Smart Factories and Digitalization in Manufacturing

Dive Brief:

• Cloud managers in the manufacturing and automotive industries are adept at running systems but less confident in their ability to monitor, predict and control cost, according to an April 2024 Infosys report. The IT consulting firm surveyed more than 2,500 cloud practitioners, including 412 in the automotive and manufacturing industries.
• More than half of manufacturing cloud managers reported difficulty monitoring cloud spend and nearly the same proportion said optimizing and predicting cost were challenging.
• Cloud today delivers more capabilities, which is clearly beneficial,” Jasmeet Singh, EVP and global head of manufacturing at Infosys, said. “However, the architecture, applications and funding model has grown more complex.”

Dive Insight:

Cloud adoption is a decision. Adapting to the technology is a process that can take years.

Manufacturing and automotive companies quickly adopted cloud, Infosys found. The sectors saw nearly 1 in 10 enterprises initiate migrations to AWS, Azure or Google Cloud in 2010. By the end of the decade, most manufacturers and automobile companies had a cloud footprint.

“The automotive and manufacturing industries are well past the cloud adoption stage,” Singh said, noting that 80% of the cloud services used by companies surveyed had been in service for nine or more years.

In a scenario that’s played out across industries, manufacturers harness cloud’s power to drive innovation, unlock revenue streams and modernize legacy systems. They’re more wary of migrating mature functions, such as testing and quality control, Infosys found.

“Cloud has become the industry standard,” Singh said. “Where companies keep systems on premise, it is purposeful for regulatory or intellectual property reasons and, in a small number of cases, for legacy systems that will be retired soon.”

Innovation comes at a price. Manufacturing companies spend an average of $30 million annually on cloud infrastructure and services, on par with retail but below average yearly spend in healthcare, energy and banking.

While 4 in 5 respondents expect cloud investments to rise this year, many are still sitting on unused prepaid credits, Infosys found. Respondents acknowledged they had only consumed 48% of their companies cloud commitments, an endemic enterprise oversight, according to ProsperOps data.

Singh attributed the disparity to overly optimistic expectations for what ultimately shifts to cloud.

Sustainability in manufacturing is no longer a buzzy phrase reserved for boardroom aspirations.

Emissions regulations in the U.S., such as the Securities and Exchange Commission’s March 2024 climate disclosure rule, as well as eco-conscious consumer sentiments, are increasingly tying a company’s long-term performance to its ability to reduce emissions. More often, achieving sustainability and implementing smart factory operations are becoming one and the same.

“I strongly believe that if you want your business to have longevity, you need to be thinking about both digital and sustainability, regardless of your company size,” said Rodrigo Alves, sustainability and energy management business EMEA manager at Rockwell Automation subsidiary Kalypso.

Digitalization can optimize energy consumption, improve product yield and optimize performance, said Neal Walters, a partner in Kearney’s strategic operations practice. 

“Even if a manufacturing facility is using exclusively renewable energy, reducing energy consumption will have an overall positive environmental impact,” Walters said. “Second, improving product yield among other benefits leads to less waste disposal and lower energy consumption. And [a third key area is in] minimizing paper transactions — many factories have thousands of square meters set aside for paper storage.”

For smaller companies that may be overwhelmed by the idea of letting go of old methods and tools, Alves added that conglomerate-level resources are far from necessary.

“I’m sure any production or operations manager could think of a manual process that someone follows every week that could be automated without the need to make a huge investment in software,” Alves said. “Something that you could automate with Tableau, Excel. Start small.” 

A good place to start is by automating audits so that instead of doing an annual audit of emissions, they are regularly monitored, Alves added. 

Collecting data is exactly how EOS, a provider of 3D-printed manufacturing solutions, set out to reach their sustainability goals.

“Both for environmental goals as well as social goals, the foundation is always data. You need to measure what you want to manage,” said EOS Head of Sustainability Björn Hannappel. “Creating more transparency first can help you identify the areas you want to improve, while also helping monitor the progress you make.”

