In late 2021, the Manufacturing Leadership Council launched the Manufacturing in 2030 Project, a comprehensive examination of the factors that will influence the industry leading up to the year 2030 and beyond. The latest milestone in this sweeping project is the release of The Next Phase of Digital Evolution.
This groundbreaking white paper examines the global megatrends like population, the economy, sustainability demands, and technology development – all of which will impact business decisions and are essential for manufacturing competitiveness.
Data’s Growing Role: Data is perhaps manufacturing’s most important asset, tracking everything from individual machine performance to the status of global supply chains. Developments in digital systems for factories, high-powered industrial networks and advanced communication technologies are giving rise to the ability to collect data.
Combined with a rise in analytics capabilities, manufacturers are now able to apply that data in powerful ways to improve processes, speed innovation, find new business opportunities and ultimately create conditions for greater competitiveness.
A Rising Middle Class: Population trends will influence where manufacturers build new factories, who they hire, the products that they make, organization for supply chains and who they are selling to.
Africa and Asia are projected to have the strongest population growth, and while traditional middle-class markets in the U.S., Europe and Japan are expected to grow at only modest rates, 88% of the next billion entrants into the middle class will be from Africa.
What’s to Come: Manufacturers will also need to consider their role in creating sustainable business practices and how they will overcome persistent workforce challenges. Institutional investors are pressuring businesses to significantly improve environmental practices, while the already yawning gap in skilled workers is expected to skyrocket to 2.1 million unfilled openings by 2030.
Technology could have a role in solving both of those issues. On the sustainability front, data can be key to monitoring emissions, utility consumption and waste, while also giving rise to new processes that improve on those metrics. For the workforce, data can empower workers to make more informed decisions, automation can eliminate repetitive tasks, and technologies like augmented and virtual reality can enhance training and upskilling.
To learn more about these and other insights, download the full white paper here.
A word of caution about the Manufacturing Leadership Council’s plant tours: Attending one could make you rethink your manufacturing operations.
Inspiration abounds: The MLC, the digital transformation arm of the NAM, recently hosted a plant tour of Lincoln Electric’s headquarters in Cleveland. Inspired by the innovation on display, one attendee vowed “to go back to my own company and start asking what’s stopping us from implementing similar technologies and practices.”
- The two-day Lincoln Electric event included visits to the company’s welding and training center, its machine division, its 3D printing facility and its automation-solutions center.
- Tour participants also learned how the business is overcoming workforce shortages through culture and technology solutions.
What is Lincoln Electric? Lincoln Electric was founded in 1895 as an electric-motors manufacturer. Today it is a global industry leader in welding equipment and consumables, additive manufacturing and automation solutions. The company has locations in 19 countries and serves customers in more than 160.
Welding school: The first stop on the tour was Lincoln Electric’s world-class welding school, first opened in 1917 and relaunched in 2018 as the 130,000-square-foot Welding Technology & Training Center.
- Students at this state-of-the-art facility begin their training at virtual welding stations before moving to one of 150 training booths to use the real “arc.”
- Lincoln Electric also offers virtual classes, a turnkey curriculum for customers and “train the trainer” courses for welding instructors.
3D printing: Tour participants also got a look at the company’s Additive Solutions Center, the largest platform of its kind, which boasts 18 3D printing cells. It serves customers in the automotive, aerospace, marine and energy industries.
- The equipment prints replacement parts, molds, tooling and prototypes measuring up to eight feet long and weighing more than 8,000 pounds.
- It can print in a variety of metals, including mild steel, stainless steel, nickel alloys, bronze and Inconel.
Automation solutions: The Automation Solutions Center tour stop demonstrated Lincoln Electric’s twin answers to the manufacturing skills gap: innovation and tech solutions that increase productivity.
- The technology on offer includes automated arc welding products, collaborative robots, metal fabrication and assembly line solutions.
- Demand for Lincoln Electric’s collaborative robots is up as manufacturers cope with workforce shortages, tour participants learned.
High-performance culture: Tour attendees also learned about Lincoln Electric’s high-performance culture, which rewards success and provides employees with opportunities for growth and development.
- The company’s Incentive Management System for the production workforce includes output-based pay to maximize personal earnings potential, an annual profit-sharing bonus, a no-layoffs policy and an open-door policy.
- “I found the networking time to be highly valuable and came away with several ideas on employee retention,” said a tour participant.
Future focus: Looking ahead, Lincoln Electric leadership said the company’s core focus must and will be on its people—to continue to build a pipeline of talent and attract and develop the next generation of leaders.
The Journey to M4.0 Value
The manufacturing industry is at a pivotal point in its history.
Driven by market forces to become more agile, innovative, resilient, cost efficient, and sustainable, companies of all sizes are pursuing a future vision for business value enabled by digital technologies that will redefine the rules of competition, how work will be performed, how companies will be organized, and how leadership must lead.
We term this future state: Manufacturing 4.0.
Such a comprehensive enterprise-wide transformation requires a three-dimensional approach: mastering the challenges and opportunities of advanced digital tools and data; improving organizational structures and cultures; and developing new workforce talent and leadership skills.
While shaped by company size, sector, and level of digital maturity, all manufacturers share the need for a common set of key M4.0 competencies.
