Manufacturers' Monthly - Feb 2017

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MANAGEMENT >> TECHNOLOGY >> SOLUTIONS

FEBRUARY 2017

2017: THE YEAR OF OPTIMISM INSIDE >>

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Potential opportunities within the defence sector

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The importance of cyber security

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What today’s supply chains are missing

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Editor’s Comment

22 Design Thinking

30 Manufacturing Innovations 32 Manufacturing Showcase

14 IT@MM

24 Accounting In Manufacturing

18 Motors & Drives

26 Managing Supply Chains

36 Internet of Things

20 Lean Manufacturing

28 Automation

38 The Last Word

10 Defence Industry

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Behind the cover 2016 saw massive slowdowns in key sectors of the Australian economy, notably, the automotive industry with Ford shutting it’s manufacturing plants and moving its facilities eslewhere.

This immediately meant the loss of thousands of jobs.

The domino effect of the extremely competitive overseas automotive markets and the strong Australian dollar has led that sector to an inevitable end point. This is where companies look overseas for more affordable production capabilities, according to Toyota, who themselves look set to fold here in Australia somewhere in 2018.

But the country has traditionally not been a one industry nation with strengths in many other areas. Mining is back on the steady uptick with iron ore prices going up beyond US$80 a tonne as an example and more coal mines opening in Queensland.

Food manufacturing companies are amongst the standouts assisted by local demand, and in the case of exports, Australia’s clean and green image overseas has contributed to its strong performance.

2017 will be looking to be a year for more growth opportunities across all verticals after long periods of economic recovery.

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MANAGEMENT >> TECHNOLOGY >> SOLUTIONS

FEBRUARY 2017

TOWARDS AN OPTIMISTIC 2017 INSIDE >> 10

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publisher. The Editor reserves the right to adjust any article to conform

Potential opportunities within the defence sector

16

The importance of cyber security

26

>>

What today’s supply chains are missing

28 Dingley Ave Dandenong VIC 3175 Ph: (03) 9794 8337

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Manufacturers’ Monthly FEBRUARY 2017 3

Comment

SYED SHAH – Managing Editor, Manufacturer’s Monthly

To err on the side of caution

B

ACK in the late 90s, when I started out on my now slightly illustrious career in journalism, there were a multitude of exciting trends heading into the new millennia. The streaming of data packets wirelessly on mobile devices (3G), the rise of dotcom companies and WiMax were among the many forecasted ideas. And who can forget the “predicted” rise of a certain American businessman to seize the presidency of the US, according to Matt Groening of the Simpsons fame (half of America is kicking itself over now that it has come true).

Being young and unimpressionable (I was rarely fazed), I joined a Danish dotcom company. The company which specialised in news and quiz game portal management and application development prepping for the future of 3G as a web editor. They seemed promising, offering the first prize of an island (yes you read it right) which nobody ever knew exactly where it was (nor questioned it). But

4 FEBRUARY 2017 Manufacturers’ Monthly

the highlight for me was attending Asia’s largest manufacturing communications event called CommunicAsia in early 2000. It was there where tech dreams became a reality. I saw devices that were capable of controlling appliances within a household and factories (though I must say the one that blew me away was watching a Pete Sampras match on a prototype 3G Ericsson phone – in colour).

It was happy days for all of us at the company until the crash of the dotcom bubble where we lost our jobs. Essentially, valuations of dotcom companies were based on earnings and profits that would not occur for several years if the business model actually worked.

Investors were all too willing to overlook traditional fundamentals.

So when giants like Dell and Cisco decided to jettison their stocks somewhere in 2000 when NASDAQ was at an all-time high, investors panicked, stock market fell.

Investment capital dried up and dotcom companies were caught with their pants down.

Everyone likes to hear good news in the financial markets. At some point in between the doom and gloom, we still look forward to a happy ending. However, it is good to be cautious about speculations of rebounds with emerging new trends without taking into account certain market fundamentals. Recently, the Australian Manufacturing PMI increased by 1.2 points to 55.4 points in December 2016 and the highest since July the same year – quite the strong finish for 2016, bringing about fresh hope for 2017. This was mainly boosted by verticals securing new orders, sales and exports. The strongest sectors was food and beverage and machinery production, according to the Australian Industry Group’s report.

Production also grew at a faster pace while deliveries continued to rise. However, at this same point,

employment has not improved.

Unemployment percentages increased steadily towards the end of the year, despite over 39,000 jobs added to the economy. The growing weakness in employment was indicated in the report, with the employment index falling 4.9 points to 47.4 to end of the year.

At the end of the day, it is always best to err on the side of caution when looking forward to brighter days in the economy. But in a recent conversation earlier at the end of 2016, with global CAD/CAM specialist Autodesk in Indonesia, they told me that the best opportunities come in the darkest hours, especially in manufacturing, opportunities are referred to invest in innovation to help the industry to streamline costs and promote longterm growth.

So welcome to 2017 – year of promised growth and opportunities (like any other year). And please tread carefully.

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Advertorial Signet is helping Australia save with an innovative new pricing initiative

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HE manufacturing industry in Australia is rapidly evolving.

With globalised supply chains, and new disruptive technologies taking hold, Australian companies are needing to find new ways to compete.

So how do you stay afloat during a period of change?

More and more businesses are

6 FEBRUARY 2017 Manufacturers’ Monthly

turning to specialised continuous improvement programs, and using Lean manufacturing methods to keep ahead in a rapidly changing landscape.

Businesses are learning to achieve more with less, and it’s working.

However, these same companies often rely on bulk purchase discounts to save on costs, which is counter-intuitive to their Lean efforts.

One of the key parts of Lean involves removing waste from processes. The “Eight Wastes” are one of the most well-known parts of Lean, describing both physical and non-tangible types of waste.

One of the eight is Inventory, identifying any stored materials or finished goods as waste.

Buying in bulk to achieve cost savings often means businesses are taking up valuable storage space with excess stock, or goods are eventually left unsold or unused.

But now packaging and industrial supplies company, Signet, has come up with a new innovative pricing initiative.

Brisbane-based Signet is working with customers, launching its new RedLine Savers pricing initiative at the start of February.

RedLine Savers is an industry first, offering discounts on a range of products. These products will be locked in at the lowest available price, where normally a bulk purchase would be required for a discount.

The selected products are everyday operational items, right across Signet’s range, meaning customers in all industries will benefit.

Small to medium businesses in particular will benefit from this initiative, as they can order in quantities which suit their own processes and storage capabilities. Smaller customers needing to rely heavily on strategic forecasting and just-intime ordering will be no worse off than a larger customer who is able to purchase in bulk.

Jack Winson, Winson Group (Signet’s parent company) CEO, said he hopes to help all customers be more competitive in their businesses.

“This initiative takes a lot of the hassle out of the purchasing for our customers,” he said.

“If they buy RedLine Savers from Signet, they know we have done the hard work for them.”

“They can be sure they are getting quality product at the best price – I think this really helps save time so customers can put effort into other parts of their businesses.”

As the manufacturing landscape in Australia continues to change and evolve, initiatives like Signet’s will help Australian businesses stay ahead.

And as far as Signet is concerned, the local economy is worth investing in.

The business was recently inducted into Family Business Australia’s Hall of Fame (QLD).

This recognised the Winson Group’s achievements as a business, and its contributions to Australia’s economy, culture, and community.

This recognition follows heavy investments by the company into Australian manufacturing and jobs.

Just in the past year, Signet invested in a state-of-the-art plastics extruder, bringing the manufacture of more products back onshore.

Adding this to Signet’s existing line of inks, marking paints, and plastics already produced onsite in Brisbane means more jobs are being kept in Australia.

