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ICT Enabled Advanced Manufacturing: Current Trends and Future Perspectives With Reference to Indian Context

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GERMAN NATIONAL ACADEMY OF SCIENCE AND ENGINEERING

A study on

“REQUIREMENTS FOR AND IMPACTS OF ICT-BASED ADVANCED MANUFACTURING WITH SPECIAL REFERENCE TO AN INTERNATIONAL CONTEXT” Sponsored by ACATECH (German National Academy of Science & Engineering), Germany & INAE (Indian National Academy of Engineering), India under a research project entitled:

“ADVANCED MANUFACTURING/INDUSTRY 4.0 AND URBAN DEVELOPMENT - THE CASE OF INDIAN METROPOLITIAN AREAS” 2

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By Professor Manoj Kumar Tiwari

Head Industrial & Systems Engineering Department IIT Kharagpur

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Core Focus of Digital Industrial Revolution Advanced Manufacturing/Industry 4.0 and Urban Development •A paradigm shift towards smart factories. •Digitalized Manufacturing •Cooperative enterprises •Entrepreneurship and innovation •International value creation 4

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Outline of the presentation 1. Manufacturing Challenges due to globalization 2. Indian manufacturing landscape 3. Survey analysis 4. Government policies 5. Integrated International Advanced manufacturing networks: requirements and implications 6. ICT adoption requirements 7. Challenges and opportunities 8. Joint risk management requirements 9. Impact: Industrial, Social, Economic and Environmental 10. Recommendations

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Global Manufacturing Challenges Open international market with digitalized connectivity. Increased productivity and high quality production. Demographic shift transforms the work force: lower opening of unskilled jobs.

Rapidly changing demands for low cost products and customization with shorter life cycle.

Geographical shift in manufacturing and design related R&D. Disruptive Innovations empower emerging markets to increase their global power Closely associated global institutions, academia & nations Sustainability becomes a competitive issue. Progression of global manufacturing towards minimum defect and zero effect on environment.

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Indian Manufacturing Landscape INDIAN MANUFACTURING • Contribution to GDP: 17% • Global Manufacturing Competitive Index : 4th rank

CHALLENGES

Prime driver of equity growth

Contribute 45% to national manufacturing output & 40% to total mfg export

Micro, Medium and Small Enterprises (MSMEs)

REQUIREMENTS

Minimal R&D capabilities

Upgrade Competitiveness

Low level of Operation Management

Integration with global partners & industries

Lack of skill and infrastructure

Integrate Social resources 7

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Challenges ENTERPRISE LEVEL

GOVERNMENT LEVEL

Limited ICT Penetration

Progressive Regulatory & Legal Policies

Technology Inadequacy

Reduce Financial Constraints

Low Productivity and Quality Resource Optimization

ACADEMIC LEVEL Obsolete Business Models Inefficient Energy Utilization

Conducive Infrastructure

International Integration Clustering and Flexible Cooperation Research & Development Facilities Skill Training and Empowerment 8

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MSMEs: Current Status STATUS OF SKILL REQUIREMENT

What level of qualification do you expect your employees to have? 3%

What is the skill level of the employees with respect to ICT application?

1%

9%

High school or diploma

No relevent skills

17%

Adequatly skilled

Graduate Post graduate or higher

Highly skilled 74%

96%

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STATUS OF ICT UTILIZATION

What is the level of ICT application in following processes: 80 70 60 50 40 30 20 10 0

Automated material handling

Planning and concept development High

Cost/benefit Analysis Medium

Low

Activity based accounting system None

Statistical process Control

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How does the firm manage customer interface and vendor interface?

11. What is the level of use of ICT in production systems ? Not implemented 7%

28%

Realtime machine health tracking

23%

50%

web based interface

Order processing

22%

69%

1%

Spare part and inventory management

Is ICT used for real time quality control and failure analysis?

one to one interaction

telephone

POOR INTERFACE MANAGEMENT Has the firm launched a product in its operational domain, new to the local market? 1%

9%

6% Yes Yes

No

No In the process

91%

93%

LOW PRODUCT QUALITY

LACK OF INNOVATION

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Recent survey by Confederation of Indian Industry (CII)

CII organized awareness seminars

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Solution for Financial management, digital marketing management of statutory compliances customer relationship management selection of cost effective IT products and solution,

IT ENABLED SMEs

Cloud services

Growth rate : 15% over past three years

Far reaching innovations

Employment: doubles in 3 years

Productive Business Operations

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Indian Government Policies Schemes/Policies