These enable them to drive value from digital investments in critical areas of business activity – from product design and innovation, to supply chains and customer relationships, to more eco-efficient manufacturing operations.
The Manufacturing Leadership Council’s new Critical Issues agenda for 2022/2023 is a specifically designed to help manufacturers align their thinking and best practices to deliver true business value from their journey to M4.0.
The MLC’s Critical Issues Process
The Manufacturing Leadership Council’s Critical Issues agenda, now in its 11th year, is the outcome of a unique, annual, member-driven process to identify the most urgent and important issues facing manufacturing companies in the year ahead. Refreshed every year, it is based on extensive consultation with over 3500 senior executives and associate members of the Manufacturing Leadership Council and Board of Governors.
The Critical Issues agenda establishes the Manufacturing Leadership Council’s strategic plan, and directly influences all major elements of the MLC’s research program, content focus, events, and services portfolio for the year ahead.
For more information contact: [email protected]
Two statements, from two people deeply immersed in the manufacturing sector, have been playing on loop in my head recently. The first was something said to me by Joe Chen, co-founder of one of our customers, Anduril Industries. He said that his company’s fundamental differentiator (and thus his most important KPI) is being faster to market than everybody else.
The second was an observation I read made by Paul Wellener, Vice Chairman and U.S. Industrial Products & Construction Leader at Deloitte LLP. Wellener, who also serves on the NAM Board of Directors, said, “The challenge is to really make manufacturing attractive to the next generation and to diverse populations.”
It’s hard to argue with either statement. Advances in manufacturing technology are driving dramatic acceleration in development, iteration, and production. And with supply chain problems causing drag on the entire sector, the ability to beat the competition for pace makes you far more likely to win.
Meanwhile it’s been well documented that the older part of the U.S. population is leaving work in droves. More than half of over-55s have quit the U.S. workforce, taking with them decades of knowledge and expertise and leaving a gap which must be filled by younger generations.
But those millennials, who will account for 75% of the workforce by 2025 according to some projections, have a level of choice in employment terms that we haven’t seen for decades. It’s a seller’s market and, with the U.S. manufacturing sector on track to have over two million unfilled jobs by 2030, the urgency behind Paul Wellener’s observation becomes clear.
So it is reasonable to conclude that success in manufacturing as we move forward will be heavily dependent on speed and agility, combined with the ability to attract and retain the best new talent from a pool of workers who are younger, and increasing in diversity of nationality in line with the population as a whole.
Studies suggest that technology has a crucial role to play. According to research from Comptia, 71% of millennials cite the degree to which an organization embraces technology and innovation as an influencing factor in their choice of an employer – a share of the cohort which is increasing each year. They want access to the best technology that will have the greatest impact on their skillsets.
In addition, the survey showed that 61% of millennials like to use their smartphone as part of their working life, compared to just 38% of boomers. Anecdotally, I see the same thing. They want to work as they live, with the same technology – and that means that the ways in which information is accessed, presented, and consumed must change.
Our own research into how product and process documentation is managed within the U.S. manufacturing sector revealed more generational differences in this area. We asked manufacturing professionals from middle management through to executive leadership whether they agreed that text-heavy documentation was challenging because of diverse reading skill levels and first languages. While 66% of those in the 45–54-year-old age group agreed, the number rose to 74% for those aged 35 to 44 and to 81% for those aged 25 to 34.
Where it gets interesting for me is the intersection between that need to beat competitors on time to market and the need to change how information is consumed (and to provide technology that engages and excites the workforce). The reality, of course, is that you are only as fast as your slowest process. And because effective communication of critical product and process information underpins every aspect of success, it has to be on the money.
Our survey suggests this is understood, with 75% of manufacturers reporting that they are actively trying to improve their communication processes, and 73% saying that communication is getting harder for them to manage as they grow. Most telling of all, 73% said they believe poor communication processes are undermining the investments they’ve made in other technology and process initiatives.
These issues are driving uptake of our interactive visual communication and collaboration platform, Canvas Envision because it provides that very step change in how information is delivered and consumed that chimes with the learning styles of the new generation workforce.
The challenges are not going away, but fortunately there is a solution.
About the author:
Patricia Hume is Chief Executive Officer of Canvas GFX.
Lincoln Electric has a long and storied history since its 1895 founding in Cleveland, Ohio, as a manufacturer of electric motors. Today, it is a global industry leader in welding equipment and consumables, additive manufacturing, and automation solutions, and has expanded across 19 countries worldwide and serves customers in over 160. But how does Lincoln keep a connection with its origins through a continued spirit of innovation and learning?
Lincoln Electric first opened its welding school in 1917 and a century later launched its state-of-the-art Welding Technology & Training Center, in 2018. This 130,000-square foot facility includes training stations for virtual welding, where all students start their introduction to welding, and more than 150 training booths for learning on the real ‘arc’. There are classrooms to accommodate both live and online instruction.
Lincoln Electric’s welding training is given to its new employees and external welding students. In addition, Lincoln also offers both turnkey and custom welding training curriculums and courses for customers to help them upskill their professional welders to achieve specific business targets and goals. They also offer a “train the trainer” course for welding instructors to ensure today’s students are getting the most up-to-date instruction to be industry-ready.
