Building an Intelligent Enterprise for Indonesia 4.0 – Steps for Industry 4.0 Roadmap

Senior Industry Value Advisor, SAP

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Background

On April 4th 2018, the President of The Republic of Indonesia (Joko Widodo) launched the Making Indonesia 4.0 initiative, in coordination with the Ministry of Industry. The economic reasons for the launched program were identified in the report as follows:

  1. Indonesia spends less on information and communications technology than its global peers
  2. Labor productivity cost is flattening in Indonesia
  3. Indonesia has shrinking net export
  4. Foreign investments into Indonesia show stagnation

In addition, between the three sectors of the Indonesia economy (Resource, Manufacturing, and Services), the manufacturing sector is weakening while the services sector is beginning to strengthen (Picture 1). And specifically related to the job market, Indonesia needs to create more jobs to accommodate the estimated 30+ million working age individuals that will enter the market (Picture 2).

Source: www.kemenperin.go.id/download/18384

Source: www.kemenperin.go.id/download/18384

With the above considerations, it was determined that adopting Industry 4.0 technologies within the manufacturing sector can help only create the job markets but also increase both productivity and net export. The three main goals of Making Indonesia 4.0 can be summed up below (Picture 3).

Source: www.kemenperin.go.id/download/18384

When the industries were analysed, the top five sectors that would help drive net export and feasibly adopt industry 4.0 were determined to be the following (Picture 4). Three of the five (food and beverage, textile and apparel, electronics) are lumped together as consumer products.

Source: www.kemenperin.go.id/download/18384

Making Indonesia 4.0: What Does It Mean for Me?

So, you may be thinking “If my organisation happens to be in one of the 5 sectors above, what does it mean for me? What do I have to do?” Before we go about what we need to do, we need to have a baseline understanding of where we are.

Firstly, I’d like to introduce a simple framework adapted from Bapak I Gusti  Putu Suryawirawan (Special Staff to Minster of Industry) who is responsible for the overall Making Indonesia 4.0 strategy from the government. I had the chance to speak with him when I spoke at one of the Ministry of Industry planning sessions for Industry 4.0. Let’s call the framework HDNA which stands for:

  • Human – Human capital we possess
  • Devices – Sensors and devices for what I will term front-line implementation.
  • Networks – Network infrastructure and communication
  • Applications – The software suite by our people

Secondly, let’s make sure we understand what Industry 4.0 is actually about and the technologies that support it. To do that, we need to know all the various industrial revolutions that have occurred in the past. Here’s the excerpt from the Making Indonesia 4.0 report (Picture 5).

Source: www.kemenperin.go.id/download/18384

So, what makes the Fourth Industrial Revolution different from what’s happening now or in the past?  It’s not just the technology itself but the communication and interface of the “human thinking” within the process. Let’s take a deeper dive.

The easiest way to imagine the evolution of Industry 1.0 to 4.0 is with an example. Imagine there is only one person making shoes. It means high quality but extremely low throughput. Imagine this person acquiring a set of tools that help him work faster. Let me call this Industry 1.0. In this case, the product quality is maintained while the throughput begins to increase.

Now this person wants to expand the business and to do so, he hires a team. He finds out that to increase throughput, it’s better if one group makes the soles while another group makes the upper and a final group glues the components together. He then gives them tools to make the job of each group easier. I call this Industry 2.0. In this case, the throughput begins to increase while the product quality becomes variable.

Now what if we have a machine that can do the jobs of each individual group? It’s a modern production line and there are reports at the end of the week about the performance of the machinery as well as the workers. I call this Industry 3.0. In this case, the throughput exponentially grows while the product quality aims to be consistent though still variable. Why variable? Because the machines don’t necessarily adjust themselves based on what has been produced and the current parameters of each section of the machine.

Imagine if the machine can tell the human its current operating parameters and performance, and the human can react to the change in parameters by changing the setup of the machine at every stage of the production or manufacturing process as soon it is detected. This is Industry 4.0. In this case, the parameters and operations of the machine are taken in real time using devices on the machine that are connected to network, making it visible to computers. These computers run applications that execute artificial intelligence, mimicking human thinking and decision making at higher speeds. Through data, they provide the human with recommendations or report to the human the proactive actions it has already taken on the machine.

Now, let’s break down the myth of the different layers of technology used in Industry 4.0 as presented below using the HDNA (Human, Devices, Networks, Applications) framework.

Source: www.kemenperin.go.id/download/18384

Technologies that enable Industry 4.0 can be broken down into 3 layers:

  • Physical Layer. This is where devices People use technologies (like AR/VR), advanced robots and machinery (3D Printing) function based on instructions given to them. Consider all these as devices and, depending on industry, can be located inside or outside factory facilities. What’s key is that these devices can talk.
  • Connectivity Layer. This is where networks They will connect devices at any location allowing them to see each other and, more importantly, talk to one or many central clusters of processing. The network of connected devices is called IOT (Internet of Things).
  • Logical Layer. This is where applications sit. They are the central clusters of processing that “talk” with devices and process the information. They allow the information gathered to be processed by software to make them valuable for business. Artificial Intelligence can help make this happen.
  • Human Layer. This layer wraps around all the three layers above and is embedded in each layer. At the end of the day, the aim of technology is to benefit Humans. In our case, consider how the role of humans change in each layer. The technologies will require humans.

How Do I Use the HDNA Framework?