Targeted Outcome

National Manufacturing Policy

Aims to increase the GDP share from 17% to 25% and 100 million jobs by 2025

National Manufacturing Competitive Programme

Integrate lean manufacturing, promote ICT adoption, Entrepreneurial and management development, raising IPR awareness, etc

Lean Manufacturing Competitiveness Scheme

Reduce manufacturing waste, enhance technology competency under PPP

Design Clinic Scheme

Technology and Quality Upgradation National Skill development policy

Provide adequate consultancy services to MSMEs and cost effective solutions to realtime design issues Promote MSMEs to achieve global standards in reference to quality and competitiveness To meet the skill requirement for manufacturing work force of tomorrow

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Budget 2014: Boost Manufacturing Review the current ceiling of investment limit in MSMEs and examine their financial architecture Export promotion mission: to promote collaboration among stake holders Development of legal bankruptcy framework to ease exit of SMEs, amendment in apprenticeship act

District level incubation and accelerator programmes to encourage rural entrepreneurship Realization of 100 smart cities: allocation of a corpus of INR 7060 crores National Industrial Corridor authority: Grant of INR 100 crores to develop 20 new industrial clusters

National rural internet and technology mission: Allocation of INR 500 crores to provide internet and technology in villages. Increase in National skill development funds & Launch of skill India programmes emphasizing on employability & entrepreneurial skills

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Automobile Sector KEY ABILITIES Contribution: 22% of country’s manufacturing GDP Ranking: 7th in the world Production: 17.5 million vehicles per year Export share: 2.3 million vehicles per year Growth drivers: foreign automobile manufacturers likely to invest in India to establish R&D and manufacturing units due to cost advantage to perform operations and statutory compliances. Growth rate: Under the automotive mission plan, government aims to double the contribution of the automotive sector to US$ 145 billion and to create around 25 million jobs by 2016 Projection: 3rd largest market by 2016 Source: Indian brand equity foundation (www.ibef.org)

Cyber Physical Production Systems/automation Reconfigurable manufacturing & product platforming Virtual manufacturing, 3D-printer

Collaborative robotic system Quality improvement: Kaizen tools, six sigma, lean manufacturing

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Initiatives & Investment Government Initiatives

Private Investments

100% FDI in automobile sector, delicensed industry, free import of auto-components allowed. Well established regulatory framework under SIAM and ACMA Establishment of world-class testing, homologation and certification facilities, along with nine R&D centres under the National Automotive Testing and R&D Infrastructure Development Project (NATRiP) Fiat’s plan to introduce 12 models in India based on 3 platforms, increase its work force by 100 and capacity by 80% at its Pune plant by 2018. Japan’s Isuzu motor has earmarked INR 3000 crore to expand its 120,000 units manufacturing facility in Chennai to gain market leadership

SIAM: Society of Indian Automobile Manufacturers ACMA: Automotive Component Manufacturers Association of India

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Electronics & Semiconductor Sector Ranking: Second globally in terms of design Growth Drivers: Telecom infrastructure requirements, wireless handset and other IT products, electronics consumable Growth Rate: Electronic system design and Manufacturing (ESDM) market to grow at a CAGR of 9.9% becoming a US$ 94.2 billion market by 2015.

KEY ABILITIES HIGH PRECISION MANUFCATURING

HIGH-END SURFACE FINISHING TEHNIQUES

ZERO DEFECT SOLUTION

SECTOR WISE APPLICATIONS

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Initiatives & Investment Government Initiatives

Modified Special Incentive Package Scheme: Companies in certain electronic clusters can avail 25% cost subsidies. India’s first ESDM brown field cluster at an estimated cost of US$ 14.5 billion in Bengaluru approved by Central Govt.

Private Investments

Intel will invest US$ 120 million in setting up a new research and development (R&D) centre in India. Soni, Hitachi, Philips, Daikin, Sharp, Samsung, Bosch are investing significantly in India

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Integrated Advanced Manufacturing Networks

Implications

Potential Risks and Challenges

Opportunities ICT Adoption : Requirements

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Benefits of ICT Adoption Connected networks : instant problem solutions by experts from varied locations Less specialization for workers to perform ICT enabled technologies. Quicker customization of products and speedier new product introduction in the globalized market

Shorter innovation cycle ,high level quality control techniques and lower production lead time . Increased organizational transparency with enhanced organization structure. Knowledge management and machine learning enabled resource optimization

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ICT Adoption: Requirements

Prominence in International market

R&D establishments Cost effective & high quality products Customized & Innovative products

To meet the challenges on the way to Upgrade competitiveness of MSMEs Bridge the gap between current technological state & globally advanced manufacturing