MLC members were given a first-hand look at Lincoln Electric’s headquarters in Cleveland at a recent plant tour that included visits to the welding training center in addition to the company’s machine division, where it builds welding equipment and consumables, as well as its large-scale additive business (3D printing) and their automation solutions.
Lincoln Electric is proud to have a high-performance culture that recognizes and rewards success and provides employees with opportunities for growth and development. The company’s Incentive Management System (IMS) for the production workforce includes piece work pay to maximize personal earnings potential, an annual profit-sharing bonus, a no-layoff policy, and an open-door policy including an employee-represented advisory board, who regularly meet with management to discuss various HR and operational matters. The IMS has been studied by the Harvard Business School and is one of the school’s top-selling case studies.
Lincoln Electric’s state-of-the-art, large-scale metal 3D printing solution is an extension of its automation, software development and metallurgical expertise, which has been applied to an additive process. The company’s additive solutions center is the largest platform of its kind globally with 18 3D printing cells which are used primarily to print replacement parts, molds, tooling and prototypes that measure up to eight feet in length and weigh more than 8,000 pounds – and are printed in a variety of metals including mild steel, stainless steel, nickel alloys, bronze, and Inconel. The solution serves a variety of industries including automotive, aerospace, marine, and energy. Customers provide Lincoln with CAD files or their parts and functional requirements and can expect finished parts in weeks versus months when using traditional castings or forging.
The tour stop in the Automation Solutions Center demonstrated Lincoln Electric’s portfolio of automation solutions that are aimed at increasing productivity and addressing the industry’s skills gap. The technology offered includes automated arc welding products, collaborative robots, metal fabrication, and assembly line solutions. The company has seen increased demand for its collaborative robot solutions in particular as manufacturers attempt to shore up their workforce shortages.
So what lies ahead as Lincoln Electric’s biggest challenge? Like most manufacturers, company leadership says that the core focus must be on people – to continue to build a pipeline of talent and attract, develop, and grow the next generation of leaders.
Additionally, Lincoln will focus on expanding its additive manufacturing and automation businesses in line with current trends and demand from customers in a variety of industries. But the company also intends to keep a focus on having a robust product portfolio that feeds into its bread and butter: a comprehensive and vertically integrated welding business, recognized around the world.
How manufacturers can bolster resilience through operational technology cybersecurity
Over the last few years, cyber attacks on manufacturing plants and public infrastructure have grown more severe and had a greater impact on the public. Recent incidents in critical infrastructure organizations highlight the evolving threats these operational environments face.
With the rise of M4.0 and growing dependency on data, manufacturers must transform their thinking about cybersecurity for operational technology (OT). While quick fixes or ad hoc policies might beckon, the long-term strategy should be to build a resilient organization to battle current and future threats.
Typical Cybersecurity Challenges
While difficulties securing manufacturing facility environments stem from several factors, loose governance is one of the prime culprits. Many times, roles and responsibilities for cybersecurity in a plant are not well defined. The automation engineer has many operational responsibilities, but sometimes cybersecurity is an afterthought and assigned as a hobby task. To make matters worse, relationships between other people or groups within the facility or enterprise aren’t formalized, leading to a vulnerability if an emergency should arise.
Limited expertise also poses a challenge. The idea of OT cybersecurity has only been around for about 15 years, and not many people have experience across M4.0, automation, and cybersecurity, resulting in a dearth of qualified OT cybersecurity resources. It takes a special combination of skill sets — from industrial control equipment and software to proprietary network protocols — and a fundamental understanding of the threats facing the OT space.
At the same time, threats continue to evolve. Since Stuxnet in 2010, threats to OT have increased exponentially, both in targeted attacks against infrastructure and collateral damage from ransomware. This escalation underscores the need for a resilient, strategic, and holistic approach to OT cybersecurity rather than an ad hoc, quick-fix approach.
“Since Stuxnet in 2010, threats to OT have increased exponentially.”
Organizations also often lack risk visibility. Many manufacturing facilities have a surfeit of data on production, raw material usage, energy consumption, and quality of product. One area of great need is an understanding of the risk associated with this data.
First, the infrastructure of the OT must be inventoried and managed in a way that facilitates a quick response to cyber events. If a vulnerability is located in a certain programmable logic controller (PLC), it could more easily be mitigated if the plant engineers know the location of the PLCs, the version of software and firmware, and the correct patch to install. Many factories do not have this inventory in an organized and secure location that can be quickly accessed by the appropriate personnel.
Second, the data moving between devices on the plant floor is a treasure trove of information concerning normal operation versus anomalous and potentially dangerous communication. Tools are available to view this data flow between devices and discern the risk to operations.
Finally, the fundamental difference between IT and OT cybersecurity processes precludes the ability to use tools meant for IT on OT devices, systems, and networks. These differences need to be understood at the enterprise level so that an OT cybersecurity program can be effective. Typical differences that can cause catastrophic production failures include nontraditional operating systems and applications; 24/7 operational requirements (100% availability needs); and primary directives on human safety. According to a study by TrapX Security, only 41% of responding organizations have a dedicated security team to secure their operational technology, while 32% of respondents rely on their IT teams to defend their OT platforms against cyber threats.
