ML Journal February 2022

ML Journal February 2022

CASE STUDY: Henkel Wins Mexico’s First Lighthouse Factory Status

Henkel has combined its cloud-based Digital Backbone, analytics, AI, Digital Twins, and a connected worker program to drive efficiency, customer satisfaction, and sustainability in its award-winning Mexican plant.    


Company Fact File

Name: Henkel
Sector: Chemicals & Consumer Goods
HQ location: Düsseldorf, Germany
Revenues: $21.8 billion (2020)
Employees: 53,000 Employees Worldwide
Web url: Henkel-northamerica.com

Henkel’s Laundry & Home Care division recently hit a M4.0 trifecta when an independent expert panel awarded its production facility in Toluca, Mexico, with an Advanced 4th Industrial Revolution Lighthouse designation from the World Economic Forum and McKinsey & Company. The company’s facilities in Düsseldorf, Germany, and Montornès del Vallès, Spain, had already achieved Lighthouse status in recognition of their leadership in using Manufacturing 4.0 technologies to transform their factories, value chains, and business models.

Henkel’s Toluca facility, the first in Mexico to achieve WEF Lighthouse status, is the company’s latest demonstration of how digitization can drive efficiency and sustainability in manufacturing, key goals for Henkel worldwide.

“Henkel wants to become a climate-positive company by 2040 and our Laundry & Home Care sites worldwide are making a significant contribution to this ambitious goal,” says Dr. Dirk Holbach, Chief Supply Chain Officer at Henkel Laundry & Home Care. “This third recognition by the World Economic Forum shows that we are pioneers in implementing advanced digital technologies in factories worldwide. It is a fantastic example of best practice in great teamwork and excellent collaboration.”

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“We learned that nothing is impossible if you have identified a need and have a team of people willing to fight for it, try, learn, pivot and adapt.”

 

 

Being a member of the Global Lighthouse Network is not just an honor for Henkel and the Laundry & Home Care team, it also helps to set the stage for more innovation, he says. “The network is a platform to develop and scale up innovations. Additionally, it creates opportunities for cross-company learning and collaboration in order to set new benchmarks for the global manufacturing community.”

Business Context:

Since Fritz Henkel started the company in 1876 making a laundry detergent based on sodium silicate, Henkel has grown into a global leader in its three business units: Adhesive Technologies, Laundry & Home Care; and Beauty Care. In 2020, Henkel reported sales of more than $21 billion (€19 billion) and operating profits of $2.95 billion (€2.6 billion). The hallmarks of Henkel’s corporate culture, exemplified across its 53,000 global workforce of passionate and highly diverse teams by a unified common purpose and shared values — including being a recognized leader in sustainability.

The Henkel Laundry & Home Care business unit’s product portfolio includes well-known laundry brands such as Snuggle, All and Purex, as well as other laundry detergents, laundry additives, hard surface cleaners, toilet and air care products, and insect control products.

A Standard Platform

 Henkel Laundry and Home Care Supply Chain has always taken great care to standardize its processes, e.g., in equipment OEMs, machine types, operating procedures and practices, and any standards (safety, quality, hygiene, etc.). “Before we started our digital transformation, we had already established a standardized installed base with defined automation interfaces and manufacturing setup,” says Johannes Holtbruegge, Senior Manager of International Digital Transformation at Henkel Laundry and Home Care.

“Keeping in mind that we operate globally with more than 30 factories that all follow the same standards, this setup would be significantly beneficial. We could start our transformation on a bigger global scale, let different factories pilot in different areas of the factory, validate our projects and savings, and then scale the solutions in a fast way to other locations as well,” he says. “That helped us to engage with a lot of people and to gain momentum and speed in the beginning of our transformation activities.”

Initially the program was connected to a significant investment in infrastructure, he adds. “We had to prepare connectivity with every individual point in the factory, we had to install centralized and decentralized computational power to serve the need of operators for real-time visualization.”

Shared Initiatives:

 Henkel transformed the Toluca facility, a 1970s site characterized by low-mix, high-volume production, into a WEF Lighthouse award-winning factory by building on the previous success of its Dusseldorf facility, named a Lighthouse facility in 2020, then solidified with its factory in Spain which achieved Lighthouse status in March 2021.