To accurately measure their outputs, EOS installs an energy meter into new machines that tracks power and gas consumptions. The company also measures powder consumption and powder waste stream, since powder is a key material used in their 3D printers. 

“By combining these you can get a better idea of the manufacturing cost, but also, the sustainability and emissions of operations,” said Trevor Kirsten, head of digital manufacturing at EOS.

For EOS, increased data around their emissions can help them decipher where they could cut back on energy usage. 

“So by having that transparency, for instance, you might find areas where maybe the machine was turned on instead of turned off," said Hannappel. "[Or] one might find out that a machine had very high energy consumption, although it wasn't producing something.

Another way that data transparency can drive sustainable decisions is when the digitized information is presented to the consumer or client, who is then empowered to make sustainable decisions.

EOS offers this information in the form of a “carbon calculator,” which lets the customer see not only the cost per part, but also the carbon emissions per part and allows them to see how using a carbon-reduced powder might change their carbon footprint.

Beyond data, Hannappel adds that automating as many operations as possible is important to a smooth smart factory operation. 

That’s because, “if you’re talking about automation of a factory, then I think automation immediately includes optimization as well. Because you would never automate an inefficient process,” Hannappel said. “So for example, if you have a robot that feeds a machine, you would never program the robot to drive around the whole city and come back into the door and then feed it. But if you’re looking at analog processes, sometimes it is like that.” 

It’s an idea reiterated by Walters, who said that, “If a factory has flaws in the basic fundamentals of manufacturing, the famous adage that ‘if you digitize a bad process, you’ll just get a digitized bad process’ certainly applies.

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By ServiceNow

As the world’s largest chemical company, BASF, headquartered in Ludwigshafen, Germany, has been a cornerstone of industrial innovation since 1865. With a workforce of over 111,000 and 82,000 customers across nearly every industrial sector, BASF generates nearly €90 billion in annual revenue while driving solutions for a sustainable future.

Managing this massive global operation, which includes more than 80,000 suppliers in 60 countries, has historically required significant resources and complex coordination. Recognizing the need to modernize and simplify its supplier management processes, BASF partnered with ServiceNow to revolutionize its approach, saving time, reducing costs, and fostering stronger relationships with suppliers.

The Challenge: A Complex and Costly Supplier Management Process

BASF faced an overwhelming volume of supplier inquiries—more than 500,000 annually—primarily about invoice statuses and payment timelines. These inquiries were handled manually across 300 business units, using decentralized systems, email inboxes, and phone calls. This process consumed the time of 600 employees across three global service hubs.

Key challenges included:

• Inefficiency: Repetitive, manual tasks slowed response times and strained resources.
• Lack of Visibility: Managers had little insight into inquiry volumes, response times, or areas for improvement.
• Supplier Frustration: Inconsistent communication and delays left suppliers dissatisfied and uncertain.

BASF needed an innovative, scalable solution that would deliver a seamless experience for suppliers while optimizing internal operations.

The Solution: A Self-Service Supplier Portal Powered by ServiceNow®

BASF, with support from ServiceNow and implementation partner Accenture, introduced a single, global supplier management portal built on ServiceNow’s Customer Service Management (CSM) platform. Launched in April 2022, the portal simplifies and automates supplier interactions, providing instant access to critical invoice information.

Key Features of the Portal:

• Self-Service Access: Suppliers can log in securely to view live invoice statuses, payment dates, and transaction histories in multiple languages.
• Automation: Routine inquiries are resolved automatically, while complex issues are escalated as tickets and routed to the appropriate teams.
• Agent Workspace: For cases requiring follow-up, agents can access complete supplier histories on one screen, resolving inquiries faster.
• Performance Analytics: Real-time data helps BASF track and optimize supplier engagement and identify areas for improvement.