Creating a Transformational OT Cybersecurity Program
To address the challenges of OT cybersecurity, enterprises must look at the problem holistically. The path to a resilient program starts with understanding the business risk to the enterprise from unsecured OT environments. The following steps outline how to start and what is required:
1. Understand the business risk.
An OT assessment is a critical starting point for any organization to gain insight into the current state of its OT environment, including control system risks and vulnerabilities. This phase should answer five key questions:
1. What is in my production environment?
2. What is important to my organization?
3. What is my current cyber posture?
4. How can I reduce risk now?
5. How do we establish a continuous risk reduction approach that makes sense to the organization?
Many times, organizations lack a clear picture of what is in their environment and the associated business risks. It’s important to get a firm grasp of the devices, software, and network architecture to achieve a baseline that can be used to build a road map of needed improvements. At this stage, the organization should deploy a tool or process that analyzes qualitative and quantitative data to identify specific risks that pose the most significant risk to the business.
“The fundamental difference between IT and OT cybersecurity processes precludes the ability to use tools meant for IT on OT devices, systems and networks.”
An asset inventory with asset categorizations can be developed at the same time. These categorizations enable risks to be scored appropriately. For example, a PLC with many vulnerabilities that is used for a low-priority task will be scored low in priority, but a PLC with only one vulnerability on a critical task would be scored high. These insights are key to the development of a tailored OT security program that is in line with the organization’s risk tolerance and strategy to identify the most significant risks to the business.
At that point, it’s time to close foundational gaps. Once a baseline of current conditions is established, anything that is critical can be corrected quickly. The assessment of the environment will also reveal high-risk vulnerabilities that may require a longer term perspective to fix. These high-risk targets can be addressed in the road map.
2. Align the cyber risk to the business mission and develop a governance structure and road map.
While it’s tempting to stay on the path of fixing high-risk problems, the more resilient approach is to address the foundations of any OT cybersecurity program. This is the next step to transforming how cyber risk is managed. Once you gain visibility and stabilize the environment, it’s time to focus on building the program’s foundation to further reduce risk.
This requires aligning governance to an OT cybersecurity standard such as NIST or NEMA. Also, organizations need to define an OT cyber program future state, strategy, and road map to reduce risk, optimize investments in digital transformation, and align with enterprise risk appetite.
It’s also necessary to define roles and responsibilities by formalizing and socializing a governance model for the ongoing oversight of OT risk management, as well as a set of clear roles and responsibilities that will support the ongoing operation and sustainability of the OT cyber program.
In addition, action must be taken to establish cybersecurity compliance with known regulations (if required).
“The path to a resilient program starts with understanding the business risk to the enterprise from unsecured OT environments.”
An awareness and training program also should be created. To do so, use an existing safety culture and augment it with OT cybersecurity awareness, techniques, tools, and policy education. This is one of the easier programs to build since many times the safety education structure is already in place.
3. Institute a program of continuous improvement.
Establishing an OT cybersecurity program is the start of an ongoing practice of continuous improvement. Bad actors are not static; their methods, tools and motivation change daily. It’s important to always redefine the protections in place and constantly monitor for new threats.
One key activity for continuous improvement is to establish transformation measurements. A measurement program should distill control-level requirements into simple-to-understand measures of maturity, and progress should consistently be reported to senior leadership. Use this metrics program to tell your success story.
Organizations also should deploy mitigation tools and policy as per the road map. Execute your implementation plans with the support of a diverse team of professionals versed in operational technology, production processes, cyber, change management, supply chain, process design, and risk management. This may require outside resources.
Another vital step is to enhance the threat response. Enhanced monitoring controls will improve your ability to respond to cyber incidents that impact production. You should define custom alerts and build out OT-specific response playbooks for your Security Operation Center (SOC) analysts, as well as prepare and practice for OT cyber incidents. A critical component of any threat response program is to establish a recovery plan. After experiencing a significant disruption (e.g., ransomware attack), your production line should return to normal operations as quickly as possible. Strategies for establishing a viable recovery plan must include creating a baseline state including asset inventory, known good network connection state and a method to confirm that a return-to-normal condition is restored.
“Establishing an OT cybersecurity program is the start of an ongoing practice of continuous improvement.”
Finally, it’s critical to visualize your OT risk in real time. Create an OT Security Operation Center or align your existing IT SOC with your business mission and objectives to provide real-time visibility into business risks, personnel safety, environmental safety, quality, customer orders, and trade secret protection. For advanced organizations, use real-time risk data for improved decision-making to move beyond threat response to proactive risk management with an OT Risk Operations Center.
M4.0 Challenges Require IT and OT Realignment
Digital transformations with M4.0 drive innovative changes in how organizations leverage technology to gain insights and capture market opportunity. Some of the most significant change to OT environments is being driven by automation and artificial intelligence (AI) to improve reliability, performance, productivity, and safety.
Cyber is an often overlooked, yet critical component in the digital transformation of operational technologies and must be addressed for an organization to fully realize the benefits of its investment. Overlooking cybersecurity, in the new world of M4.0, introduces unneeded risk to the finances of an organization. Companies should consider the methods outlined in this article as a path to lower the risk to the plants and thereby help protect revenue and profits.