Because technology is constantly changing, Henkel had to pilot different setups and evaluate a lot of options, says Holtbruegge. “We are continuously observing the market for new technology to ensure that the decisions we have taken are still state of the art and we are always looking for opportunities to upgrade.”

Because Henkel’s company culture is highly innovative, people are ready to try new things and learn, he adds. “From a conceptual perspective, we didn’t have to convince a lot of colleagues regarding digital transformation; the culture was there. We consider a digital transformation project like any other investment project in growth or rationalization; it has to come with an attractive return on investment.

“Finding the most promising projects out of a portfolio of unknown projects could be considered the biggest challenge,” says Holtbruegge. “We had to start learning about new technologies on a small scale, with small investments and lot of support in order to decide whether a project could become attractive and whether we could calculate a business case. We had to stop some projects in an early stage as we found that the time was not right or the target benefits may be lower than expected. However, once we decided to trust a technology and to roll it out, these projects have always brought us the expected return.

“Part of this success is that we involve our people (our internal stakeholders) fully into these projects. Line operators are part of the scoping of projects. Lab technicians together with supervisors help us to find the next story in quality. This takes effort in the beginning of the project, as well as upskilling people. Still, it makes operators proud of what they can achieve together (the perspective of having a pilot to which they have contributed to rolled out globally). It also accelerates the actual implementation phase of the project later on.”

A Digital Ecosystem

The company has successfully integrated a variety of M4.0 innovative technologies in four main ways:

  1. The Digital Backbone. Among the M4.0 technological innovations the company implemented, beginning with the Dusseldorf facility, was the development of a unique cloud-based platform Henkel calls the Digital Backbone. This platform connects more than 30 production sites and six distribution centers around the world in real time, with the goal of improving customer service, operational efficiency, and sustainability as well as achieving double-digit cost and inventory reductions.
    “This digital ecosystem allows us to keep track of the constantly growing expectations of customers while continuing to develop more sustainable production processes. Our digital transformation journey started back in 2013 and since then we have been consistently leveraging digital in all our productions sites worldwide,” says Holbach. By connecting this Digital Backbone with IT-systems, the business unit is driving line efficiency through predictive maintenance and advanced technologies.
  2. Big Data Analytics and AI Algorithms. To further strengthen its digital ecosystem, Henkel Laundry & Home Care implemented AI algorithms previously developed for its Spanish Lighthouse plant. The goal is to prescribe actions to assure breakdown-free line operations using historic data.
    In the Toluca plant, Henkel is using AI algorithms and big data analytics to take a proactive, agile manufacturing approach to minimize the risks for out-of-stocks by using integrated data from cloud-computing platforms to identify volatility in consumer demand. Henkel can combine machine learning on historical data with AI algorithms to develop actions that will eliminate breakdowns in line operations, making it possible to create a tighter alignment between planning, production, and customer operations.
    Another innovation the company had successfully implemented in the Spanish plant was replacing forklifts with automated guided vehicles (AGVs) to enable a complete touchless and safe product flow in the facility. The fully automated vehicles improve occupational safety while simultaneously maintaining optimum stock levels for raw materials and products at the Spain factory. It also established a technology based on the digital platform that allows for smart product serialization, facilitating full track-and-trace capability from cradle to consumers.
  3. Digital Twin. To help the company achieve its goal to reduce its carbon footprint by 65% by 2025, Henkel is building on scalable digital ecosystems by digitizing energy-intensive processes, such as the spray drying of powder detergents. Henkel employs a Digital Twin, or cloud-based 3D replica of the facility, to simulate operations and prescribe optimal process parameters, as well as sustainability and safety actions, to operators. By using a Digital Twin, the company reduced the total waste in its Montornès del Vallès plant by 35%, and improved energy and water consumption in the double-digit range.The Toluca plant, which is one of the company’s five largest Laundry & Home Care production facilities worldwide, also entails using these spray-drying processes. By incorporating the improved, more energy-efficient processes into the Digital Twin, the company is further improving the sustainability performance of the Toluca factory, as well as its other spray-tower sites.
  4.  The Connected Worker program. Henkel uses its M4.0 digital ecosystem to support its front-line workers in their day-to-day operations as well. By providing real-time data access and standardized workflows through its Connected Worker program, the company can identify, monitor, and benchmark the practices that are most effective and most sustainable. As part of the program, the company implemented a mobile app-based platform to simplify and digitize shop floor processes. The app digitizes worker interactions and process documentation with dashboards, schedules, and action prescriptions, enabling operators and the shop floor to stay constantly connected and make decisions quickly. One result was the elimination of 70% of the paper used in the Montornès del Vallès facility since 2018.The connectivity on the shop floor, combined with the overall digital ecosystem, also enables the company to monitor operations remotely, as well as foster digital collaboration among teams.