Keeping more of the supply chain close to home is a win for customers as well, with lead times down. Many of the raw materials used are also sourced locally, meaning there’s a reduced risk of delays, or of containers getting lost or damaged in transit.

For Australian businesses, particularly those in the manufacturing sector, these initiatives are good news. Despite all the challenges that come with a changing industry, it’s still possible to get ahead – and stay there.

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Comment

INNES WILLOX, Chief Executive, Ai Group

The Future of Manufacturing: A Forgotten Dimension?

The future of manufacturing is multifaceted. At times, however, there seems to be less diversity in current discussions about the future of manufacturing than there is – and I think will be – in the sector itself.

T • • • • • • •

HERE is certainly a frequent recurrence of a handful of key words and phrases: Advanced manufacturing; Market niches; High-value added products; Servitisation; Knowledge intensity; Digitally-enabled manufacturing; and Global supply chains.

At Ai Group, we have been talking this talk for some time ourselves and continue to do so. But I would like to venture into territory that I don’t think gets covered off enough in discussions about the future of Australian manufacturing.

The idea for this came following Boral’s announcement late last year that it intends to acquire the US building and construction products company Headwaters Inc. for A$3.5 billion.

It occurred to me that this very large transaction – surely the largest transaction in Australian manufacturing for some time – does not readily fit into many of the narratives that are going around about the future of Australian manufacturing.

Firstly, many of Australia’s largest and most successful manufacturers are considerably more “upstream” than the conceptions many people have about the future of Australian manufacturing.

When we think about the future of Australian manufacturing, we certainly think about medical appliances, pharmaceuticals, health products and wine. But how often do we think about steel, packaging, explosives, fertilizers, paint, malt, canola oil, building materials and industrial chemicals?

Either the conceptions are at least 8 FEBRUARY 2017 Manufacturers’ Monthly

somewhat incomplete or the sector has an even bigger transformation ahead of us than perhaps we are bargaining for – or both of course.

But my bet is that over the foreseeable future many of our successful, large upstream manufacturers will grow at more or less the same pace as the sector as a whole. They are very much part of the future of Australian manufacturing.

If this is right, the future will still involve the sort of transitions envisaged in many of the forwardlooking narratives with which we are all familiar. But it will also involve steadier transformations of these – and other – more mature industries.

They will continue to be relatively large employers and they will continue to account for a large share of domestic manufacturing output – and of income earned abroad.

There are any number of reasons it is important for us to acknowledge the upstream nature of a large slice of our manufacturing sector.

In the policy arena for instance, we need to ensure that the policy issues that are relevant to these businesses are not lost sight of in our enthusiasm to move into new areas and as we frame the areas of policy concentration that are conducive to new industries.

We certainly need to look at other areas of policy – including in relation to innovation, product approval processes, businessresearch collaboration, intellectual property arrangements and the like.

These are unquestionably important for the future of manufacturing. But so are some of the more traditional policy preoccupations.

A somewhat related point concerns conceptions of our

‘comparative advantages’. Over the past few years a view has gained currency that our comparative advantage in manufacturing lies in a few specialised areas of “advanced manufacturing”.

Med tech and pharma are prominent among the favourites and of course the food and beverages sector gets a jersey too. In one study in particular much of our existing manufacturing sector is relegated to a coyly-named, ‘industries in transition’ basket.

This particular study has gained currency in industry policy circles and has underpinned the orientation of both Commonwealth and some of the state governments over the past few years.

Another key set of questions revolves around the offshore production of manufacturing and how that fits into our picture of the future of Australian manufacturing.

Among the ASX100 and further into Australian manufacturing we would find a whole range of companies – many hundreds of companies of many different sizes

and in many different sectors – with a strong and growing emphasis on offshore production.

My own view is that growth offshore is an important part of the future of Australian manufacturing.

It is not right for everyone. But it is a path that many are taking and it is a path that many others should and will consider.

But it is also a path that does not get sufficient attention in much of the discussion about that future.

Partly this is because it is a path that does not necessarily – at least not directly – tick boxes such as domestic job creation and increased Australian GDP. Unsurprisingly the stock market is taking time to digest their investment of A$3.5 billion but it is early days – and in any case, I don’t think it alters the fact that they see a transformative opportunity to leverage Australian manufacturing expertise; an opportunity to extract additional value from a large set of American manufacturing assets; and it is a positive story for Australian manufacturing.

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DefenceINDUSTRY As one door closes…..

The defence industry will not replace the car industry in terms of employment numbers, but it does offer some prodigious opportunities, as Alan Johnson reports.

T

HE mainstream media has filled pages and pages with news on the demise of our car industry, but interestingly very little on the emerging expansion of our defence industry, and its potential positive impact on our manufacturing sector.

True we are not comparing apples with apples, but what the Turnbull Government is doing is investing in the largest defence force modernisation program in Australia’s history, with Australia’s manufacturers set to take advantage of the available opportunities.

The program, $195bn for new Defence capabilities over the next decade, brings together all Defence related investment – including capabilities, facilities, workforce and information and communications technology.

And it’s clear, the minister for Defence Industry, Christopher Pyne, wants local industry to get a slice of this very big pie, either through Defence direct or the numerous prime and sub-prime contractors.

“We are determined to use the Defence dollar to drive a high technology, advanced manufacturing future.

“This is where the jobs of the future will be created, and as the Minister for Defence Industry I will do everything in my power to develop and grow the sector into one of the most important parts of our economy,” the minister told Manufacturers’ Monthly.

To emphasise the point, Pyne pointed to the Defence Industry Policy Statement (DIPS) he released in February last year.

“It outlines a number of initiatives designed to support the growth and expansion of Australian industry to meet the capability demands of Defence whether as a Prime or as part of a contributing supply chain.”

10 FEBRUARY 2017 Manufacturers’ Monthly

Key initiatives The two key strategic initiatives within the DIPS are the Centre for Defence Industry Capability (CDIC) and the Australian Industry Capability (AIC) Program, both launched in December last year.

The CDIC has been set up to provide an engagement mechanism for industry into the Primes and Defence by industry development activities.

These include business advice and funding for sector wide initiatives, facilitating innovation by connecting business, academia and research organisations, and by enabling experienced business advisers to provide defence specific advice to help grow prosperous Australian businesses.

“We are also committed to strengthening the AIC program which applies to all Defence capability procurements of $20m and above,“ Pyne said.

The AIC Program has been set up to focus on maximising opportunities for Australian industry to be involved in the acquisition, employment, and sustainment of Defence capability.

The minister said strengthened AIC requirements will be released to tenderers as part of Defence projects, including the recently released Request for Tender for Project SEA1180 Offshore Patrol Vessels.

The changes will see requirements for tenderers to more explicitly demonstrate how they will provide maximum opportunities for competitive Australian industry to contribute to the project, and provide global and local supply chain opportunities for Australian industry, including SMEs through the project.

“Using the resources and support of these programs, local manufacturers will be better positioned to compete and win, both locally and in the global marketplace”.

He also went on to say that Defence and the CDIC are interested to hear from all competitive Australian companies that feel they have a

contribution to make and can provide value for money.

“The continuous naval shipbuilding program and the broader delivery of the Integrated Investment Program will involve small, medium and large Australian companies as a truly national endeavour, with the CDIC right at the heart of our strategy for resetting the Defence and industry partnership.”

He explained that the CDIC’s role is to guide and mentor SMEs to prepare them to do business with Defence.

“I know we have a huge amount of talent in Australian industry and I would urge local manufacturers to make contact with the CDIC and enquire how their tailored advisory services might apply to them.”