It’s important for OT cybersecurity metrics to be integrated with other key components in any M4.0 environment. By transforming OT cybersecurity defenses into a holistic program, companies will protect valuable M4.0 data, realize safer working conditions, and secure production quality and brand protection. M
About the author:
Douglas Clifton is a Managing Director in Ernst & Young LLP’s National Cyber Security group based out of Dallas, Texas.
Ken Keiser is a Manager in the Consultant Services at EY and a practice lead for Operational Technology (OT) Cybersecurity.
More companies are taking a disciplined approach to the growing threat of cyber attacks, according to a new cybersecurity survey from the Manufacturing Leadership Council. The MLC is the digital transformation arm of the NAM.
- The survey, which included input from 160 companies, indicates a dramatic change in how seriously manufacturers consider cyber threats compared to 2018, when the MLC last conducted the same survey.
Who’s prepared: Nearly 62% of manufacturing companies say they have a formal cybersecurity plan in place, according to the survey.
- That’s up from 2018, when barely 33% of manufacturers indicated they had devised and adopted formal cybersecurity plans that encompassed their plant floors.
- Nearly 40% of respondents said they had a high level of confidence in their internal cyber expertise, compared with just 25% who expressed such certainty in 2018.
More attacks expected: Yet even as better cybersecurity strategies are put in place, nearly 79% of survey respondents said they expect more attacks in the next year.
- That figure is up from 64% in 2018.
- The most frequently cited reasons for this prediction are increased levels of cyber crime and cyber terrorism and greater connectivity in manufacturers’ operations.
The effects on digital transformation: More than half the survey respondents expressed concern that cybersecurity issues could affect the speed and scope of digital transformation.
- 14% said cybersecurity could be a major obstacle in the next five years, with another 40% describing it as “an issue of concern.”
- Close to half—43%—said they consider cyber a part of doing business in a digitally transformed world.
Proactive measures: More manufacturers are taking advantage of publicly available safeguards, such as the NIST Cybersecurity Framework, to underpin their strategies.
- Nearly 58% of respondents said they have adopted the NIST framework, up from 48% in 2018.
- 45% said they have cyber insurance, compared to the 18% that said they had it in 2018.
The coming challenge: In the past four years, manufacturers have made significant strides to combat the growing problem of cyber attacks against the industry.
- However, manufacturers will need to stay a step ahead of cyber criminals as the number and sophistication of attacks increases.
See the survey: Review the survey findings for an in-depth look at how manufacturing leaders are thinking about cybersecurity in manufacturing’s digital era.
Get help: NAM Cyber Cover was designed specifically to provide enhanced risk mitigation and protection for manufacturers and their supply chains. Find out more at www.namcybercover.com.
High-performing projects and world-class leaders were honored at the first in-person awards gala to take place in three years.
After two years of being reimagined as an online event, there was some extra excitement in the air as the Manufacturing Leadership Awards Gala made its return as an in-person event. It was a fitting celebration in a year that saw a record number of nominations, producing the biggest-ever cohort of winners.
Listed below are the top award winners that were revealed at the gala. The complete list of 2022 winners is here. The 2023 Manufacturing Leadership Awards season will open on August 15.
Manufacturers of the Year
- Small/Medium Enterprise
- Large Enterprise
- Manufacturing Leader of the Year
Dr. Albert Bourla, CEO, Pfizer
- AI and Machine Learning
Anheuser-Busch InBev – Utilities Consumption Reduction with AI Engine (SORBA)
- Collaborative Ecosystems
Protolabs – A Digital Thread for a Full-Solution Provider
- Digital Network Connectivity
Anheuser-Busch InBev – Structured Analysis of Downtime and Asset Performance Management Tool (AODS)
- Digital Supply Chains
Dow Inc. – Global Trade Facilitation Program
- Engineering and Production Technology
General Motors – Factory ZERO: GM’s Launchpad to an All-Electric Future
- Enterprise Integration and Technology
Flex – Facilitating the Production of the World’s Most Complex Product with the Evolution of a Smart Factory. (tie)
Johnson & Johnson – Johnson & Johnson Supply Chain SMART Factory
- Operational Excellence
Anheuser-Busch InBev – AI Digital Workforce and Knowledge Share Platform (Acadia + DeepHow)
- Sustainability and the Circular Economy
AUO Corporation – Meet the Water Drop for 27 Times in AUO
- Transformational Cultures
ALOM Technologies – ALOM DOING Initiative Elevates Company as Employer of Choice
- Editor’s Choice Award
Flex – The LISA Line-Stop Assistant
COPYRIGHT: National Assoc. of Manufacturers
About the author:
Penelope Brown is the Senior Content Director for the Manufacturing Leadership Council.
Multiple ML award winner AB InBev is harnessing the power of technology to create a future with more cheers, says Global VP Marcelo Ribeiro.
“Manufacturing needs to create an ecosystem for the future where we can all learn from each other.”
Marcelo Ribeiro, Global Vice President, Engineering and Operations, AB InBev.
Anheuser Busch InBev (AB InBev), the world’s leading brewer, swept the boards at the recent 2022 Manufacturing Leadership Awards Gala with three individual Project awards, three High Achiever awards, and the ultimate accolade of the 2022 Manufacturer of the Year-Large Enterprise award.