Results: Significant Savings, Faster Responses, and Stronger Relationships

The transformation has delivered remarkable results for BASF and its suppliers:

• Fewer Inquiries: Invoice-related inquiries have dropped from over 500,000 annually to fewer than 200,000.
• Improved Efficiency: Total tickets raised have decreased by 60%, and resolution times have improved by 50%.
• Time Savings: On average, agents save two minutes per inquiry by using the integrated Agent Workspace.
• Supplier Satisfaction: Suppliers now enjoy instant access to accurate, transparent information, saving time and improving cash flow management.
• 10% Process Efficiency Gain: BASF has freed up internal resources to focus on resolving more complex supplier issues.

Feedback from suppliers has been overwhelmingly positive, with one partner describing the portal as “a great solution to access information independently and an absolute win-win situation for both parties.”

Why This Matters for Manufacturers

BASF’s success offers key takeaways for other manufacturers looking to optimize supplier management:

1. Invest in Self-Service Technology: Empowering suppliers with instant access to information reduces manual workloads and enhances satisfaction.
2. Automate Repetitive Tasks: Automation frees up teams to focus on higher-value activities and improves response times.
3. Use Data for Continuous Improvement: Analytics provide actionable insights to refine processes and meet performance goals.
4. Adopt a Collaborative Approach: Engage suppliers and internal teams during implementation to ensure the solution meets user needs.

Next Steps: Expanding the Revolution

BASF plans to extend its use of ServiceNow to additional supplier management functions, including Procurement Service Management, creating a unified platform for all supply chain communications.

“This is a revolution for BASF,” says Johannes Utsch, Business Process Expert in Purchase-to-Pay Finance. “We are now seeing the benefits of speed, convenience, and stability, and there will be many more use cases along the way. The transparency we’ve gained is driving continuous improvement.”

Take Action

Are you ready to streamline supplier management and strengthen relationships? BASF’s journey demonstrates the power of self-service and automation to transform operations and boost competitiveness in the manufacturing sector. How could your organization benefit from a similar solution? Learn more about purpose-built manufacturing solutions from ServiceNow.

Dive Brief:

• Cloud security is a top priority for organizations around the world, according to a June 2024 Thales study. The report is based on a survey of 3,000 IT and security professionals from 18 different countries.
• More than two in five respondents said they have had their cloud environments breached in the past, with 14% of respondents reporting a breach in the past year. 
• For nearly one-third of incidents, human error and misconfiguration are to blame. Respondents also cited the exploitation of known vulnerabilities in 28% of breaches and failure to use multifactor authentication in 17%.

Dive Insight:

Thales research comes at a time when cloud security is under heightened scrutiny.

Leading cloud providers, such as Microsoft and others, have been targeted by sophisticated threat groups targeting companies, government agencies and other organizations that store data in the cloud. 

A wave of attacks have impacted at least 100 Snowflake customer environments, with those incidents linked to failure to use MFA.

“The cloud is not inherently more secure than on [premises],” Todd Moore, VP of data security products at Thales, said via email. “Security is determined entirely by the measures put in place to identify and protect the data within the cloud, and this responsibility lies between providers and users.”

As cloud use becomes more prevalent, companies are finding the attack surface — and the complexity of the network environment — are becoming more complicated. 

Application sprawl is partially to blame. The Thales study found two-thirds of organizations say they use 25 or more SaaS applications. And nearly half of data in the cloud is considered sensitive. 

Despite the high level of sensitivity, only 10% of organizations say they have encrypted 80% of their data.

Stellantis has been busy rolling out new artificial intelligence-enabled technologies on factory floors in recent years, one of many manufacturers experimenting with AI as a way to boost production speed and ease workers' physical labor. 

In September 2024, the automaker hosted its annual Factory Booster Day, bringing together technology startups and suppliers with proposals for Stellantis' manufacturing team. The annual event is one of the key ways the company taps new potential technologies to bring into its factories. 

Anna Valeria Anllo, head of innovation for vehicle process engineering at Stellantis, said the company prioritizes technologies that enable them to improve plant efficiency and product quality, as well as cut costs. 

At the 2024 factory day, Anllo said Stellantis was particularly interested in quality control and energy management. 