Some of the figures involved with the defence industry are eye watering, for example last financial year, Defence published 33,000 contract notices with a total value of $56.8bn on AusTender.

Almost 50% of the volume of contract notices (15,618), with a total value of $20bn related to contracts managed by the Capability Acquisition and Sustainment Group.

“Of these contracts, many have a technical requirement that reflect the capability need of the Australian Defence Force.

“Where a locally designed and manufactured solution is available and is competitive, such as the Bushmaster and Hawkei vehicles built by Thales Australia in Bendigo, Victoria, Defence will exercise this option.“ He said there are also opportunities to support equipment through the Prime contractors including into their supply chains via Defence’s Global Supply Chain Program.

“The Global Supply Chain Program has seen participating Primes award over $820m to Australian companies to date, a large number of which are SMEs.” The minister said there are many

excellent examples of local industry getting involved.

“I have spoken in Parliament about Ferra Engineering’s success on the Joint Strike Fighter (JSF) program, and there are many other examples such Levett Engineering, Marand, and Quickstep who are manufacturing leading edge Defence products for global Defence supply chains.

“More recently other successes, such as Albins Performance Transmissions and their products for the Thales Hawkei, and Australian Performance Vehicles positioning themselves for the upcoming Land 400 program.

“In all of these cases these businesses have invested strategically in both their manufacturing technology and their business processes so that they have a competitive offering tailored for the Defence marketplace.”

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DefenceINDUSTRY For SMEs concerned about protecting their IP, the minister explained that Defence is currently working collaboratively with the Australian Industry Group (AIG) to reform the IP provisions in Defence’s Australian Standard in Defence Contracting (ASDEFCON) templates.

“The new provisions will focus on the technical data Defence needs to achieve capability outcomes, with the ownership of the IP generally remaining with the relevant supplier.”

While the minister pointed out that the management of IP between smaller suppliers and prime contractors is a business arrangement for each organisation, the Minister did say that Defence is revitalising its Company Scorecard to better assess subcontractor management by prime contractors.

Funding Pyne says there are a number of sources of assistance for local manufacturers.

“AusIndustry, who are delivering the CDIC for Defence, also offer a range of programs to support businesses.

“If a business believes it has products and services or is developing products and services that have a direct link to defence capability, it can apply for tailored advisory services and subsequently grants from the CDIC.” Grants of up to $250,000 are available, with the minimum grant amount being $5,000. There is no limit to the number of grants a business can receive over the life of the CDIC, but total funding is capped at $250,000 per grantee in a three year period.

The minister said the CDIC will provide up to $3m in Capability Improvement Grants each year.

“However, the exact amount of funding available in any year will take into account advice from the CDIC Advisory Board.

“The CDIC is also working with colleagues in State and Territory Governments as they seek to tailor their own grants and programs so that their offerings complement those offered through the CDIC.” To submit proposals, the minister has launched the Defence Innovation Hub portal.

“It is designed to provide an equal

opportunity for all participants to put forward their great ideas, make connections and collaborate in the development of innovative technology, while working in close partnership with Defence.”

He said the Hub will assist manufacturers in maturing and further developing technologies which have moved from the early science stages into the engineering and development stages of the innovation process.

“It is an exciting initiative which will pull together Australian companies, research institutions, academia, and innovative technologies.”

According to the minister, the recently announced CDIC Advisory Board will play a key role in providing ongoing strategic direction for the CDIC. “At their inaugural meeting, I reinforced their critical role in positioning Australian industry to seize the unprecedented opportunities available to meet our Defence capability needs over the next decade.

“I made it clear that the Government is expecting the CDIC to bring Defence and Defence industry together like never before, and help businesses of all sizes work with Defence to boost the economy.

“The Board will identify priorities to determine the balance of investment across the Centre’s activities,” the minister said.

Opportunities John O’Callaghan, AIG Director and a member of the CDIC Advisory Board, is extremely optimistic about local SMEs getting a fair slice of the defence pie. “The challenge for industry is to perform.”

He explained that the principal goal of the Board is to assist Australian companies through the process of engaging with Defence, and pointed to the Defence Innovation Hub as a key portal.

“One of the challenges for companies, SMEs in particular, is to deal with the labyrinth of the Defence bureaucracy.

“The plan is to use the mechanism of the Innovation Hub, under the auspice of the CDIC, to smooth the relationship so that SMEs in particular manmonthly.com.au

are actively encouraged to apply to provide capability enhancements for Defence.”

He said there are particular areas of activity which Defence is keen to focus on, which includes surveillance, cyber, land combat, warfare, aerial activities, and strike and combat activities.

“Defence is seeking, through the hub, those companies that can offer advanced technology which would lead to solutions for these particular requirements.

“My research shows there are a large number of Australian companies out there with these capabilities, so we are expecting a big demand through the hub,” he told Manufacturers’ Monthly.

He said the research arms of many Australian universities are already working with Defence and Prime and Sub-Prime contractors, and with science and technology groups, to offer the sort of capabilities and solutions that Defence needs.

“The hub is also encouraging SMEs, including start-ups, to help them work their way through the system. Plus there is financial assistance for them to do so if their proposal has merit.”

He said the key focus is on advanced technologies, particularly on the electronics side. “Because that’s what the smart technology defence needs to give it a capability edge.”

Echoing the minister’s comments on IP protection between companies, O’Callaghan said there have been major strides in recent times using the team at Defence’s Science and Technology (DST) group as an example.

“Historically Defence always wanted to own all of the IP associated with any proposal, but increasingly now the DST group has decided that they don’t need to do that, provided they have access to it.”

He said this issue of IP protection, especially for smaller players, is becoming less of an issue than in the past, and is a similar situation with their relationship with Primes and Sub-Primes.

He believes the days of the Primes gobbling up SMEs and appropriating their IP is effectively over.

“That’s because they now have Manufacturers’ Monthly FEBRUARY 2017 11

DefenceINDUSTRY established supply chains and can see the benefits of continuing to improve the health of these supply chains by actively encouraging SMEs to become part of the supply chains. And that includes the acknowledgment that their IP should be protected in its own right.”

While O’Callaghan admits it’s not totally smooth for SMEs. “It is certainly improving.”

He says much of this is due to the maturity of the Primes.

“Many of them have been operating in Australia for around 30 years and see the benefits of developing a healthy supply chain network themselves.

“If you take Thales Australia, for example, they are actively involved in nurturing and assisting SMEs to become part of their supply chain.

“That’s a healthy development, but the debate about IP will always be a vigorous debate,” he admitted.

Optimism One of the reasons O’Callaghan is so optimistic about local SMEs getting a fair slice of the defence pie relates to companies being effective in supply chains.

“Going back 30 years or so, most of the major defence industry activity was controlled by the Federal Government who owned all the facilities, such as Williamstown and Garden Island dockyards, and the Government Aircraft factory.

“Now that most of these facilities are in the hands of private and public companies, they have evolved their own supply chains.

“And as a consequence, the members of these supply chains, particularly if they are involved in build, design and sustain - particularly sustainment - pretty much guarantees all long term contracts.”

Using the Future Submarine program as an example, O’Callaghan highlights the point that the upfront costs for the design, development and construction is about $50bn for 12 platforms, while the sustainment costs of the submarines over 30 to 40 years is around $150bn.

“Now if you are in a supply chain that is trusted and highly capable, you have potentially 30 to 40 years of work 12 FEBRUARY 2017 Manufacturers’ Monthly

in front of you. So the division of the pie becomes a lot more attractive.”

In terms of Defence’s contracting activity, O’Callaghan says the Future Submarine program is a good example.

“They give a lot more emphasis to the sustainment component of the contract, during the initial contract negotiations. That was not a feature going back historically.”