AB InBev was formed in 2008 by the merger of Belgian/Brazilian brewing company InBev and US-based Anheuser-Busch, later adding South African company SABMiller in 2016. It now produces around 500+ local beer brands available worldwide, with revenues of more than $54 billion in 2021, and is supported by 169,000 employees in over 50 countries.
In our latest Dialogue with a manufacturing industry thought leader, AB InBev’s Global Vice President of Engineering and Operations, Marcelo Ribeiro, talks to Manufacturing Leadership Council Executive Editor Paul Tate about harnessing advanced digital tools to empower front line teams, making data accessible to help solve key business problems and drive new ideas, and creating an industrial ecosystem to drive resiliency and sustainability in the years ahead.
Q: What’s the scope of your role as Global Vice President at AB InBev?
A: It’s really a dual role. One is to define our strategy, including Manufacturing 4.0 priorities, in both operations and engineering so we have a unified approach across all our regions – from glass bottles and cans, to labels, malt, and beers. The other is to identify best practices and what works best, and then to make sure that we incorporate those best practices into the overall management system with ensuring they are successfully shared across all our markets.
“Our goal is to bring all of our operations to a level of world class performance and achieve operational excellence by addressing both the challenges of today, and to prepare ourselves for the future.”
Our goal is to bring all of our operations to a level of world class performance and achieve operational excellence by addressing both the challenges of today, and to prepare ourselves for the future. And that future is coming at us more rapidly than it used to, so we need to harness the potential of those new 4.0 technologies through continuous improvement and try to bring that future into the present. The key focus there is to ensure we have the skills and the empowered autonomous front-line teams to do that, because it’s those front-line teams who will ultimately drive the success of the company into the future with sustainable and reliable operations.
Q: What are the key trends driving AB InBev’s business transformation today?
A: We have a dream at ABI which is “to create a future with more cheers”. Within that dream we have a clear strategy to lead and grow the category, to digitize and monetize our ecosystem, and to optimize our business. This means we are developing and delivering products that reach consumers on more occasions. That requires flexibility, and not only operational excellence, but also innovative thinking to develop new products at the pace that consumers want. So, we are digitizing our sales more and more – today, 55% of our revenues are now made through digital platforms. We have built quite a considerable amount of data about changing consumer behavior and preferences and the varieties of products people want so we are using those insights to prepare our supply chain to deliver on those changing needs.
The COVID-19 is an example of a very rapid mix of changes. On-premise outlets, like restaurants and bars, were closed and consumption moved to the home, which required very different approaches to packaging and delivery. E-commerce became much more prevalent as well, so we had to make sure the supply chain could adapt quickly and find new ways of increasing capacity without compromising safety, quality, and sustainability for the company.
So today, as we continue to optimize the business and focus more on organic growth, we have learned a lot about optimizing the interjection point between superior operational performance and leveraging digital transformation. In many ways, it’s the consumer that drives that transformation because the supply chain and operations need new tools and solutions to be able to adapt quickly and be prepared to fulfil that changing demand.
Q: What does winning these prestigious 2022 Manufacturing Leadership Awards mean to you and AB InBev?
A: It is huge. We are very honored and proud of all the people who contributed to these award-winning projects. These tools are now in use in all of our operating markets. It’s an important recognition of all the teams involved and their hard work in using technology to solve customer and consumer problems, to make our products better, our environment safer, and improve our operational performance. What we’re really interested in, of course, are the kinds of benefits we have seen in all three projects and what those benefits will be in the years to come. Their achievements are all likely to be important to the future of AB InBev. So, these awards are one more incentive for us to continue to work on transforming the business by collaborating with each other – with vendors, with suppliers, and among ourselves inside the company – to continue to drive our dream to deliver world class performance in every single operation we have.
“We have a clear strategy to lead and grow the category, to digitize and monetize our ecosystem, and to optimize our business.”
Q: Can you explain a little more about the three main projects involved?
A: The first one is in the AI and Machine Learning category. This is the SORBA project designed to reduce fuel waste in overused assets like air compressors and boilers. We wanted to incrementally improve energy consumption using real-time AI industrial optimization techniques and to develop a platform that could be shareable between breweries. We started a pilot a few years back but decided to find a partner who could develop an AI and machine learning solution that was more agnostic. We had tried several solutions but found them hard to scale with the same success from one site, to two, or three sites. So, we were looking for a platform to use with an algorithm that was more independent of the specific environment that we were working on, like the type of data we had or the installation on different machines and so on. That’s what we found with SORBA. It’s easy to use and could be tailored to the business need.
Today it is more than an individual energy solution. Initially we were focusing on steam, heat, and energy, but now the same platform is being leveraged in other parts of the business for things like quality purposes and the consumption of water. We’re also testing it for efficiency, like OEE validation. And it is already driving a massive benefit in terms of energy fluids. But we’re only just getting started as we are looking to extend it to more sites. And our teams who are using it are now coming up with new business cases because it’s easy to use and not so complex to set up the model, so we don’t have to tailor and customize a complete solution every time.
Q: The second award winning project is AODS in the Digital Networks and Connectivity Category. How is that helping the company?
A: This tool really allows us to compare our maintenance plans and activities across all of our operations. It’s a centralized downtime tracking and monitoring tool for brewing, packaging, and utilities operations and it can identify critical machines and connect equipment performance with a set of indicators to prescribe necessary actions and improve both line and performance results.
