This article is inspired by a panel discussion at METEC 2023 hosted by Primetals to demystify the Industry 4.0 application. It speaks about Four Years Industry 4.0: Outcomes, Learnings, and Outlooks. So, that’s a look into the future. If you think about or hear about the Industry 4.0, this session will bring you how things will look for you after 4 years of adopting Industry 4.0 or I4.0 for short
The panelists from Gerdau Steel Making were describing a real world example. They explained what happened at Gerdau Brazil along 4 years after they had started to adopt I4.0 on 2019.
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Why is Industry 4.0 gaining an increased attention?
Simply because it meets a requirement for economy growth as stated by Joseph Schumpeter since 1942. The neo-Schumpeterian economics places technological innovation at the core of economic growth and transformation processes. Joseph Schumpeter introduced the terms of technological change that drives growth by replacing old, less productive structures with new, more productive ones. Schumpeter explained the innovation drive by a factor called entrepreneurial spirits. In his 1942 book Capitalism, Socialism and Democracy, economist Joseph Schumpeter introduced the notion of an innovation economy. He argued that evolving institutions, entrepreneurs and technological changes were at the heart of economic growth.
Even he laid the foundation of entrepreneurship and differentiated it from the innovation it self. He claims that innovation is the realization of a business idea, and the Schumpeterian’s entrepreneur is its maker. The inventor/visionary has a dream, but until he puts these ideas to work, he is not an entrepreneur.
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The digital technologies advancement in the last few decades opened the doors for the innovation economy again. The digital transformation and technology advancement have a fast pace that fuel the rapid growth of the economy. So when Industry 4.0 was diffused during the past 10 years as a the password for digital transformation, it was largely accepted by the business as a sign for economy growth.
However as any new term, the early publications were impractical. That’s what Kurt Herzog, Head of Industry 4.0 at Primetals Technologies explained at METEC 2023. He said till 4 years ago we need to compete in researches about in inapplicable ideas. Now, 4 years later, the media slowed down chasing Industry 4.0 bubbles. Then, at this time we have the opportunity to focus on more practical solutions.
How Primetals demystified the Industry 4.0 application?
Let’s start by refreshing our mind about Primetals. Who is Primetals?
From their website; Primetals keeps the history of the founders of Primetals and future of Primetals: WE PIONEER THE FUTURE OF THE METALS INDUSTRY
Primetals Technologies was founded on January 7, 2015, by Siemens VAI, Mitsubishi Heavy Industry, and partners. Our solutions build on over 60 years of innovation in metals production. Our predecessors, Mitsubishi-Hitachi Metals Machinery and Siemens VAI have significantly contributed to our company’s comprehensive, state-of-the-art portfolio. In early 2023, Mitsubishi Heavy Industries obtained full ownership of Primetals Technologies.
Primetals
Kurt Herzog, Head of Industry 4.0 at Primetals Technologies for the last 7 years made a great opening statement describing the relation between supplier and buyer. He said: “Thanks Gerdau team for challenging us and pushing us”. Then he added what does In\dustry 4.0 means for him and Primetals. “Industry 4.0 increases the degree of automation in discrete manufacturing. However most of the white papers on I4.0 do not apply for Steel industry because it is a process industry not a discrete manufacturing”. “So I4.0 is applying digital technologies to connect different processes”. “Steel Industry is challenging for industry 4.0 because the process is continuous across discrete islands. Optimizing each island doesn’t lead to optimizing the complete process”.
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Finally he explained the secret ingredient behind a successful digital transformation. “It is all about passing data between different production units. That’s digital transformation”. However, “The digital tools doesn’t guarantee the digital transformation. It is the team taking the ownership of the introduced digitals tools that creates the digital transformation.”
Gerdau-Brazil and the Industry 4.0 application in their steel plants?
Industry giants to continue their domination need to make strategic decisions. So Gerdau made a strategic decision to adopt digital transformation back in 2014. You can see this from what GE website speaks about in this article: Gerdau Saves Millions Annually
with GE Digital. In 2014 Gerdau decided to partner with GE Digital to help execute a robust digital industrial transformation across its enterprise. Then, in 2019, Gerdau partnered with Primetals as Industry 4.0 roadmap consultant and solution provider. Lastly in 2022, it appointed Industry 4.0 Meltshop Technical Manager as a sign of it commitment to continue pursuing Industry 4.0 diffusion across its production facilities.
GE describes Gerdau ambitious digitalization goals back in 2014 as the company decided to turn a critical eye towards simplifying processes and embracing a more agile operating model. While Gerdau is no stranger to change, the company needed more than incremental change—they needed to transform their business. Gerdau’s goal was to reduce overall maintenance costs by 20%, no small task across an organization this large and complex. This challenge also came with the additional goal of shifting maintenance and operations from a preventive model to a more proactive approach.
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Gerdau’s flexibility as a steel manufacturer—and their willingness to embrace better, more efficient processes—that has allowed them to maintain their position as an industry leader for so long. Their cooperation with GE Digital led to 4.5 million in annual savings with a complete ROI in only 8 months.
The next logical steps 5 years later was to sign an agreement with Primetals to take them to the next level of digitization through Industry 4.0.
Gerdau team insights about Industry 4.0 application
From the words of the Gerdau team and Primetals Head of Industry 4.0 at the panel discussion you can see some vital lessons learned. For Gerdau, Industry 4.0 was a cultural change for the production and maintenance team. They need to rely on and believe in the digital data and indications made available by Primetals framework. Gerdau assigned a dedicated team to create the example at pilot areas that can be rolled out to other production areas. Also, they cooperated to create MVP – Minimum Viable Product- that brings quick wins. This fuels the continuity of the project from the point of view of the Gerdau management which funds this project.
Gerdau and Primetals started by a simulator. Now, some of the furnaces are operated via the Industry 4.0 Intelligence. The solution grows along the 4 years of partnership by monitoring the process and evaluating the solution to ensure it is sustainable solution. Those 4 years included huge efforts of changing the mindset of the Gerdau operators. They also both adopted the Agile methodology to ensure meeting the ever changing and growing needs of digitalization. We had together spent a series about Agile Maintenance and starts here: Can Maintenance be Agile?
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In Conclusion,
The insights of the real team who implemented a transformation is extremely valuable to any one who seeks implementing the same transformation. Gerdau Industry 4.0 application in partnership with Primetals Technologies was just the right step forward after the Gerdau steel plants digital transformation in partnership with GE Digital. This article was inspired by the panel discussion at METEC 2023 about Industry 4.0 application. The panelists were from Gerdau Industry 4.0 Team and Primetals Technologies. We also showed the results of Gerdau Digital transformation as seen by their strategic partner, GE Digital.
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