However, O’Callaghan readily admits it’s not all smooth sailing, with many SMEs lacking the confidence to work their way through the system.

He says SMEs have two options basically.

“If they have a capability that Defence really needs, they have a good opportunity to contact Defence direct.”

However he admits getting through Defence’s front door and finding out the key person to deal with is quite tricky.

“In fact that’s the role people like myself play, to align exactly that.

“But probably the best opportunity for the majority of SMEs is to align themselves with a Prime or SubPrime company, where they have identified that the capability that you are offering is in fact something they actually need or like to support. It might not be something immediate, but something downstream.

“The point is the Primes and SubPrimes are actively seeking companies to knock on their front doors. They want to get new ideas and get a competitive advantage in particular niche capabilities.”

He says for companies who have that capability, it’s not that difficult for them to get through the various doors.

“What they need to be able to prove is that they have the capability to sustain the availability of the product and that would generally require an investment.”

O’Callaghan said Defence’s recent roadshows and open days were well attended, with a huge amount of interest from potential supply chain members.

“Many of them came from the vehicle industry, wondering if there were opportunities for their capabilities, which is often the case.

“It might require re-skilling

workers and/or new facilities to do the job, but in the main, there will be opportunities for companies like that, if they are really interested.”

He said a really good example of a company that successfully made the transition from the car industry to defence is Mirand.

“They started off in the vehicle industry many years ago, and identified that the industry didn’t have a long term future for build in Australia.

“They looked elsewhere and where able to transfer their technology from the vehicle industry to the aerospace industry, in particular Lockheed Martin’s JSF project.”

O’Callaghan said this was due to the company’s leadership, who recognised they had the in-house capability, and the ability to re-skill and re-structure to position themselves for the advanced opportunities at the high tech end of the JSF activities.

“If I was a CEO of a company in the vehicle industry, I would be researching the Internet to find out how Mirand’s model works so well.”

He said one of the reasons it worked was the company’s CEO identified there was a series of programs, both in defence and the department of industry, that the company could tap into to get financial support for the repositioning needed.

As well as the CDIC program, O’Callaghan said there are other opportunities for assistance, with close to 40 facilitation programs to

assist Australian companies to access Defence capability activities.

“And because the government has made a direct commitment to build in Australia, the CEOs of the Prime and Sub-Prime contractors are pretty confident and are now positioned with their established supply chains to bid for the work that is coming down the pipeline.”

According to O’Callaghan, this is the first time since the 1980s that there has been such a commitment to Australian build and sustainment of major platforms for the defence force.

“That change of policy, along with the lower Australian dollar, is giving a boost to defence companies to become positive, and that is flowing through their supply chains and potential supply chain members.”

To highlight the point, O’Callaghan said that around five years ago, the minister at the time set up a “projects of concern” list, with 26 projects on that list that had gone seriously awry.

Today there are only two projects on that list.

“That tells you there has been a sea-change in getting things right, from the point of view of the defence industry performing to meet Defence’s capability requirements.

“That proves a base line now for a much greater degree of confidence for the future as we venture forth on this major capital investment program,” O’Callaghan concluded.

AusIndustry; www.business.gov.au CDIC; www.business.gov.au/cdic

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IT@MM Disruptive Manufacturing is now a good thing Getting ahead of the numbers game in manufacturing today means embracing the world of interconnectivity and advanced automation within the value chain. In a whitepaper on disruptive manufacturing, companies like Sage show how these ‘disruptions’ will be beneficial to all in the manufacturing space.

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O say that the global manufacturing industry is undergoing an era of profound upheaval (or disruption) would be an understatement. However this disruption is not just symptomatic of the tectonic changes in the world of manufacturing, in many ways it will also prove to be it’s saviour.

Disruption can come in many forms such as pressure from cheaper Chinese imports or even currency fluctuations, all of which have impacted on global manufacturing over the past two decades.

For its part, Australia’s manufacturing sector has also suffered from a disruptive economic climate throughout that time,

Disruption in the form of the IoT

Across multiple industries the Internet of Things ‘IoT’ is causing a far-reaching form of disruption in all areas especially in the manufacturing sector.

The IoT is fast becoming one of the most disruptive forces that Australia’s, and indeed, the global manufacturing sector, has ever faced.

The modern manufacturing plant floor is a hub of technology, sensors, electronic controls and automated equipment. These interconnected devices drive compliance, efficiency, quality as well as flexibility.

This is where manufacturers will see the biggest impact of this disruption.

Fast, efficient and flexible

Connected tools and machines are a key aspect of these changes.

Take an IoT-enabled torque wrench in the assembly of a complex part, as a simple example.

When connected to specific cloud applications, a torque wrench can capture the torque applied to a specific part, as well as information like the specific wrench that was used, when that wrench was last calibrated and the employee(s) who used it.

Faults can be detected in real time, and even when they’re missed, the cloud applications can trace every part affected back to the root cause.

Quality and speed are the first things that will be improved in such a hyper-connected environment,

for better long-term performance, maintenance and support.

Quality issues not only get service attention, but can (and do) influence future product design. Sensorconnected smart technology via the IoT brings processes and products together into a new ecosystem for added customer value .

And then it comes to the issue of compliance, a major headache to many manufacturers, IoT solutions are being used to streamline compliance with company and government regulations, from collecting and analysing data remotely to making sure that machinery is being used effectively.

Utilising sensors allows staff to immediately detect potential problems and ensure that any issue that may affect quality or safety issues are promptly dealt with well before they arise.

Put into a practical global context, IDC estimates there will be 30 billion sensor-connected “things” by 2020.

This change defines a fundamental shift in how value is created for individual consumers, and across the entire global economy.

So how can disruption help the manufacturing industry?

despite some tinkering with microeconomic policy initiatives that has impacted positively on the industry overall, such as labour market reform, research and development grants, and the occasional export drive into a particular market.

14 FEBRUARY 2017 Manufacturers’ Monthly

computerised machines are provided with instructions for the exact requirements for each product at each moment of production. This is a full-scale transformation of the old-style “economies of scale” approach that drove mass-produced consumer goods.

which leads to an improved customer experience.

This same level and depth of visibility won’t stop when the product leaves the plant. Smart products will not only interact with the customer in new ways but will also be able to stay in contact with the producer

What is mainly transformative about the IoT is the changing nature of the products that companies will make and how they will be made.

Smart, connected products are generating new value in ways we couldn’t imagine even five years ago – from reduced costs of production to improved efficiencies in areas like service and innovation, opening up new landscapes for invention and growth, as well as speed to market for new produtcs and ability to service global need.

To compete, differentiate, and win in this new IoT world, companies must recognise the transformative manmonthly.com.au

IT@MM (again, disruptive) power of the IoT – and be ready to collect, analyse and capitalise on the information (data) now being generated by customers, suppliers and the products themselves.

In other words, manufacturing companies must now be also ready to identify and assess potentially profitable new business opportunities that all this productgenerated data uncovers.

It’s time for manufacturers to think and act outside of the box A study from the Economist Intelligence Unit found 87 per cent of leading executives from across the globe have had operations affected by out-of-date infrastructure.

New technologies that can identify issues with infrastructure before they occur will be needed by companies to put them on a firm footing for the future.

IoT enabled solutions will help companies improve efficiency, extend the life of assets, reduce the risk of failure and improve the ability of businesses to meet08:23 customer Projekt1 14.12.16 Seite 1

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expectations and demand.

These same leading executives understand that their strategic competitive advantages might erode or be enhanced by emerging technical solutions.

Disruptive technologies could potentially raise productivity, attract more customers, inspire new market strategies, and drive substantial growth.