The goal is 100% reliability and optimized operations for all equipment and processes at all of our global facilities. This tool allows us to leverage the information we have in our Standard Operating Procedure (SOP), plus operational performance data that we have in other systems. Now we are we adding more operational data into the tool as well, more maintenance information, even spare parts, and so on. So, it’s becoming a great collaborative tool to help us benchmark and find best practices across our operations, especially when you have similar machines or similar conditions.
“We have defined three key aspects of digital technology that we are working on. One is the democratization of data to make sure it is easily available to the front line.”
We are now expanding this to other areas of the company and I’m confident the more data we put in, the more we can leverage the analytics to give us additional value and multiply the benefits we are seeing today.
Q: And the third project, using the ACADIA and Deep How tools in the Operational Excellence category?
A: These are tools to help empower front-line teams. Acadia automates our SOP in a digital way, replacing paper and PDFs with a more modern experience with short videos. We combined this with the AI powered Deep How tool which makes it much easier create and edit those videos and also has the capability to add subtitles and voice translation in multiple languages, so you can easily switch from Chinese to Portuguese, for example. This is important with multiple sites around the world and a global workforce.
What we are building here is another shareable knowledge platform across the company. It solves many problems on the training side, helps people learn faster, and accelerates the pace of sharing across the globe to accelerate our performance gains. And although it began with SOPs, we are now adding best practices and other kinds of training so every time we find a good solution, we can update the procedures. It’s a great enabler to help empower the front-line teams and improve decision making across all our production sites
Q: When you look back at these projects, what have you learned about digital transformation along the way?
A: Clearly, the technology does not define the solution. If you have a problem, then you can leverage technology to find the right solution. But it’s not about doing technology for technology’s sake and then trying to find a problem to solve. All three projects were either solving a business issue or helping us seize a business opportunity. And all of them have delivered clear tangible benefits for the company, whether it’s in financial performance or the number of people they reach. I believe the participation of the frontline teams in their development was key to making them successful. Those teams become part of the solution, identify with it, and have a strong sense of ownership. Finally, you need to have good metrics to help you know when to scale. Not everything you try to explore is going to be a success, but if you have good metrics and goals from the beginning it helps you to identify whether a pilot is a success or not, or whether you could improve the new tools more to bring more value at scale.
“We also need to be more modular, more flexible, with systems that can be more easily tailored to the needs of specific businesses so we can be more agile in the future.”
Q: These are challenging times, though. What challenges still keep you awake at night?
A: We’re not short of challenges today with today’s dynamic operating environment. The safety of our people is always our priority. Despite the challenges, we remain focused on creatively using technology to find solutions that can help us to continue to grow, to continue to invest, and to continue to drive towards world class performance. And we want to do so while advancing our sustainability goals and our purpose to create a future with more cheers.
Q: Looking ahead, what would you highlight as the greatest business challenges and opportunities for the manufacturing industry over the next five years?
A: One thing we have learned in recent years is that the future is becoming less predictable. We need to prepare for that, so we have to build a more resilient supply chain, and a more flexible supply chain. I think that’s the biggest business challenge for the industry going forward and using technology as an enabler to help solve new problems. So, we need to increase collaboration with everyone across the ecosystem – suppliers, partners, vendors, universities, associations like the MLC, and so on – to achieve that resiliency and sustainability. We used to have a very transactional relationship with vendors and suppliers and we are now changing that to be more partners, sharing more, and opening our doors.
For example, to meet our sustainability goals, and for every company’s sustainability goals, we have to look at Scope 1, 2, and 3 requirements which means the scope goes beyond out operations and across the entire supply chain. We recognise that we need to collaborate with our suppliers and distributors along that chain, to be able to meet our ambition to achieve net zero by 2040 across our value chain. We need to work together and share more good solutions. We need to use systems that talk to each other end-to-end across the supply chain, so we have more visibility on supplier operations, and we give them more visibility on our front-line operations, production planning, and so on. Manufacturing needs to create an ecosystem in the future where we can learn from each other. And we have to actually enable that to happen as becoming more resilient will require building a collaborative ecosystem.
Q: What are the priorities for your own digital strategy to meet those future challenges?
A: We have defined three key aspects of digital technology that we are working on. One is the making the data more accessible and easily available to the front line. That may sound like an easy thing, but in a large company like ours, with a very diverse footprint, with different operations and different ages of equipment, it’s not a simple thing to do. So, we need to standardize that data from anywhere in the world, whether it is coming from China or Brazil, so we can see all that information in the same way.
“All three projects were either solving a business issue or helping us seize a business opportunity.”
That will allow us to use a more modular execution system. We used to have a very monolithic system, which was hard to adapt and implement. Now we need to be more modular, more flexible, with systems that can be more easily tailored to the needs of specific businesses so we can be more agile in the future.
The third layer is advanced analytics. So, we want to be able to use all the data we have from the first level, contextualize it in a more modular execution system, then apply all the different levels of analytics tools we have, from BI to AI and machine learning to digital twins.
Those are the three aspects that we believe will help make a real difference in the future.
Q: What new leadership skills do you feel that senior industry executives now need to successfully drive that continuing digital transformation?
