Factory Europe, towards Industry 5.0

Data Manager magazine, issue: May 2024

How to put industry back at the heart of the European agenda. IT at the service of manufacturing and the emerging role of the CIO as chief ecosystem officer. The integration of cutting-edge technologies for a new manufacturing model. With contributions from Bianchi Bicycles, Comau, ST Powder Coatings and Wittur Group

What do bicycles, industrial robots, powder coatings and lift and lift components have in common? Although they belong to different sectors, they share common aspects related to production, international presence, technological innovation, applied research with a high number of patents, quality in terms of total life-cycle assessment and safety.

Bianchi Bicycles , is the most historic and iconic bicycle brand, with over 130 years of history, as well as a successful model of reshoring and digital transformation. With the reorganisation completed and the factory set up next to the historical one in Treviglio (Bg), Bianchi plans to churn out one thousand bicycles every eight hours, increasing its workforce from 180 to 250 employees.

Comau , Stellantis Group, operates in the industrial automation sector. It produces industrial robots, automation systems and advanced solutions for industrial production in various sectors, from automotive to aerospace, and interprets a new production model that optimises human and machine-oriented automation. Comau is also working to industrialise production processes for both electrolysers and fuel cells and, more generally, all those technologies required for the large-scale adoption of hydrogen.

ST Powder Coatings is a major player in the powder resin sector. Powder coatings are used to protect and decorate a wide range of materials, including metals, wood and plastics, and are used in various sectors such as automotive, furniture, sports equipment and construction. ST Powder Coatings' laboratories are committed to researching low-temperature processes and newly developed non-petroleum materials.

Wittur Group is active in the lift components sector. It manufactures and supplies components and systems for lifts and lifts, including doors, cabins and advanced systems with an increasing focus on energy efficiency, intelligent connectivity, high performance, safety and comfort. The history of vertical transportation is certainly one of innovation that has helped transform urban architecture.

Four entrepreneurial realities, symbolising the industrial potential of the axis Italy, France and Germany, converging in the affirmation of a sustainable and digital future. These companies not only represent the productive strength of three key economies, but also channel the expectations of a more globally competitive and technologically advanced European economy.

UNPRECEDENTED METAMORPHOSIS

In 2024, CIOs in the manufacturing sector find themselves at the centre of a profound revolution. Manufacturing is no longer just the domain of traditional machinery and production lines. With the advent of Industry 4.0 technologies (IIoT, AI, predictive analytics, cobots, vision and advanced automation) and towards evolution 5.0 (pushing towards greater human-machine collaboration), CIOs are faced with a new innovation and competitiveness paradigm that focuses on automating industrial processes and integrating digital technologies to make operations more efficient and productive. As manufacturing companies increasingly engage in creating partnerships within their ecosystems and as systems and processes become more complex, CIOs will be increasingly involved in defining how their organisation interacts with partners. With their unique mix of business, technology and IT knowledge, CIOs are able to design and lead ecosystem initiatives, effectively assuming the role of the ‘other’ CEO: the chief ecosystem officer. Traditional manufacturing boundaries are crumbling, replaced by a complex network of suppliers, partners, customers and others working together to create shared value.

According to experts from IDC Insights' Manufacturing Team, by 2025, one in four CIOs will also hold the role of chief ecosystem officer, to orchestrate IT and business within the ecosystem to meet customer needs and reduce costs. This role, initially an evolutionary projection of the traditional chief information officer (CIO), is rapidly emerging as the focal point for orchestrating and managing the business ecosystem. While the traditional CEO focuses on the strategic vision and overall leadership of the organisation, the CIO becomes the ‘other CEO’ who is responsible for coordinating IT and Business to meet customer needs and reduce costs within the ecosystem. In ST Powder Coatings' business context, IT's role is to coordinate and integrate identified solutions, often acting autonomously from other organisational areas. A clear orientation towards cloud solutions, although not always a compulsory choice, together with the adoption of web interfaces for users, sometimes external to the organisation, is enabling growth without impacting existing infrastructure and systems. For example, as Group CIO Andrea Lanza explains, a CRM system has been introduced in the Group that also acts as a collector with branches and distributors, making it possible to uniformly collect data and information previously dispersed over several systems, which were sometimes not accessible centrally. This system also offers the possibility to effectively manage opportunities even in less developed areas and markets.

