Industry 4.0 is here. Technologies like artificial intelligence (AI), machine learning (ML) and the Internet of Things (IoT) are developing, and the market is starting to show signals of adoption. The first companies to move towards Industry 4.0 can gain better insights into their operations, produce new and profitable business models and widen the gap between competitors. Being on the frontline of this movement, however, can also be quite challenging. Innovation can be risky and resource-intensive. This raises the question: what moves companies to take the leap? What challenges are they facing and what opportunities do they see? To answer these questions, we’ve interviewed innovative companies that have already taken the first steps toward Industry 4.0.
First in the series is Houdijk Holland.
Houdijk Holland is the worldwide market leader in biscuit feeding technology. It’s the only company in that market that exclusively focuses on biscuit and cracker handling, resulting in over forty years of biscuit feeding expertise. Customers from all over the world, like Mondelez, PepsiCo and Pladis, trust their biscuits to Houdijk’s feeding systems every day. This unique position is strengthened with continuous innovation. Building new machines is part of their identity, and they are always looking for new opportunities to seize.
Houdijk’s next venture is making their machines and systems smarter. They have started their first test two weeks ago to collect data from their machines with Widget Brain. Initially, this data will give them insights on how the machine is performing. Ultimately, algorithms built by Widget Brain will make predictive maintenance and autonomous decision-making possible. With this project, Houdijk is one of the first in the industry to make moves towards Industry 4.0.
Leading the project is Gosling Putto (R&D Manager at Houdijk Holland). Putto understands why it takes time for companies to line up for Industry 4.0. He believes every competitor knows about the trends in the market, but it’s a waiting game for someone else to act first: “Everybody is at the starting blocks, looking at each other and waiting for someone else to move first. But as long as everyone keeps on staring, nothing happens.” Reasons for hesitations are safety and privacy concerns, but also the lack of standardization and the resources that go into innovating. According to Putto “it takes a lot of human and financial resources to make this possible”.
For original equipment manufacturers (OEM), it’s also a question of whether or not their customers are actually as interested in these new types of technologies. The general perception is that end-customers aren’t ready to scale yet. When Houdijk Holland was searching for one of their customers willing to participate in the test, they found one immediately. “Our German customer was very happy to participate. They had the same idea (of using more data) for a while now.” This shows that end-customers are also picking up on the Industry 4.0 signals. One of the reasons for this development is the constant pressure in the market. Expectations intensify as smaller batches, shorter lead times and lower costs are demanded, which are only possible with streamlined production resources. Putto describes it as follows: “If an installation or a component in a machine fails, an entire production line will be down. For customers, it’s necessary that it’s always up and running. You do not want an entire 10 million production line down because of your machines. That’s why predictive and preventive maintenance is so important for both parties.”
Even though this customer jumped in immediately, Putto also understands that other customers would need more convincing. To reduce barriers, Houdijk Holland finances the tests completely, but they are also clear about their intentions: “This is a test. The customer benefits from collaborating because they can get clear insights in the machine’s performance. We benefit from this because we can detect anomalies in our machines and improve them for future projects.”
Industry 4.0 is in the middle of full development. As technologies slowly mature, more standards and rules will be put in place to provide structure and define the market. Aside from making operations smart, machines autonomous and supply chains transparent, there is also another major turn of events on the horizon: new business models.
Putto shares his idea on commercializing their intelligent machines in the future. “If it all turns out the way we want, we can make a new business model that’s based on SLAs (service-level agreements). Our customers would pay us for our service and our task is to have an excellent OEE and maintain that. We’re not there yet, but customers are receptive for it.”
This business model involves a change of ownership. Machines will no longer be owned by customers, but by the original equipment manufacturers. This will result in machines that are unbreakable. When algorithms accurately predict performance and necessary maintenance, the OEE of machines and efficiency of production lines will increase, leading to machines that will never experience downtime. As this occurs, sales of products (i.e. machines) will no longer be profitable and selling services will become more natural. This would mean that OEMs will be responsible for maintaining a high OEE and selling their service on a subscription-based fee. Not only will this increase customer satisfaction and loyalty through better after-sales service, it would also mean that OEMs will have recurring revenue from the same machine rather than profiting margin on a one-time sale.
While some companies are still thinking about the idea, others have already started laying the foundation for Industry 4.0 in their operations. Houdijk is eager to learn more about the possibilities of Industry 4.0 and the value it brings to them: “It’s in Houdijk Holland’s nature to be innovative.[…] We will keep on pushing this project through. We see it as a test, but there’s a lot of potential in this that we wish to roll out when it runs successfully.”
This content is owned by Widget Brain and written in collaboration with Houdijk Holland. Widget Brain is a software company specialized in algorithms, machine learning and IoT for the Industrial Equipment industry, Retail, Maritime and Waste. Learn more about Widget Brain here.