Infrastructure Development Technology awareness & Upgradation

Skill Upgradation

Flexible & robust regulatory policies

Clustering and cooperation of MSMEs with industries

Collaborations among industries, government and academia

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SMART FACTORY

Cloud Computing Internet of Things Virtual Manufacturing

ICT based technologies ERP, RFID,PLM, CAM, E-commerce, CRM

System Process People

Advanced Mfg Technologies (AMTs) Computer Integrated Machining(CIM)

Automated process Control Real-time production monitoring Data driven manufacturing Resource management and Optimization

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ICT-enabled Business Operations ICT Driven Business Functions

Management operations • HR/Payroll Management • Finance / accounting • Vendor Management • Customer Relation management (CRM) • Integrated communication(chat, email, conferencing) • E-marketing, e-commerce

Production

Manufacturing Technologies

• Product development • Product design(CAD/CAM) • Procurement & Inventory management • Order processing • Quality management • Product Management • Planning and scheduling

• Network based manufacturing • Additive Manufacturing • Reconfigurable manufacturing • Advanced manufacturing technologies/CIM • Cyber Physical Systems to increase automation

Centralized Implementation • ERP • Product life Cycle Management • Decision Support System • Material Requirement Planning

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Cyber Physical Production System

Source: http://www.smartf-it-projekt.de/?page_id=11&lang=en

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Towards enhanced competence of MSMEs Cloud Manufacturing Big Data in Virtual Manufacturing Product Life Cycle Management Agent Based Infrastructure

Standardization of SME protocol

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Cloud Manufacturing

Source: [Huang, B., Li, C., Yin, C., & Zhao, X. (2013). Cloud manufacturing service platform for small-and medium-sized enterprises. The International Journal of Advanced Manufacturing Technology, 65(9-12), 1261-1272]

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Product Life Cycle Management

PLM

Analyzes the located manufacturing request provided by the Manufacturing Cloud Integrates Consumer to Cloud and Business to Cloud model

Optimize the solution based on original needs and finalize the service request Smart Cloud Manager (SCM)

Imparts a range of flexible manufacturing capabilities More manufacturing objects can be achieved with minimum additional investment and effort

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Standardization of SME Protocol  Internet use by most SMEs limited to information searching, e-mail and posting of company websites  Use of a Collaborative Information Sharing Platform efficiently integrates various manufacturing activities The seven tier framework: Customize Data User Acquisition Interface

Web Server

Product Data Interchange

Product Database

Collaborative Operations

Application Tier

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Big Data Analytic in manufacturing Clean Production

Cyber Physical Systems

Cloud Manufacturing

Leveraging ICT

Digital Marketing

Virtual Enterprises

Product Development Quality Management

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Skill Training Expert consultancies & International exposure

Integrate rural areas with IT & smart class rooms

Networking and marketing skills for trading Owners & Executives: Exposure, leadership & strategizing goals

Targeted training

Enriched Human capital competitive work force

Middle level managers: Expert knowledge of ICT applications

Quality training & regular assessment

Customized Indigenous technology development Clear distinction between diploma/certificate/ degree education Frontline Employee: Operating CNC, EDM, CAM, RFID etc

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Clustering and Network Research & development Employment Opportunities

Seam less connectivity

Knowledge Creation

Eco-friendly environment

Skill training

Institutions & universities

Training & Education

Clustering & Network

Interoperability

Regulatory policies Investment opportunities

Support infrastructure

Technology Transfer

Commercialization

Driver industry adopting support industries

Compliant procurement & vendor/customer management

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Opportunities Research & development in manufacturing & design

Low cost and high quality disruptive technologies

Efficient & renewable energy systems (Smart grid)

Talented and enterprising human pool

Emergence of new areas have cascading effect

Boundless free globalized market

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Advantages in India Pervasive manufacturing sector even in rural & remote areas Capabilities of the Indian IT industry

Emerging Sectors in India Drivers Of Change: 1.Disruptive Innovations 2.International Integration 3.Demographic Advantage

Government’s proclivity to boost Indian manufacturing

Skilled and Talented human capital India ranks as 6th most innovative country: by GE’s annual global innovation barometer in 2013

World class educational institutions like IITs & IIMs

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International Networks Market

Leveling quality, product benchmarking

Government

Meet credit & finance hurdles

Technology

Clean tech

Leverage analytics ICT, virtualization solutions

Sustainability: An inclusive business strategy

Promote diversity & inclusiveness

Reassess training , tools & requirement: ensure employment

Innovate faster than your competitors

Cleaner, faster & efficient production

Synchronize business models & geographic footprints

Taxation, legal & IPR framework

Innovations to mitigate risks by evolving trends

Energy Security: Nation’s concern

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India-German Bilateral Relation GERMANY