"How can we help our plants and our factories and associates do better, be better, have better quality, and cut costs?" Anllo said.

Robot guidance tools help boost factory accuracy

Stellantis rolled out a robot guidance tool from France-based startup Inbolt that uses 3D-vision systems to help robots adjust their trajectory and operations to avoid potential conflicts or impacts mid-manufacturing process. 

Inbolt's technology has been installed at multiple Stellantis powertrain factories thus far, such as in the automaker's Szentgotthárd, Hungary, factory.

The guiding tech, chosen from the 2021 Factory Booster Day, is being used there to help autonomous mobile robots pick cylinder heads from pallets and load them onto the production line. The Inbolt technology locates each cylinder head, realigns the robot’s trajectory and ensures correct pick-and-place operations onto the production line, according to Inbolt. 

Anllo said Stellantis is hoping to scale Inbolt's technology across 20 or 30 other plants around the globe. The automaker looks for use cases for technologies like Inbolt's in other aspects of its factories, including body shops and paint shops, she added. 

When evaluating a new tech program for factories, Anllo said the company analyzes the cost of integration, its potential cost savings and the time needed to roll out the product. Once finished with that process, research and development teams can move forward with a proof of concept that can be reviewed by plant managers for approval. Stellantis aims for projects to reach their first proof of concept within one to two years. 

Another AI-enabled technology that Stellantis has rolled out are autonomous wheels from Norway-based startup wheel.me, which convert current carts and dollies into AMRs. The tech was first integrated at Stellantis' Sterling Heights, Michigan, plant, after being chosen from the automaker's 2022 Factory Booster Day. 

"We are in the process of looking at different locations where we can also install this," Anllo said.

One of wheel.me's advantages for integration is that the technology didn't require any adaptions to the shopfloor layout, Anllo said. This more seamless integration is a factor in how Stellantis chooses experimental process technology, as it helps lower upfront costs. 

"We take innovation seriously, we are really about transforming, moving forward, making things better for associates, improving quality and being more cost efficient," Anllo said.

Companies across the food and beverage space — from Unilever to Heineken and Mondelēz — have embraced and touted their AI technologies. The technology is being used in manufacturing to help cut costs, market products and craft new items to specific consumer demand. But companies without a clear strategy for its use within their supply chain are not yet seeing results after adoption.

A study released by software developer IFS in August 2024 found the expectations for what AI can accomplish within manufacturing companies are not being met when the technology is actually put into practice. The survey, consisting of responses from over 1,700 C-suite executives at manufacturing companies, found that despite continued optimism associated with the positive aspects of AI, hurdles remain before they can see a tangible benefit with cost reductions and innovations.

According to Kevin Miller, the chief technology officer at IFS, a big component to the rapid adoption of AI is pressure from boards of companies. But he cautioned that companies are not always looking at which AI components can improve their supply chains in a tangible way. 

“Companies are sometimes racing to a solution,” Miller said. “AI is still somewhat in its infancy, and it can be wrong in the results that it gives back to you.”

Over half (55%) of manufacturers surveyed believe a lack of a strategic approach toward the technology within their companies is hampering their abilities to find success with it. A limited set of expertise with the technology was cited as the most common issue companies are running into, with 43% of respondents to the IFS survey listing it as the main factor slowing progress.

Miller added that while artifical intelligence was pitched as a magic box to solve problems, it’s not that simple.

According to Miller, AI can provide a holistic benefit to the food and beverage production process. One IFS client, a snack food manufacturer, noticed a dip in quality in their production, as raw materials were expiring faster than anticipated. The company installed some sensor devices to detect the temperature of the facilities with automated fans. When the temperature rose, the fans kicked on and circulated cool air, which led to enhanced food quality.

“This version of AI they’re using is not really anything a human couldn’t do, it’s just automating it to the point where there are many more data collection points to spot any anomalies much faster than a human can,” Miller said.

“The company needs to be ready for that type of transformation,” Miller said. “It’s important to start with the fundamentals, like ‘What is the objective or challenge we’re trying to solve?’”