may get a glimpse of this in the coupling between product lifecycle management (PLM) systems and manufacturing execution systems (MES) in smart manufacturing. Traditionally, PLM systems belong on the IT side, while MES systems belong on the OT side. However, the advent of mass customization and just-in-time planning have highlighted the need for PLM systems to be aware of shop floor details, and for MES to be aware of detailed product and process specifications in PLM systems. As such, the domain of bills-of-materials (BoMs) and bills-of-processes (BoPs) lies increasingly on the interface between IT and OT.

Third, the OT world is transforming from a world of low-level hardware interfaces (such as those found in PLC systems) to a world of complex digital systems that directly contribute to the success of a firm. These systems become the digital brain of the physical operations, with nerves stretching out across the shop floor in the form of Internet of Things (IoT) devices that enable real-time sensing of what is happening and real-time decision making about what must happen. OT is not primarily a domain of electronics any longer; it has become a domain of complex digital technology. Smart robotics and automated guided vehicles are great examples of how OT is evolving.

All of this suggests that a successful smart industry transformation is a complex path for any industrial firm. It may require the in-depth knowledge and hands-on experience of a consultancy firm to oversee both the horizontal and the vertical aspects of business integration. The right partner can understand and handle the characteristics and intricacies of both enterprise information systems (IT) and shop floor systems (OT). At the best firms, consultants don’t care very much about the color of their collar (green is very much in vogue these days), but more about creating truly integrated solutions. 

Atos is just such a firm — a global leader capable of handling your end-to-end smart industry aspirations and see them through to completion — from logical, end-to-end business process optimization to the coupling of a MES, to your advanced shop floor devices. After all, we believe that smart industry demands cohesive digital integration to enable a smarter, more sustainable business future. That’s what really makes us tick.

About Paul Grefen

Paul Grefen is a full professor at Eindhoven University of Technology since 2003 and a principal architect at Atos Digital Transformation Consulting since 2020. He received his PhD in 1992 from the University of Twente in the field of high-performance database processing. From this field of pure technology development, his work developed towards the boundary between computer science and industrial engineering, balancing requirements pull and technology push elements. His current interests include complex information system architecture, service-oriented business, business process management and business outcome engineering, applied in business domains like smart manufacturing, synchro-modal logistics and the (financial) service industry. Paul was a visiting researcher at Stanford University and IBM Almaden Research Center (both in California). He has authored some ten books and several hundreds of scientific publications. He speaks at national and international scientific and business events. He is a board member of the European Supply Chain Forum and provides advice on digital transformation through his practice G.DBA.