In the more traditional sphere,’ explains Lanza, ’the ability to govern, supervise and support, even remotely, complex plants and processes have pushed technology manufacturers in the industrial sphere to adapt and propose digital solutions, where previously the focus was on the robustness of industrial solutions. In the area of operations, ST Powder Coatings is investing in the renewal of applications and systems in order to improve security through the adoption of cybersecurity solutions that were previously not compatible with the existing infrastructure. ‘This renovation will also simplify operator interfaces, enabling the digital collection of information and production data directly from the source. With this in mind, constant collaboration and comparison between the different business needs and the many digital technologies on offer are key to identifying and selecting the most suitable projects, ensuring robust, regulatory-compliant solutions that meet customers' needs.

Turning to automotive, Comau is focusing heavily on vision systems. ‘We are among the few in the market that produce both robots and vision systems, but we also offer integration services with 50 years of experience in the global manufacturing sector,’ explains Giovanni Di Stefano, head of Products and Solutions Engineering - Advanced Automation Solutions at Comau. ‘We have also developed an IoT platform for data collection and tracking of our customers’ production, which we install within some of our integrated solutions such as arc welding, or on the lines we manufacture for our customers. In addition, we are completing the transition to the cloud, giving customers the choice of whether they want to work with their own local hardware, or with a private cloud, or with a third-party cloud, always ensuring that data security is not compromised.

Uma Shankar, CIO and member of the Executive Management Team at Wittur Group, highlights the current challenges in the lift component manufacturing sector. Factors influencing this include the war in Ukraine and the contraction of key markets such as China. Here's how the company is embracing digital innovation to expand its global presence and improve customer service. ‘We have implemented an e-commerce platform for the sale of spare parts, facilitating access for customers in different markets. We will continue our efforts to expand into new markets in the coming years. In addition, we have outlined a PLM roadmap for the next four years, with the aim of optimising the product development process and reducing time to market. This will result in improved internal collaboration and overall efficiency. Recently, we started the implementation of an advanced CRM platform in order to optimise contact and offer management. This will enable us to improve customer relations, increase operational efficiency and maximise sales opportunities.

Through the implementation of an advanced Business Intelligence platform, we are gaining valuable insights for our business, which will help us in making strategic decisions and maximising impact. Thanks to these initiatives, we believe we are well positioned to take advantage of global opportunities and drive sustainable growth in our industry in the coming years’. Mauro Toso, CIO of Bianchi Bicycles, also spoke on this aspect. The company has skilfully combined its tradition with innovation, becoming a benchmark in the high-end bicycle manufacturing sector. ‘We are implementing a new B2B2C model, we have completely redesigned the user-experience to standardise Bianchi brand and product communication. We are now working with the business to identify the possible applications of AI on the world of Commerce and After-Sales Service’.

THE FUTURE OF MANUFACTURING

At the heart of global economies, the manufacturing sector is undergoing an unprecedented transformation, driven by the convergence of IT and OT and the growing imperative of sustainability. This scenario of rapid and profound change is redefining the rules of the game for manufacturing companies, pushing them to review their strategies, invest in new technologies and adopt sustainable practices to remain competitive in an increasingly dynamic and interconnected market. Emerging technologies such as artificial intelligence, the Internet of Things, process and data virtualisation technologies, 3D printing and advanced robotics are revolutionising manufacturing, cybersecurity and safety, enabling greater efficiency, flexibility and customisation.

Parallel to the technological revolution, there is an increasing focus on integrating environmental and social sustainability into manufacturing processes. With increasing awareness of climate change and the depletion of natural resources, manufacturing companies are adopting more responsible and sustainable approaches to production. From optimising resource and energy use to adopting recyclable materials and environmentally friendly production processes, companies are redefining manufacturing. In 2023, the US-made manufacturing industry capitalised on the momentum generated by three major pieces of legislation enacted in 2021 and 2022: the Infrastructure Investment and Jobs Act (IIJA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Inflation Reduction Act (IRA).