From the perspective of today’s (and tomorrow’s) manufacturing, adopting these technologies is no longer simply optional or convenient.

It’s a necessity to remain competitive.

In order to capitalise on all the benefits of the IoT, the implementation of new technologies in ERP or next generation business management solutions is the best way for manufacturers to improve and increase their efficiencies.

Manufacturers need to understand that improvements in efficiencies will only come when they think ‘outside the box’ and embrace the notion that disruptive technologies are not only good for their business, but will also help improve the outcomes in a sector

that is in a continual state of flux.

Therefore, by adopting faster, simpler and more flexible business management solutions, manufacturers can keep well ahead of the huge changes that are happening right now across a range of industries, including manufacturing.

Using ERP software to harness the power of disruption Manufacturing companies recognise that holistic business management solutions can help them overcome the barriers they are likely to face in the future, but the key is getting the right one.

An ERP or next generation business management solution with a strong process manufacturing foundation that supports many of the best practices required to align business processes is what is required.

The best ERP solutions use flexible data models to support complex organisational deployment and reporting structures, simplifying management across multiple facilities, companies or business units, regions

and countries from a common installed instance of the solution.

Sage X3 is now ready for the Internet of Things Sage X3 supports complex organisational deployment and reporting structures, simplifying management across multiple facilities, companies or business units, regions and countries from a common installed instance of the solution.

With built-in functionality for manufacturing, distribution and services tasks, Sage X3 adjusts to accommodate a company’s unique rules and processes.

Most of all, for the requirements of the IoT, Sage X3 is also easily scalable and quickly adapts to the needs of large volumes of acquitted data, growing with the business as it expands to new markets or geographies, and making it simple to manage a global business while at the same time navigating the new universe that is the Internet of Things.

Manufacturers’ Monthly FEBRUARY 2017 15

IT@MM Why Australian manufacturers are in the cyber cross-hairs of hackers It is no secret that Australia’s cyber-security environment is seriously wanting. The recent 2016 Threat Report from the Australian Cyber Security Centre shone the light on critical gaps in Australia’s cyber defences – the breach of the Bureau of Meteorology highlighting just one prominent example – and it may surprise you to learn that manufacturing is not immune to these vulnerabilities, writes Tim Wellsmore, director of Threat Intelligence and Consulting for Mandiant at FireEye.

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ANUFACTURERS across the globe are at constant risk of hackers attempting to steal their valuable intellectual property. This is not to mention the level of weaknesses in critical infrastructure that have nothing to do with manufacturing per se, but which the industry cannot survive without: electricity grids, water supplies, technology infrastructure and even the ability to attack production lines has been increasing alarmingly over the past six years.

To their credit, manufacturers don’t necessarily have their heads in the sand regarding the threats to the industry. Per the IDC Worldwide Semiannual Security Spending Guide, IDC expects banking to make the most investment in security technology this year at US$8.6 billion – with discrete manufacturing, federal and central government and process manufacturing next in line. In total, these four verticals will represent 37 per cent of global security revenue for 2016 and will also be the top-spending verticals until 2020, the analyst firm predicts.

The expected investments are much needed, because the consequences of not investing in cyber defences are immense. Take out an electrical grid and industry grinds to a halt. Take out the internet and you cripple the information transfer of most organisations. Hack a manufacturer, and years of R&D investment and IP can be stolen, potentially causing an entire industry to be replaced by those in countries with much cheaper cost bases.

Chinese and Russian hackers reportedly attempted to access 16 FEBRUARY 2017 Manufacturers’ Monthly

details about Australia’s next generation submarines. The attempts were reportedly aimed at the submarine builders in Germany, France and Japan bidding for the $20 billion contract to build the new fleet. The bidders were holding highly sensitive information about the Royal Australian Navy’s technical requirements for its next-generation submarines.

Perhaps even closer to home, Donald McGurk, chief executive of Adelaide-based communications, metal detection and mining technology firm Codan, said he watched sales and prices of his

firm’s metal detectors collapse after Chinese hackers stole the company’s designs and began selling cheap knock-offs into Africa. How did they come by the designs? An employee’s laptop was reportedly compromised on a trip to China.

These are just two prominent examples, and we know these are just the surface of the real events impacting business and manufacturers across Australia.

Now, an awareness is emerging of the real risk of Industrial Control System (ICS) vulnerabilities we’ve observed since 2010 – the year the Stuxnet virus that took down an

Iranian uranium enrichment plant was disclosed.

Ninety per cent of the known vulnerabilities to these systems are from after 2010, and that’s a number we only expect to grow: we’re seeing strong demand by the active cyber threat groups for ICS systems across the globe. Further, more than half of the vulnerabilities we’ve observed since 2013 deal with “Level 2” compromises—the systems that allow operators to supervise and control physical processes, such as opening valves or modifying machines.

Meanwhile, the patching of vulnerabilities is a still substantial

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IT@MM problem in ICS environments. Of the nearly 1,600 total vulnerability disclosures we’ve examined, one-third are zero-days – a hole in software that is unknown to the vendor – and which have no vendor fixes, which present significant opportunities for adversaries to get into systems.

And at least five ICS-specific vulnerabilities have been exploited in the wild, a rate we anticipate will increase in the future.

This is not to mention the rise of ransomware attacks on companies and individuals – wherein attackers will lock up infrastructure assets and only release them once the company pays a ransom. Additionally, the threat from massive denial of service attacks – such as the one seen recently which slowed or knocked out sites such as Twitter and Reddit – is increasing at a scale never seen before, powered by the rise of the Internet of Things.

Unfortunately, security personnel

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from manufacturing, energy, water and other industries are all-toofrequently unaware of their own control system assets, let alone of the vulnerabilities that affect them. Organisations operating these systems are simply missing the warnings and leaving their industrial environments exposed – the hacking of Ukraine’s power grid is the most famous example of this.

This may sound bleak. But with the right approach, there are ways to combat the growing threat of cyberattacks in the manufacturing space.

For one, the expected investments into cyber defence highlighted earlier will help by shoring up the defences for security teams in the ICS space. It shows not only an acknowledgement of the issue but a proactive approach to countering it.

Additionally, it’s important for business owners and executives to understand the realities of the threat from credible sources of

threat intelligence, translated into understandable and actionable business risks. Also, manufacturers that have ICS assets should prepare their security teams with an accurate understanding of control system assets, locations and functions. They should be aware of the changing threat environment, what that means for their day to day operations, and continue to maintain vigilance. This involves: • Obtaining structured vulnerability and patch feeds that cover a wide variety of sources; • Match reported and confirmed vulnerability disclosures and patch announcements against their asset inventory in their industrial environments; and • Prioritise vulnerability remediation efforts by considering ICS architecture location, the simplicity of exploitation, and the possible

impact on the controlled industrial process.

Make no mistake: cyber-attacks are going to happen, and happen frequently. It is the age we’re in now and there is still too much benefit to hackers to want, or need, to stop. It will be relentless and the methods of attack will evolve to counter most of the defences we create to halt them.

It’s imperative that investment is forthcoming from industry and government alike to ensure Australia’s interests, and its IP, are protected. But more importantly, recognising that cyber-attacks aren’t just reserved for acts of cyberwarfare or opposing governments is paramount for manufacturers and businesses to truly understand the level of vigilance required. Manufacturing is the beating heart of any modern nation, and it should be protected accordingly.

Manufacturers’ Monthly FEBRUARY 2017 17

Motors & DRIVES Load testing to benefit from new testing centre SEW-Eurodrive’s service centre in Mackay opening in March 2017 to bring services closer to home for regional customers.