INDIA

High paced technology development Precision manufacturing, research & designing

Rich Human capital (demographic advantage)

Leader in automobile, pharmaceutical renewable energy

One of the leaders in IT sector

SYNERGY

Germany is the fourth largest economy

Emerging manufacturing & R&D activities

Advanced skill training system & world class education system

Diverse and distributed manufacturing MSMEs

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Potential Risks and Challenges JOINT RISK MANAGEMENT Dynamic & Robust Business Model and risk management protocols esp. cyber security International and National Industrial Networks Involvement of multiple stake holders: government, academia FDI & people Flexible and adaptable regulatory and legal structures, esp. Intellectual property Right (IPR)

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Implications Industries Growth of emerging industries

Supports growth of MSMEs

Energy intensive industries like machine tool, steel making, forging

Less financial obligations when supported by clean tech & inclusive production

Industrial Clusters

Encourages investment & technology transfer

Industrial networks

Flow of information, ideas, capital, people & products.

Competitive MSMEs

Building indigenous capabilities & technology R&D through cost effective realization of ideas, promotes innovation and export.

Automobile, pharmaceutical electronics industries promote new technologies

Induce a range of innovative ideas for entrepreneurial encouragement.

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Social HUMAN CAPITAL ENRICHMENT:

RURAL DEVELOPMENT:

HOLISTIC GROWTH:

Demographic advantage

Urbanization

High productivity

High standard of living

Skill Development

Technology & knowledge acquisition

International quality products

Leadership More employment

Higher Entrepreneurial spirit

Awareness Cluster: cascading effect

Low Income Disparity

Unleashing innovation potential Social security

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Economic INDIAN ECONOMY More investment: national & international Higher contribution towards GDP Higher productive output Hi tech cities Rural development Flexible & good governance

INTERNATIONAL RELATIONS ICT Connectivity: design, development, manufacturing & marketing.

HOLISTIC GROWTH Generation of knowledge Higher standard of living

Trade blocs

Higher investment & trading opportunities

Optimal Resource utilization treaties

Mobile & global talent market

Collaborative global institutions and nations

Rapid technology disruption

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Environmental CYBER PHYSICAL SYSTEMS: Cleaner & efficient production

POLLUTION CONTROL

SUSTAINABILITY

More modularity delivers less wastage

Clean tech parameters : Effects global Competitive ability

Sustainable logistics systems

Smart grid in cluster: eco-friendly environment

Modular & automated operation strategies

Managing waste & recycling

Data infrastructure: low redundancy & resource utilization

Innovation of Environment friendly materials & products

Energy management: revitalizing business operations Promote education for sustainability New pollution control & environment protection policies

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Recommendations Integration of rural based micro enterprises in mfg. value chain

INTERNATIONAL VALUE CREATION MANUFACTURING NETWORK

Strong data infrastructure Cyber Security & risk management

INTERNATIONAL

AMTCLUSTER CPS CHALLENGES SKILL ICT

VALUE

Robust regulatory international policies & FDI

OPPORTUNITIES

IMPACT

GOVERNMENT

MSMEs

Forward looking mechanism to cope with global dynamic market

INDUSTRIALIZATION

ANALYTICS

Fundamental Change in mentality: entrepreneurship & technical training

Overhauling the Logistic system essential to create impact in global supply chain

Clean tech competitiveness & resource optimization

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Blue print to upgrade Indian MSMEs Cloud based services

Innovative products

Cyber Physical Systems

Manufacturing Innovation Model for MSMEs Collaborated Organizations

Emerging Markets

Integrated production

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References • • • •

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www.ibef.org : Indian brand equity foundation http://indiabudget.nic.in/ub2014-15/bh/bh1.pdf : union budget 2014-15 http://www.ciiavantha.org/ : Avantha centre for competitiveness for SMEs. Annual Report 2012-13, Government of India, Ministry of Micro, small and Medium Enterprises. National Manufacturing Competitiveness Council, 2010 National manufacturing policy, 2011 FICCI Skill development Report of the working group on Micro, Small and Medium Enterprises Growth for 12th 5 year plan 2012 -2017, Government of India. Approach to 12th Plan, Accelerated Development of Transport Infrastructure, Planning Commission, Government of India. ‘Collaborative Ecosystem’ definitive for MSME success, Confederation of Indian Industry, 2013. Report of the Inter-ministerial Committee for Boosting Exports from MSME Sector, Ministry of Finance, Government of India. Problems and Prospects of Micro Small and Medium Enterprises (MSMEs) in India in the Era of Globalization