Before we talk about modernising our facilities and using the buzzwords like “predictive maintenance” or “customer experience”, let’s look at the value drivers of modern consumer product businesses. I have created a simple value drivers diagram to illustrate the discussion.

Source: www.kemenperin.go.id/download/18384

Every consumer products business aim to be profitable either by increasing revenue or reducing costs to become more efficient. To understand the value drivers of the business, let’s overlay where Humans, Devices, Networks, and Applications will make an impact and answer pressing questions. Here’s a look at each perspective.

Thinking About Devices

By utilising technologies or devices that can talk to each other, which cost drivers will acquire a substantial gain in efficiency (defined as increased throughput with same or lower cost) or product quality?

Let’s use a scenario to illustrate this. Imagine that you are a F&B business aiming to grow your business outside of Java into the other islands of Indonesia. As part of the overall business strategy, you’ve decided to establish new warehouses and delivery routes to support this. In this case, the equipment or technologies related to the warehouse and trucks would be ideal candidates for devices.

For the warehouse, devices can take the form of sensors that monitor temperature, electronic tags (RFID) that transmit information on goods such as expiration date and batch, and electronic readers that will automatically read the information on the tags. With these devices communicating, we can increase the efficiency of logistics movement and data entry. For the trucks, the devices can take the form of sensors that track GPS position, tire pressure, fuel, and temperature. With these devices communicating with each other, we ensure the most efficient routes and best time to travel to ensure quick delivery with the lowest fuel consumption.

The key point is to strategically identify the critical data you’d like to capture and where best to capture it. Once identified, they would be ideal scenarios to explore to place these devices. Devices can take many forms, such as sensors already provided by OEM of a piece of an equipment ready to purchase devices, or kits that your team can create. It’s important to ensure the devices have connectivity capability that allows them to connect to a network and permits two-way communications.

 Thinking About Network

The network is basically the communications infrastructure required to connect devices. In the case of our warehouse and trucks scenario for devices, we must ensure a robust and secure communication infrastructure. For the warehouse, this means ensuring a secure intranet where the devices can easily be identified by their IP address and the information or action they allow are easily accessible via executing commands through the network. For the truck, it’s making sure that devices can communicate securely through a mobile network. Now, it might mean using one mobile hotspot to connect or having individual SIM cards for each device on the truck. Most importantly, the data stream must be encrypted and streamed real time or in specific slices of time (every 15 minutes or so).

The Internet of Things (IOT) begins to take shape when devices begin to use networks to speak to the central hub or with each other. For devices within a company’s network, they can be easily captured from servers that read the data of the devices. For devices outside a company’s network, they should connect to an IOT hub. Think of the hub as the place where an organisation can manage all the data streams and the devices that are connected on a mobile network.  What occurs at this stage is you have silos of data— both inside and outside your organisation—that you need to bring together. This now leads to the next part of the framework.

Thinking About Applications

At this stage, IOT is a set of devices on a network whose data are collected in individual silos or hubs. The next step is bringing all these data stream together to provide business value and impact. Let’s take the example of the warehouse and the truck again.

For the warehouse, consider how the RFID tags and readers can be used to automatically post the process of picking, packing, and deliveries in various systems. You need an application, such as Enterprise Resource Application (ERP), suite that can easily take the data streams of IOT and perform necessary actions—perform postings automatically in the correct order and use the data to update information, such material requirements planning (MRP) and production planning.

At the same time, consider the type of information and instructions the ERP can send out to the devices. It could be rewriting the tags in real time for the next set of deliveries to process along with a notification for the human operator the pallets to use or move. It can also be about alerting human operators on issues with the materials and recommendations of replacing the batch of material with a different one.

For the trucks, consider how the sensors on the truck allow real time vehicle and delivery monitoring of goods. The information can be used to plan maintenance of the trucks based on the travel and usage, and at the same time, create route planning based on distances that have been achieved. At the same time, consider how the human driver can be proactively notified of problems with their trucks and recommendations to fix the trucks or shift their deliveries to the closest companion.

As you can see, it is the applications suite that represent the ‘brains’ of the entire Industry 4.0 ‘body’. You need to have a robust and strong digital core along with extensions that can be easily added on, allowing you to process the different data streams and business applications of devices and networks you want to explore.

Thinking About Human

At the end, the combination of devices speaking to each other on the network and communicating or being instructed by applications all focus on improving human lives. The nature of work will change, and your employees will need to evolve. It might mean retraining factory workers to be more comfortable with technology and, more importantly, working with them until you get the experience right for them.

Even if you get DNA right, it must fit with how we humans function and work in a given scenario— the user experience. User experience is understanding how an application is used within a given set of scenarios a worker faces in their day to day. It’s making sure the application presents or creates a warning that is easily readable and can quickly allow the user to react. And if it involves wearable or mobile devices, the form must not disrupt their work or is not clunky and heavy.

In terms of the skills to make Industry 4.0 a reality, it will require strong technical skills, smart business people, and real ground level employees who do the work day in and day out. Existing IT teams need to be familiar with and accept new technologies or development paradigms. Business people must consider technology as key enabling factors to make these strategies a reality. Real ground level employees must be brave enough to redefine their work to integrate technologies as part of the norm.

Summary

I hope the HDNA (Human, Devices, Network, and Applications) framework and the examples I’ve given help simplify Industry 4.0 for your industry in Indonesia. As someone who has experience with making Industry 4.0 project real, I always ask client to think big and think pragmatic at the same time. That is why, in terms of the value proposition and positioning in a business case, it’s important for you to understand the value drivers of your company.

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