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HE service centre, which is scheduled to open in March 2017 and occupy up to 2000sqm of space, will allow SEWEurodrive to give added support to gear drive customers in Mackay and surrounding region with their drive technology requirements.

Believing that load testing a gearbox and/or drive will ensure that potential problems are identified before the unit goes back into service, SEW-Eurodrive will implement a system to load test up to 500kW power and up to 600,000Nm torque with spin or partial load tests up to 1.5MW will also be available.

In addition to load testing the gearbox, in most cases the system will be able to load test the entire gearbox, motor and swing-base assembly. This can be done as a shaft mounted assembly, which closely replicates site mounting.

According to Daniel Dallari, sales & operations manager – Far North Queensland, the load testing facility will be a great addition to the new SEW-Eurodrive Service Centre in Mackay. “SEW’s load testing capability will be the first of its kind in QLD,” Daniel said.

“Other gearbox repairers only spin test the overhauled gearboxes and any potential problem will only be revealed after the unit is back in operation.

SEW-Eurodrive collaborated with CNC Design – a Melbourne based company – on the load testing system.

CNC Design has extensive experience in GEARTest (a back-to-back setup to test the gearbox up to 100 per cent full load with minimum energy consumption) load testers for both industrial and wind turbine gear units in Australia and USA. Within the set up, the drive

motor is connected to the gearbox undergoing the test. The output shaft of this gearbox is in turn connected to a special purpose speed matching test gearbox unit itself driving another motor acting as a generator. The principal is the same for both industrial and wind turbine gearboxes.

The test rig is controlled by an Advanced Motion Control System, so the load cases and test sequences are flexible and can be adjusted to the specific test plan for each gearbox. This is setup and monitored via a user-friendly operation station.

Additionally, the specific software for sound and vibration measuring is integrated in the solution as required.

SEW-Eurodrive will conduct a number of tests to determine the condition of the gearbox during the load testing phase. The load test

will load the bearings and gearing, avoiding gear mesh backlash that affects vibration analysis, ensuring fast fourier transform (FFT) readings will identify any potential bearing, gear, or shaft defect. Loaded gear tooth patterns will detect potential misalignment, including misalignment caused by load, speed or temperature.

In addition, a test protocol will be provided for each performed test and will remain both with the gearbox documentation and also stored electronically for evaluation later on.

Load testing allows measuring noise and checking compliance with noise requirements.

A benefit of completing this load test from the new service centre in Mackay will be that maintenance and service personnel will be able to visit the facility to witness the load testing phase.

A CNC Design load test facility installed in USA for wind turbine gearbox testing.

18 FEBRUARY 2017 Manufacturers’ Monthly

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Lean MANUFACTURING Five-minute productivity fix and more for manufacturing Getting better operational value doesn’t always require major overhauls. Peter McGregor, training coach with Improve Group Learning Solutions shows us how.

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OOSTING productivity can be as quick with some simple steps, according to Peter McGregor, training coach with Improve Group Learning Solutions.

“I ask people I’m mentoring, how do your staff communicate their problems to you? They tell me staff bombard their supervisor or line manager who then tries to remember to fix it,” McGregor said.

It can be frustrating and stressful for production-line workers repeatedly telling their boss when something goes wrong again to no avail. There’s a better management tool than overloading your brain.

“Put up a visual performance issues board at every workstation to tell everyone how their process is functioning, how many flaws exist in their processes, what their performance target is for each and every hour of their workday,” he said.

“When you make it visible, everyone in the organisation will start to watch.”

But there are the sceptics. When Peter enthused a line manager he was coaching at a Brisbane company to start using performance boards, two of the manager’s directors told him outright, it “was rubbish”.

Despite the initial resistance from the directors, the manager put up the boards anyway.

“A month later, the transformation was enormous. Once the directors understood what it was about, they loved it. It’s the one thing any team leader can do in five minutes – put up a board.”

That way problems are solved close to the source and, because staff are no longer working under stress, the work pace becomes slower and safer. In short, they’re not wasting time fixing mistakes or poor processes.

20 FEBRUARY 2017 Manufacturers’ Monthly

Cutting $32K off your monthly overtime bill Invest more time doing a bit more navel gazing about your processes (nothing too high tech though) and the results could be much bigger.

How about cutting $32,000 off your monthly overtime bill, reducing staffing headcount by 27 per cent and shrinking absenteeism all while increasing production?

That’s what Peter’s coaching did to help Production and Manufacturing manager Charlie Khalil at Custom Bus Australia in Villawood, NSW, earlier this year. Custom has been building buses for more than 60 years and was keen to keep ahead of the game with huge transformations in technology and innovation.

Khalil wanted to become more savvy about incorporating ‘lean

manufacturing’ practices, so enrolled in a Diploma of Production Management with Improve Group and Peter McGregor was assigned as his coach. Khalil had already put in place improvement initiatives, achieving a relatively stable ‘pulse line’ process with a Takt time of two days. But there were still niggling issues with material and component supply, assembly bay delays and a constant bottleneck at line’s end just before going to paint.

“The beautiful thing is that it’s not complicated at all. There were literally three or four things that Charlie needed to be trained to see, and when you see these things, you understand the impact they have. He started to look for those and to teach his team leaders to look for them, too. You don’t need technology. The

analysis wasn’t hard,” McGregor said.

The performance board was an early tool Khalil used to keep production and manufacturing issues and priorities on his radar.

McGregor said,“He put in place a simple white board for communication at every work station, so when a problem occurred, his staff just wrote it down. As Charlie moved around the factory, he could see these problems and could start to prioritise: if it’s not major they could fix it themselves, or this is important, we need to get on top of it.”

Processes under the microscope How do you make a bus in two days fewer than usual? You put your processes under the microscope.

Buses are large and complex

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LeanMANUFACTURING with each requiring up to 3,000 components. So, if you’re trying to slash the time it takes to build one from 25-30 days to 23-25 days you need standard work instructions for every task that’s involved in the process.

That’s what Khalil focused on within the first six months of the Diploma program. He stripped down the work performed in each bay to understand the value activity better.

“The way our internal manufacturing department used to work, they didn’t allocate time to a particular task, but that’s how our production team works. It’s a disconnect between the two teams.

When I took on the manufacturing responsibility, it seemed the natural way they’ve tried to deal with the problem was to take on extra resources rather than adapt and try to work out exactly why the process wasn’t flowing and the outputs weren’t as high as they should be,” Khalil said.

“I wanted to gauge the actual cost of operations, the way we work, then learn how to measure percentage of savings based on the implementation of the process.

“This was where Peter was fantastic. He’s shown me how to analyse that sort of data, how to go back to basics and go from there and identify what works versus what doesn’t.”

The goal was a model with a

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Takt time of 1.5 days, which would increase production output by 25 per cent. A key gain was better managing components moving into the production line and the on-site manufacture and delivery of parts to each work bay.

Setting standards “If you don’t have standards, how do you know you are guaranteed to produce a bus in the required time frame? When you have so many components going into a bus, if there’s one component that is constantly a problem, the process stalls. If you can’t move the bus on, all work in the other cells stops,” says McGregor Khalil agreed, saying the biggest eye-opener from his work with McGregor was realising unless you follow the processes step by step, the “process falls apart and starts quickly working against you rather than for you”. He’s also shaved 10 hours off his average work week, now putting in about 50 hours because he needs to be on site less.

“What the guys now understand to be productive versus what was considered to be productive 10 months ago is a different ball park altogether. They all buy into what they’re each working on in the plant and how their productivity impacts other areas,” he said. As well, there’s been a drop in absenteeism.

“We’ve reduced headcount from

around 45 a year ago to 33 now in the manufacturing department including supervisors, but we’ve maintained if not improved the productivity with a reduced headcount.”