Funds and tax incentives to US manufacturing in various sectors have already stimulated a record amount of investment. On this side of the ocean, 70 per cent of Italy's legislation for the manufacturing sector originates from European directives and more than 50 per cent of Italian exports are absorbed within the EU. Fabbrica Europa is Confindustria's policy document containing proposals for a more competitive Europe, presented in view of the forthcoming European elections with the aim of putting industry back at the centre of the European agenda. In order to be in a position to navigate the Net Zero scenario, Italy must design an industrial system that is more resilient and ready to react proactively to future shocks, and that is capable of achieving the ecological and digital transition in an accelerated manner, favouring the sustainability of the socioeconomic system. Pursuing the Industry 5.0 model entails significant consequences for the country's industrial policy - as emerges from the ASviS Spring 2024 Report .

Business models of companies, with their value and supply chains, need to be redesigned; new forms of collaboration need to be developed for the transposition of industrial policies by companies; new approaches to research and innovation are needed; a high level of vertical and horizontal coherence of policies between all levels of government is required. Finally, it is crucial to stimulate research and innovation for sustainability as driving forces of the economic system, necessary to address the challenges of sustainability across the board.

THE NEW INDUSTRY MODEL

According to analysts at the Deloitte Research Center for Energy & Industrials , in 2024 manufacturers are facing economic uncertainty, continuing shortages of skilled labour, specific disruptions in supply chains, and new challenges created by the need to innovate products to meet corporate net emission reduction targets. Technology is poised to play a significant role in meeting these challenges.

Companies are increasingly inclined to embrace a smart factory approach, experimenting with the possibilities of generative artificial intelligence. The digital transformation of the factory is proceeding at different paces. For some players, it is already a reality, however, the lack of properly planned OT/IT integration and management continues to leave some companies exposed to threats from ransomware (which have increased) and theft of intellectual property and proprietary data. At the same time, governments are requiring industries to strengthen their cybersecurity practices in line with the increased risk with decrees such as the Network and Information Security Directive (NIS2). The directive focuses on strengthening requirements to embed cybersecurity into the DNA of organisations and bring more sectors, including manufacturing.

As revealed in Orange Business' Security Navigator 2024 report , the problem is that most industrial sites lack the resources to assess OT risks, implement cybersecurity best practices in their manufacturing environments, and ensure network reliability and resilience. Manufacturing is by far the industry most affected by cyber attacks. If cybercrime were a country, it would be the third largest economy after China and the United States. The orchestration between optimisation, cybersecurity and regulatory compliance is the key to addressing the emerging challenges in the industrial environment - as Giovanni Di Stefano of Comau explains. ‘We follow the IEC 62443 standard on cybersecurity in OT. We always aim to use a Secure By Design approach, i.e. we carry out a risk assessment with the collaboration of third parties and derive security requirements from this. From the security requirements, we define the specifications in terms of additional security functionality and then realise the architecture that meets these specifications. At the end, we perform penetration tests to verify the goodness of the defences put in place.

Uma Shankar of Wittur Group presents a comprehensive approach to information security that embraces governance, awareness, and implementation of effective measures. The group has a chief information security officer (CISO) in charge of developing specific strategies to ensure the security and resilience of business operations in a constantly changing digital environment. ‘We use the Cloud-first strategy with public cloud platforms and SaaS applications. This approach allows us to ensure data protection through an ecosystem of partners against cyber attacks. We actively promote cyber security awareness among our employees through training and awareness programmes. We organise regular cyber security awareness sessions, providing employees with crucial information on risks and best practices to protect our systems and sensitive data. In addition, we have implemented a network segmentation strategy to isolate and protect critical systems. This approach allows us to limit access to sensitive devices and resources, thus reducing the risk of compromising data and operational processes’.

Mauro Toso of Bianchi Bicycles highlights the importance of integrating “by-design” cyber risk management and ensuring maximum business continuity. “We were fortunate to start with building a new plant and IT infrastructure from scratch, and this allowed us to introduce cyber risk containment measures right away, both for internal IoT components and for classic external business interactions. Critical production, warehouse and sensitive data management applications happen on a new hyperconverged server infrastructure that ensures zero downtime through internal replication, on external datacenters and soon in the cloud.”

