Software in Manufacturing

This article was written in response to launch of the Modern Manufacturing Fund which was announced two years ago. Whilst welcome news, I was concerned to discover that the fund explicitly excluded software. In response I prepared the following document for the department. Fortunately, the second round of the MMF included software.

Traditionally, manufacturing software refers to software that assists with the manufacturing process: horizontally across the value chain from design, supply chain management, production, distribution and logistics, marketing and sales, and vertically, from the plant floor to the enterprise (see Smiling curve in Figure below). This software can improve safety, productivity, agility, and resilience of the manufacturing process. It has not referred to the software that could assist with R&D, nor the software embodied in (or connected to) the manufactured product.¹

A few years ago, CSIRO mapped out the manufacturing software ecosystem and made several recommendations.² The challenge that manufacturers faced at the time (and still do) is the fragmentation and lack of interoperability of the various software platforms. Whilst standards, such as ISA-95 were developed for large global manufacturers,³ they have proved to be very difficult to scale down to the operation of an SME. With the advent of Industry 4.0 principals (connected, transparent and autonomy) and cloud services, many vendors have started to collaborate — for example with the recent partnership between SAP and Siemens.⁴

Traditional Software for Manufacturing

Traditional manufacturing software can be split into three main classes: software to manage the product (PLM), the process (MES) and the business (ERP). Within these classes there are some sub-components (the following references are from WikiPedia):

Product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from inception, through engineering design and fabrication, to service and disposal of manufactured products. PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise (example Siemens)

• Product data management (PDM)or Product information management (PIM) is the business function often within product lifecycle management (PLM) that is responsible for the management and publication of product data. The goals of product data management include ensuring all stakeholders share a common understanding, that confusion during the execution of the processes is minimized, and that the highest standards of quality controls are maintained.
• Computer-aided engineering (CAE) is the broad usage of computer software to aid in engineering analysis tasks. It includes finite element analysis (FEA), computational fluid dynamics (CFD), multibody dynamics (MBD), durability and optimization. It is included with computer-aided design (CAD) and computer-aided manufacturing (CAM) in the collective abbreviation “CAx” (example AutoCAD)

Manufacturing execution systems (MES) are computerized systems used in manufacturing to track and document the transformation of raw materials to finished goods. MES provides information that helps manufacturing decision makers understand how current conditions on the plant floor can be optimized to improve production output. MES works in real time to enable the control of multiple elements of the production process (e.g. inputs, personnel, machines and support services). (example GE production)

• Supervisory control and data acquisition (SCADA) is a control system architecture comprising computers, networked data communications and graphical user interfaces (GUI) for high-level process supervisory management, while also comprising other peripheral devices like programmable logic controllers (PLC) and discrete proportional-integral-derivative (PID) controllers to interface with process plant or machinery. (example Schneider Electric)

Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software — typically a suite of integrated applications — that an organization can use to collect, store, manage, and interpret data from many business activities (example SAP)

• Supply chain management (SCM) is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
• Customer relationship management (CRM) is a software package that allows a company to manage and analyse its own interactions with its past, current and potential customers. It uses data analysis about customers’ history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth (example Salesforce)

Whilst the cost of these software systems can range from hundreds to millions of dollars, the real cost is in the integration (customizing it to your company’s operation) and reconfiguring the software when there are changes (ask any Hospital!). What is currently happening in the market is that the lines that define the different software systems are becoming less clear: some MES can also be used as an ERP; some ERPs come bundled with a CRM etc. Thus, to save costs many SMEs only choose one system that more aligns with their operations. This choice can be sub-optimal. What is required is a union of all three systems.⁵

But even if we a have fully integrated PLM, ERP, and MES this does not mean that it is compatible with your supply chain, of your sales. This is a particular problem with the Defence and Medical supply chain — These industries are regulated and require strict compliance of standards with procurement. Gaining access to these supply chains can be prohibitively expensive — often the SME will require double indexes.

New Software for Manufacturing

At the two ends of Smiling Curve is software that is less formally identified with Manufacturing:

• Digital Innovation Technology (DIT) — this is software that supports R&D innovation process⁶ (i.e. Zoom, Miro), and collaborative — software that connects the researchers to the factory floor — and beyond) (i.e. Confluence and Jira).

• Digital Servitization Technology (DST) — this is software that supports digital servitization. It can be software that is embodied in the product, or software that is or connected to the product. This is facilitated by Industrial IOT software (i.e. Predix).