A: It is critical to empower the front line. Leaders should be focused on providing the resources to allow people to do the work and achieve excellence themselves. Leaders also have to be mindful of a culture of collaboration and inclusive environment that stretches both inside and outside the company. They should also have active listening and communicating skills to understand and help resolve challenges.
In the end, people are key for any business transformation. They are the ones who make the technology work, who adopt the new digital tools, and who find the right problems to address. People make or break digital transformation programs. To move from a traditional, operational approach to more people-empowered collaborative decision making we need more knowledge, more information, and we need to put that knowledge into people’s hands so they can apply it to create a better decision-making process. Today, knowledge is more important than ever. We have to have the knowledge and the skilled people who can use it to drive our transformation. Technology is also evolving very fast and nothing can be taken for granted. So, that requires new leadership skills where leaders must be able to really listen to their teams and understand the potential or limitations of different technologies so we can find the right ways to succeed with any implementation.
Q: Finally, if you had to focus on one thing as a watchword or catchphrase for the future of manufacturing, what would that be?
A: I’ll use our company purpose: “The dream big to create a future with more cheers”. When we have a more collaborative ecosystem that shares learnings and best practices, and when we have more inclusive, sustainable environments across the industry, then we really will have a brighter future for everyone, our employees, our customers, our suppliers, our shareholders, and so on. And technology plays an important role in helping us to get there. M
FACT FILE: Anheuser-Busch InBev
HQ: Leuven, Belgium
Industry Sector: Consumer Goods
Revenues: $54.30 Billion (2021)
Net Earnings: $13.82 Billion (2021)
Employees: 169,000 Employees
Presence: Operations in 50 Countries
Production Sites: 200 Breweries + 40 Vertical Facilities
EXECUTIVE PROFILE: Marcelo Ribeiro
Title: Global Vice President, Engineering and Operations, Anheuser-Busch InBev
Education: BSc Mechanical Engineering, Universidade de São Paulo, Brazil; MBA, Universidade Luterana do
Brasil-Canoas RS, Brazil; Accelerated Leadership, INSEAD, Paris, France.
Languages: Portuguese, English, German, Spanish
Previous Roles Include:
– Global Vice President, Engineering, Anheuser-Busch InBev
– Zone Brewery Support, North America Region, Anheuser-Busch InBev
– Global Packaging Director, Anheuser-Busch InBev
– APAC Zone Brewery Support, Anheuser-Busch InBev
– People Supply Director – Canada, Anheuser-Busch InBev
– VPO Implementation Manager, Montreal & London, Anheuser-Busch InBev
– Plant Manager – AmBev
– Corporate Manager, Manufacturing Projects Leader, AmBev,
– Project Manager, Fichtner Consulting Engineers
Other Industry Roles/Awards/Board Memberships
– 2022 Manufacturer of the Year – Large Enterprise, Manufacturing Leadership Awards MLC/NAM
About the author:
Paul Tate is Co-founding Executive Editor and Senior Content Director of the NAM’s. Manufacturing Leadership Council.
The good news from MLC’s new cybersecurity survey is that more manufacturers than ever before — 62% in fact, according to the study — have put in place formal cyber plans and strategies to defend their companies against increasing numbers of cyber attacks.
That’s a big and welcome change from just four years ago when just slightly more than one-third had such plans in place. And there was even more good news from the new survey: manufacturers are also growing their internal cyber competencies, providing more cyber training to employees, and even availing themselves of such measures as cyber insurance.
The one area, however, that is still cause for some concern is at the organizational level. When asked who is in charge of cybersecurity efforts, again this year the picture that was painted was one of diffused, or scattered, responsibility. Half of survey respondents indicated that their head of corporate IT is in charge of cyber in their companies. Another 28% said it was their Chief Information Security Officer, 25% said it is a dedicated IT/OT team, and another 17% indicated it is their head of manufacturing. Only 15% of this year’s survey respondents said they have a dedicated Chief Cyber Security Officer (respondents were instructed to answer the question by checking all that applies).
Even allowing for different size, complexity, and culture, organizational responsibility for cybersecurity has long been slippery in manufacturing companies. This is due, in part, to the technical nature of cyber, including whether IT or OT systems are involved, as well as the relative newness of the discipline itself.
In some ways, the current situation reminds me of the debate in the 1980s with the then-new role of the Chief Information Officer. Back then, CIOs struggled with getting their corporate footing, particularly with the C-suite and getting a seat at the so-called leadership table.
A recent study entitled “Security and the C-Suite: Making Security Priorities Business Priorities”, conducted by the Ponemon Institute for LogRhythm, sheds light on the organizational problem, particularly lines of reporting. The study says that 93% of cybersecurity professionals polled in the U.S., EMEA, and Asia-Pacific are not reporting directly to the CEOs of their companies.
“In fact, on average respondents are three levels away from the CEO which makes it very difficult to ensure that leadership has an accurate and complete understanding of security risks facing the organization”, the study said.
It may only be a matter of time before issues of who is responsible for cybersecurity and who that person should be reporting to in order to ensure as full as possible an organization-wide understanding of cyber risks and remediations are resolved.
But a better approach may be a proactive one, driven by the C-suite, to make cybersecurity responsibility as clear as possible. Clarity is a necessity in a time of rising frequency and sophistication of attacks. – David R. Brousell