CONVERGENCE EFFECT

In 2020, the industry market embracing the adoption and integration of advanced technologies for the digital transformation and optimisation of production processes in Italy was worth EUR 4.1 billion, according to data from the Milan Polytechnic Observatory , driven mainly by IT technologies, which accounted for 85% of expenditure against 15% for OT. This trend has seen a convergence on both sides over the past few years. In fact, the race of the Italian Internet of things market in 2023 reached a value of EUR 8.9 billion, +9% compared to 2022. However, there is an abrupt slowdown for Industrial ICT. Despite the growth in market value, there was a sharp drop in new projects in Italy in 2023, mainly due to the halving of incentives. A trend that can be reversed, in view of the new 5.0 Transition Plan for the two-year period 2024-25 with 6.3 billion euro of funds that - in addition to the purchase of tangible or intangible 4.0 capital goods - will also have to be allocated to goods necessary for self-production and self-consumption from renewable sources and to the training of personnel in green transition skills.

Moreover, the advent of 5G connectivity is opening up new perspectives for the implementation of enabling technologies for Industry 4.0 and Smart manufacturing, thanks to the virtuous circle between AI, Edge computing and IoT. According to Accenture , 5G will be one of the main driving forces for growth in the European economy, particularly in Italy, where the economic picture of business demographics for the first quarter of 2024 shows lights and shadows, with the number of SMEs decreasing in the country's large industrial districts. Moreover, in 2023, according to Istat data, industry turnover dropped by 0.5 per cent compared to the previous year. This trend is not homogeneous across sectors, but is also confirmed by the eurozone manufacturing economy continuing to contract at the beginning of the second quarter of 2024, according to Eurostat data. This means that the general decline in Italian industrial production is mainly generated by the negative performance of some specific sectors such as consumer goods, intermediate goods (which have a strong impact on production capacity) and energy. On the other hand, positive signs are registered in other sectors such as the production of pharmaceuticals, the construction of means of transport and the production of capital goods. This situation is the direct and indirect result of a number of factors affecting not only Italy, but Europe as a whole, and is fuelled by the feeling of uncertainty regarding economic growth. Factors that will be at the heart of the agenda of the Italian G7 Presidency together with artificial intelligence and its governance mechanisms.

BOOSTING PRODUCTIVITY

The National Recovery and Resilience Plan (NRP) is a key catalyst for advancing the digital and energy transition of manufacturing companies. This key objective of the plan is beginning to translate into tangible results for companies. According to data from the MECSPE Observatory on Industry for the third quarter of 2023, with forecasts for 2024, more than 60 per cent of entrepreneurs say that without the incentives provided by the NRP they would not have invested, or would have done so to a lesser extent, especially in crucial topics such as digital transformation, research and development, training and sustainability. According to the observatory's data, almost 70 per cent of entrepreneurs indicate medium to high digital growth for their companies in recent years. Technologies introduced in 2023 mainly include cybersecurity, cloud and IoT.

Interest in artificial intelligence is on the rise, with 13% of entrepreneurs planning to introduce this technology, followed by further investments in cybersecurity and collaborative robotics. The majority of entrepreneurs express positive views on artificial intelligence, with over 60% expecting benefits from its implementation. Some 25% of companies have already introduced or intend to do so, while 38% are considering it. The 4.0 incentives for business growth and digitisation highlight the readiness of companies to adopt the new measures of the Transition Plan to integrate sustainability and digitisation.

Giovanni Di Stefano of Comau emphasises the strategic role played by IoT and artificial intelligence on the line. ‘We have installed here in Italy the first fully automatic line for the production of our robots, using robots to produce robots, and in this line we have installed our IoT platform to track the production and quality of the production process. We are devoting considerable resources to implementing artificial intelligence to enhance the algorithms of our vision systems and simplify the installation process. In addition, we are focusing efforts on Generative AI to make our manuals easier to consult and use. Finally, we have launched several initiatives to explore the use of metalanguages, i.e. self-generating code systems with the aim of automatically translating human syntax into robot syntax, to simplify the programming of our robots as much as possible.