In reflecting, Khalil’s motivation to make improvements meant he paced through the 10 units of the diploma program in just 10 months.

Not bad for someone who last did formal education in 1995 – when he completed his HSC. The study

bug has bit. Charlies has applied to enrol in another Diploma course – in lean manufacturing this time – to keep continuous improvements on his radar.

For more information on the relevant qualification, visit http://www. improvegroup.com.au/training/ nationally-recognised-training/generalmanagement/diploma-of-productionmanagement.

Manufacturers’ Monthly FEBRUARY 2017 21

DesignTHINKING The DLI difference Design Led Innovation (DLI) brings about new perspectives clarifying a business proposition and discovering potential new business opportunities. Ros Hore, Strategic Initiatives Director, CSIRO Manufacturing talks about how a DLI program explored these opportunities.

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ANAGING a business is hard work where there is near constant meetings, phone calls, plus the ceaseless demands and questions of those around you.. It is often hard to get the time and breathing space to sit back and think about how you could do things better, let alone really understand and empathise with your customers’ needs and consider how your business model meets those needs.

Recently, a group of medium sized Australian manufacturing businesses worked together to apply Design Led Innovation (DLI)to their businesses.

The participants are members of the High Performance Consortium (HPC) community and the program was undertaken in collaboration with the University of Technology Sydney (UTS) and CSIRO Manufacturing.

Sam Bucolo, professor of Design and Innovation research centre at UTS, who developed and delivered the

22 FEBRUARY 2017 Manufacturers’ Monthly

program with CSIRO manufacturing scientists embedded with the companies and HPC facilitators providing ongoing support. The program comprised a series of challenging workshops designed to confront managers’ pre-conceived ideas about who their customers are, what problem they are solving for those customers and how their business models were aligned to do this.

Frank Cristiano, general manager of Melbourne based fibreglass manufacturer Tricomposite, was amongst the participants.

“I’d recommend this to all businesses”, he said. “It makes you ask the question ‘How do I make my business more attractive to the customer?’”

A subsidiary of Jayco, Tricomposite provides fibreglass parts for manufacturers. Its products can be found anywhere from office blocks to off-road caravans. Like

many companies, Tricomposite was looking to find new customers and retain its competitive edge against cheaper overseas competition – which was where DLI came into the picture.

The DLI program requires participating companies to ask the question “who is my customer and what do they value about my business?” The companies then conduct a series of interviews with existing customers to ask this question and test the value proposition from the customer’s perspective.

“It will definitely help you think like your customers and see things from their point of view. At first it felt weird interviewing our customers. They couldn’t believe we were asking for their opinion and that we were genuinely interested in listening to them. Once they started talking we couldn’t stop them! The DLI process we used to ask what they valued about our business resulted in

truly insightful learnings. DLI trains you to understand their wants and their frustrations and obviously that helps improve your relationship with them and the value adding you can offer,” Cristiano said.

Participating in the DLI program with other companies and the CSIRO manufacturing scientists had additional benefit. At the commencement of each workshop the companies reported back on their learnings. This generated accountability and teamwork between the businesses as each company wrestled with the DLI concepts at different stages throughout the program with the CSIRO scientists providing an independent and different perspective.

“We’re always open to new ideas but there was a steep learning curve with DLI. The first few sessions certainly were over our heads but then it clicked and we moved forward,” Cristiano said.

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DesignTHINKING For Tricomposite this renewed emphasis on customer service has paid dividends. Participation in DLI highlighted an opportunity for Tricomposite to add value to their customers and enter new markets but it required the expertise of a composites engineer, which was a

skill set that the business didn’t have for cost reasons. The DLI program gave Tricomposite the confidence to employ a composites engineer on a short term contract to test their ideas. It has been a great success for the business.

“Our composite engineer analyses

customer’s designs, and saves them money by suggesting ways that they can decrease the materials and processing needed, while improving factors like efficiency or rigidity.

Between our composite engineer and the customers’ design engineer, they can design the product right, firsttime around,” Cristiano said.

In one example, Tricomposite has been able to reduce the weight of one of its highest volume parts by half without compromising its strength or durability by using less material. This has been a significant cost-saving to the business and its customer. Tricomposite is also trialling a rapid prototyping methodology in order to provide customers with a collaboratively designed fully sized fibreglass part manufactured within two weeks of receiving the 3D CAD model – a significant reduction in turnaround time and mould risk. Participation in DLI has resulted in Tricomposite shifting their business model from that of a fibreglass component

manufacturer making parts to a customer’s specification to that of a service provider of manufactured fibreglass parts.

CSIRO’s participation in DLI is an example of one of the many ways the research sector and industry can collaborate. Research and development needs to be included in business strategy and DLI provides that mechanism. Beyond its obvious scientific know-how, CSIRO also possesses years of experience in research and development, as well as extensive connections and knowledge of other players’ strengths and capability in the innovation ecosystem.

“Most of the companies knew CSIRO but really had no idea what it was that we do and how we could help them. The engagement through this program really improved this relationship,” Andrew Abbott, team lead for manufacturing, CSIRO said.

For Cristiano, the message to business is simpler: “Sit back, listen to your customers and just go for it.”

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Manufacturers’ Monthly FEBRUARY 2017 23

AccountingIN MANUFACTURING Five benefits of modern accounting for manufacturers The manufacturing industry runs 24/7 with constantly changing customer demands, making real-time financial information essential for manufacturers.

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EW tools from robotics to nanotechnology are changing the way goods are produced, but so many accounting and finance teams are still doing things the oldfashioned way - with spreadsheets.

This leaves teams struggling with manual accounting processes that create challenges around visibility, accuracy, and efficiency.

To keep up with customer demands, stakeholder expectations, and changing global regulations, today’s manufacturers need an accurate picture of their balance sheet.

Once relegated to the background of the manufacturing enterprise, accounting and finance now offer tremendous value to the front of the organisation.

Automating rote tasks and

freeing teams for value-added work like analysis management, can put manufacturers in the enviable position of being the first to innovate, market, and identify and act on new growth opportunities.

Here are five benefits manufacturing companies experience when they empower their accounting and finance teams to effectively utilise process automation technology.

Automatically match all types of transactions Complex intercompany relationships, multiple divisions, inventory, and global supply chains make matching large volumes of data a difficult, time-consuming and error-prone process.

With an automated transaction

matching process, manufacturers can stop manually “ticking and tying” thousands of transactions.

Instead, the technology matches all transaction types, which can be millions per minute, while making unmatched transactions available to create reconciling items, exception cases, and correcting journal entries.

As a result, manufacturers save hundreds of hours on bank reconciliations, credit card matching, intercompany transactions and invoice-to-PO matching.

Confirm key account balances every day Automating the reconciliations process enables continual validation of account balances and transactional details, and verifies balances across different production facilities, business units, and currencies.

It standardises routine processes while embedding control and auditability. Companies can ensure the accuracy of critical accounts throughout an accounting period, and refocus their accountants on exception handling and discrepancy investigation, instead of tedious (and potentially error-prone) data entry.

Centralise and automate endto-end journals management Manually processing journal entries can take hundreds of hours every month, as spreadsheets are passed around for approval and review before eventual posting.

Manufacturing companies can automate the creation, approval, and review of journals using dynamic data from many sources, including bank feeds and credit card statements. Teams can track and manage recurring entries, thus providing even greater levels of visibility and control.

24 FEBRUARY 2017 Manufacturers’ Monthly

Standardise and streamline inventory reconciliations Legacy account reconciliation processes are time-consuming and prone to errors.