What is interesting is that we have two reports:

• CSIRO roadmap⁷ which states that the real value in manufacturing occurs at the two ends — R&D and servitization, and then
• AMGC plan⁸ which states that knowledge workers are 40% cheaper than the the US average in the aviation and med-tech sector.

So, Australia has a competitive advantage — we are cheaper in the tasks that create the most value.

Software embedded in the Manufactured Product

This issue is discussed in the NIST Report⁹

The value of embedded software represents a substantial and growing share of the value of many manufactured products, from pacemakers and washing machines to cars and airplanes. One recent article asserted that “a premium class car now … runs on 100 [million] lines of software code, “implying that a significant albeit uncertain share of the car’s value is created by coders in offices rather than assembly workers on a factory floor. .. When a manufacturer incorporates services or software from an external provider into its product, the value added and employment associated with those inputs may not be credited to the manufacturing sector even though the inputs are intrinsic to the manufactured good. When a manufacturer incorporates services or software from an external provider into its product, the value added and employment associated with those inputs may not be credited to the manufacturing sector even though the inputs are intrinsic to the manufactured good.

And reiterated in the AMGC report.¹⁰

Consider the following scenario. If I go a buy a small tractor from the US, and then a control box from Taiwan. I then spend the next year writing software that automates the tractor. What have I done? From the ABS point of view, I have performed a service for the tractor, but from my point of view, I have “manufactured” an “Autonomous Tractor” — see identify crisis. This situation gets more bizarre when the software is then licensed back to the OEM, which is then re-imported into Australia. So from a trade perspective, we have imported an advanced manufactured product — when in reality, the “advanced” part was done in Australia. Note, this is not a hypothetical situation and there are many examples of hidden innovation in Australia. This has a significant impact on the measurement of Australia’s economic complexity.

Due to R&D tax incentives, the role of software can be a contentious issue.¹¹ Which was highlighted by an interview with Mike Cannon-Brookes.¹²

Postscript

After this submission, I found an excellent report from NIST¹³ which maps out the software and standards ecosystem for manufacturing. Just like so many initiatives — there is nothing new under the sun, and it is just a matter of having the time and patience to discover these gems.

It is interesting to reflect that Emesent was selected as a site for the announcement as an advanced manufacturer, not because of their advanced manufacturing processes, but because their product (Hovermap) contains advanced software. Emesent do not manufacture drones, they manufacture the boxes that people can bolt onto their own drones. This was acknowledged by the Minister, with the quote “Emesent. It was formed in October of last year following about 10 years of research with the CSIRO. Since that time, they have become world leaders in autonomous drone technology.”

[1] Industry 4.0 Recommendation Report 2017 Strandards Australia. “It all comes back to the definition of ‘manufacturing’. What we end up exporting may not be a finished product, it may be a software package for a machine in another country.” — Jeff Connolly, CEO, Siemens Australia and New Zealand.

[2] Equipping Australian Manufacturing for the Information Age — CSIRO Discussion Paper. Sep 2014 Nico Adams, Laurent Lefort, Peter King, Leon Prentice, Kerry Taylor, Peter Kambouris

An initiative to enhance SME productivity through fit for purpose Information and Robotic technologies: The value of Lightweight Assistive Manufacturing Solutions, May 2013 Edgar Brea, Peter Kambouris, Alberto Elfes, Elliot Duff, Marcel Bick, Adrian Bonchis, Ashley Tews and Lydia Lopes

[3] ANSI/ISA-95 is an international standard from the International Society of Automation for developing an automated interface between enterprise and control systems. This standard has been developed for global manufacturers. It was developed to be applied in all industries, and in all sorts of processes, like batch processes, continuous and repetitive processes. The objectives of ISA-95 are to provide consistent terminology that is a foundation for supplier and manufacturer communications, provide consistent information models, and to provide consistent operations models which is a foundation for clarifying application functionality and how information is to be used.

[4] Siemens and SAP Join Forces to Accelerate Industrial Transformation

[5] PLM, ERP and MES: The holy trinity of manufacturing

[6] Think Play Do: Technology Innovation and Organization —2007 Mark Dodgson, David Gann and Amon Salter

[7] Advanced Manufacturing Roadmap — 2017 CSIRO

[8] Sector Competitiveness Plan— 2017 AMGC

[9] What is Manufacturing ? — 2017 NIST

[10] Advanced Manufacturing a new definition for a new era — 2019 AMGC

[11] New RDTI Guidance a Kick in the Teeth — Innovation AUS

[12] Atlassian a proud Ausssie manufacturer and exporter — 9Now at 6:40

[13] Current Standards Landscape for Smart Manufacturing Systems — 2016 NIST