Uma Shankar dl Wittur Group emphasises the investments to enhance productivity and efficiency in the supply chain and production, identifying three key pillars of their strategy. ‘In recent years, we have started a major initiative to implement a cloud-based ERP system, which aims to cover the entire group within the next five years. The main objective of this initiative is to harmonise business processes in order to improve operational efficiency globally and reduce total cost of ownership. Furthermore, the ERP will allow us to replace existing legacy systems, simplifying the IT landscape and enhancing IT security through a centralised and secure platform. With our Business Intelligence platform, we extract valuable insights from the vast amount of data generated by our ERP and other systems. We mainly analyse sales trends and product prices, customer behaviour and operational performance, making data-driven decisions that drive growth and innovation. In addition, we are investing in the areas of IoT and Generative AI. IoT, in particular, will enable us to monitor real-time performance and optimise production processes. To further increase productivity, we are exploring the potential of Artificial Intelligence, focusing especially on (Gen AI, for which we are finalizing some use cases in Knowledge management.”

For Mauro Toso of Bianchi Bicycles, top priorities include implementing the digital twin, improving picking processes, and adopting advanced systems for production planning and scheduling. “First, we introduced a digital twin of the new factory under construction to analyze and correct any problems and inefficiencies in advance. Then we overhauled internal logistics with an advanced guided picking system, and we are currently introducing an innovative APS to support production planning and purchasing from the medium- to long-term to the daily scheduling of operations on the new plant.”

In this context, internal training plays a key role in ensuring that employees are up-to-date on the latest technologies and ready to face increasingly complex challenges. According to Giovanni Di Stefano of Comau, training is a key element of corporate strategy, especially when it comes to issues related to artificial intelligence and data security. At the same time, Uma Shankar of Wittur Group stresses the importance of collaboration based on shared planning, diverse experiences and Agile project management to promote innovation and improve business efficiency. Mauro Toso of Bianchi Bicycles, CIO, adds that the synergy between Business and IT is critical to the success of digital transformation, with the business involved not only in the implementation but also in the strategic leadership of projects.

“Definitely, training is central to our strategy, as our work requires high rates of specialization, which does not allow the entire organization to be constantly updated on IT issues”-Comau's Di Stefano explains. “To ensure ongoing employee training we launch many initiatives throughout the year, always related to our procedures and processes. The most important topic right now is definitely the management of artificial intelligence in conjunction with data security, a topic on which we have issued an ad hoc procedure, along with dedicated training and the selection of corporate tools aimed at guiding users to use new technologies in the safest way possible.”

For Uma Shankar of Wittur Group, IT plays a crucial role in decision-making processes related to investment priorities, resource allocation and growth strategies. “We work closely with Business to foster strong collaboration between Business and IT departments, with the goal of driving innovation and improving efficiency. We actively participate in strategic planning sessions to ensure alignment of technology initiatives with business goals. We also promote open and transparent communication between business and IT at all levels. We form multifunctional teams that include staff from both business and IT, promoting collaboration on projects. By bringing together individuals with different perspectives and experiences, teams can develop comprehensive solutions that address both business needs and technical considerations. We regularly measure performance metrics related to project delivery, customer satisfaction, innovation, and operational efficiency to identify areas for improvement and celebrate successes. Recently, we have begun to adopt Agile project management methodologies to facilitate iterative development, rapid decision making, and rapid response to changing business needs. This approach encourages collaboration among Business stakeholders and IT teams throughout the project lifecycle.”

Mauro Toso of Bianchi Bicycles also focuses on the synergy between Business and IT. “Right from the start, our digital transformation involved the business, delegating not only the implementation but also the strategic leadership of the various project streams. In this way, we had maximum involvement of people and management on strategic innovations, drastically reducing time and complexity. The IT function played a role in governance/quality and decision and choice support during all phases of implementation, from software/system selection to partner identification and implementation leveraging the Hybrid Agile methodology.” The importance of internal training, synergistic collaboration and shared governance between IT and Business emerges as a key element for successful digital transformation in manufacturing companies. Through these strategies and practices, companies are able to address increasingly complex market challenges, adapting quickly to new technologies and changing customer needs. By maintaining an agile and results-oriented approach, companies can not only improve operational efficiency and productivity, but also foster continuous innovation and maintain a leadership position.