Transformational Impact

Henkel’s Dusseldorf plant, in addition to being recognized as a leader in M4.0 innovation in 2020, has also recently been recognized as one of the WEF’s first Sustainability Lighthouses, the only one in FMCG and the only one located in Europe. Its use of Digital Twins to connect and benchmark 30 factories and drive real-time sustainability actions in the Dusseldorf plant has brought about a 38% reduction (kWh/ton) in energy consumption, a 28% (m3/ton) reduction in water consumption, and a 20% (kg/ton) reduction in waste generation, as compared to a factory baseline set in 2010.

As for the Toluca plant, the Digital Backbone has already resulted in a 6% reduction in inventory, while the digital dashboards to monitor OEE performance has brought about a 14% improvement. With AI-powered optical inspection, the plant lowered customer complaints by 55%, and the Digital Twin increased energy efficiency by 19%. OEE performance also was enhanced 3% through the use of digital tools to empower its connected workforce.

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Lessons Learned

 “We learned that nothing is impossible if you have identified a need and have a team of people willing to fight for it, try, learn, pivot and adapt,” says Holtbruegge. “Digital transformation cannot be a headquarters program. We have digital engineers in all our factories whose task it is to develop digital roadmaps for their factories, suggest improvements from the bottom up within our predefined technology framework, (and then lead the implementation locally. Empowerment is key to solving the challenges of day-to-day operations which, even though the factories are as standardized as possible, can be different from factory to factory.”

The company also learned to accept that not every project that it starts can be successful. “We improved our approach to be able to identify projects that have a low likelihood of becoming successful as fast as possible to be able to dedicate time to projects with a bigger impact,” he says.

“The possibility to globally scale solutions is extremely powerful and is key to success. Instead of building island solutions, we are proud of having a globally harmonized IT infrastructure with a global SAP instance that helps us also to benchmark internally and strive for big contributions to our business success.”

“During this process we confirmed the strength of this virtual network of factories and found more and more use cases that would be fitting to this approach.”

 Next Steps

 The company is integrating its solutions and systems with each other more and more, says Holtbruegge. “The clear target is the digital twin of our production process. An intelligent model that can predict status changes of our supply chain (from planning and manufacturing down to the entire logistics process) based on which scenario analysis becomes easily possible – to everybody in our organization. We are working on data democratization, giving people access to data and allowing them to build their own content which they require to make the best decisions for our company.”

He adds that the company’s transformational initiative made it more resilient, brought Henkel closer to its customers and consumers, allows it to observe the impact of decisions on KPI in real-time, and gives everybody in the supply chain a toolkit which they can utilize to make smart decisions faster and more efficient.

 A Global Virtual Network

“We started our transformational journey back in 2013 and we were not sure at that time what the result would be,” says Holtbruegge. “Our transformation started with the need to further support our sustainability ambitions going forward. Hence, we decided to implement a global data platform (instead of a decentralized approach) and to connect all our factories to our digital backbone, which is still the key infrastructural element of our transformation.

“During this process we confirmed the strength of this virtual network of factories and found more and more use cases that would be fitting to this approach. We started to build a digital transformation strategy around sensorics, analytics, visualization, and robotics which contains our key focus areas, and which still guides us today in our day-to-day work, the further development of our digital capabilities. We are learning every day as we continue this approach. We identified bottlenecks and we learned to react on them fast. We introduced digital upskilling opportunities for our employee base, focused on concrete projects we developed,” he says.

“We are happy and proud of what we have already achieved,” notes Holtbruegge, “but we will continue to work on our system every day to make it more impactful, smarter, and capable to onboard more functionalities over time.”  M

About the author:
Sue Pelletier
, a contributing editor with the Manufacturing Leadership Journal, is a seasoned writer/editor with experience in online, social media, e-newsletter, tablet app, book and e-book, and print publications..

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