Automating account reconciliations simplifies and standardises the end-to-end reconciliation process to ensure the accuracy, timeliness, and quality of your high-volume reconciliations while strengthening your internal control environment.

By leveraging configurable autocertification rules, manufacturers can automate key account reconciliations without having to implement additional process changes.

Connect and integrate with existing systems Implementing finance automation ensures data integrity without risk of conversion and entry errors and enables data imports from bank files, POS applications, and other systems. It can also save IT resources from the difficult, time-consuming process of performing costly, custom integrations and running ad hoc reports.

However, it is essential to select a solution that is built for connectivity and can integrate with your ERP system.

Modern automation technology is changing the nature of manufacturing, and it’s time for its accounting and finance teams to experience the same benefits of that technology.

The process automation tools that can enable real-time reporting and analysis and ensure an efficient and accurate close are finally here.

Now it’s up to manufacturing companies to empower their accounting and finance teams to fully utilise their benefits, thus creating a competitive advantage for the entire organisation. manmonthly.com.au

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Managing SUPPLY CHAINS The next industrial revolution will reinvent supply chains Digital mediation platforms and trends such as the circular economy will profoundly change the way manufacturers operate, believes supply chain expert Jan Godsell. Brent Balinski spoke to the Warwick Manufacturing Group professor about how this could look.

T

HE Industry 4.0 narrative is generally focussed on what takes place within factories.

This is a bit of a shame, believes Jan Godsell, professor of operations and supply chain strategy at Warwick Manufacturing Group.

To be fair, she said, the concept emerged following the German government’s rethink of its industry policy post-Global Financial Crisis, and the country’s industrial sector is traditionally factory-heavy.

And then there’s the fact it’s been popularised by German conglomerates including Siemens and Bosch, both of which have a vested interest in technology within factories. Nothing sinister, of course, but when such companies are talking about Industry 4.0, they’re sure to tell you about how it can make plants run better. That’s their business.

“If you actually go back, though, to some of the original Industry 4.0 thinking, it does talk about connectivity beyond the factory,” Godsell told Manufacturers’ Monthly at the recent Future of Manufacturing Forum at UTS Business School.

Godsell’s business is supply chains – the complex interplay that goes on in matching supply with demand – and she believes they’ll be radically reshaped by Industry 4.0. For those who are clever, she added, “We have got a once in a lifetime opportunity”.

“In a way the power is with the person with the machine; that machine can be anywhere, and Industry 4.0 allows those machines to not be connected within a single factory but to create this virtual factory across an entire country or across a continent or across the world,” she explained.

Mediation platforms Think of it as like Uber for all the milling, bending, moulding and other 26 FEBRUARY 2017 Manufacturers’ Monthly

production machinery existing within a location. With the right digital infrastructure in place to arbitrage and coordinate, fabrication, assembly, and logistics, the effects could be profound.

Though such digital mediation platforms are used every day by consumers, their potential within supply chains for manufacturers is unrealised, and could be revolutionary. (There are companies interested in the concept, but it is a long way from general adoption.)

“If you think about how supply chains have been configured historically, we have an OEM usually at the front end who then will sell via a distribution network to a consumer.

And then they’re responsible for coordinating not their supply chain but their supply base: their tier one suppliers, tier two suppliers, tier three suppliers,” explained Godsell.

This has often come with emphases on labour cost and economies of scale.

This will be turned on its head, she said. While the tail end of the industrial revolution wanted cheap locations and big factories, the next revolution – along with drivers like servitisation and the circular economy – will see the means of production distributed, enabled by digital communications.

Supply chains wouldn’t have to be designed from the OEM backwards (the end producer and different tiers of supplier, plus a distribution network).

“So we would know, maybe, what piece of equipment a person has in their garage, or an SME had in their factory and we could then – when companies had a need for a particular capability – post that onto the market mediation platform,” said Godsell with excitement about the possibility.

“The platform could automatically match demand to capability and then the person with the need could look to the person with the capability and decide who they used.”

Consumers – also able to access a rich collection about where and how their custom product was made – would be able to make decisions

based on things like how far away the product was made, environmental impact, and lead times.

Supply chain appreciation is lacking Godsell had decided on a career in manufacturing at age 15, was trained originally as an engineer

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ManagingSUPPLY CHAINS (she is a member of the Institution of Mechanical Engineers) and went on to work at ICI/Zeneca.

Following that she started as a production engineer at the thensmall Dyson, she moved into senior management, and was able to see and learn about the entire supply chain of a company for the first time, an area she has since specialised in as an academic.

Like many specialists when it comes to their own area, Godsell believes the appreciation of supply chains is sadly lacking. In the UK (her home country), by her reckoning, 80 per cent of the population works somewhere in the supply chain industry.

In boardrooms – where supply

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chain considerations should inform business strategies – the situation is also poor. Only 10 per cent of the top 25 companies on the FTSE had board members with manufacturing or supply chain experience in their resumes, Godsell pointed out. She believes a conventional division between supply chain (focussed on keeping costs minimal) versus sales, marketing and product (as driving profit) is a flawed approach, and favours a holistic view of the supply chain.

Furthermore, if something doesn’t go right with a supply chain, the effect can be dramatic. As the website for Godsell’s research group points out, these are all examples: “The impact of buy-one-

get-one-free deals on food waste, automotive industry product recalls, horse meat in ready-meals and queues in accident and emergency departments.”

Considering different business models Among current trends in the field, the circular economy is one worthy of greater focus.

For reasons such as sustainability (sometimes myopically viewed by manufacturers as a cost) increasing the useful lifespan of products and rethinking business models are important.

A favourite example for Godsell is the HP Instant Ink program, which exploits connectivity, cuts out the need to go buy new cartridges, and lessens environmental impact.

It also shows the servitisation trend in action, and also, importantly, provides printer ink at a cheaper cost to consumers. A series of wins.

Enabled by all the lofty-sounding trends above, there are other ways manufacturers could be rethinking the way they operate in the Industry 4.0 world. Again, the factory is only one part of it.

Consider the UK’s steel industry, added the professor. The year that just passed was one of great difficulties for the sector.

“And part of that is because it’s actually quite expensive to sell UKbased steel at the moment. But just imagine if we didn’t have to sell it – if we leased it,” she offered.

“And just imagine if all of those steel components had a little RFID tag on that maybe was not turned on for the majority of its life but enabled that piece to be tracked.”

Rather than being dumped, a possibility would be to design the steel in a way that made it easily recyclable, she suggested. It could be refurbished for reuse, or recycled in an electric arc mill. Of course, this would also require investing in arc mills. At the end of the steel’s life, its RFID tag could be reactivated and its details used to see the product’s specifications.

“At the moment in the UK we don’t have any or have very few electric arc mills, because we’ve had a traditional steelmaking model around blast furnaces. So we’ve made the investment in electric arc technology, which is suitable for recycled steel, and because we’ve got the RFID tag on it we know what quality of steel it is, so it’s relatively easy to recycle,” said Godsell.

“It helps the automotive industry, it helps make the steel industry more sustainable, but it’s a totally different way of doing business for organisations. And actually it would require investment by the UK at the moment from one steel technology – which I’m not saying we’d phase out totally, it’d still have its uses – but investing in a new type of technology that would actually enable that circular economy to take place.”

Manufacturers’ Monthly FEBRUARY 2017 27

Automation EtherCat is for everyone There is a perception that EtherCat is only suitable for highly complex automation processes. However, as the example of a Victorian abattoir illustrates, the protocol can and should be used in all types of operations, regardless of their size or level of complexity.

Background The abattoir employs around 500 people and processes 1,000 to 1,500 head of cattle per day. As with all such operations, the facility uses a lot of water and produces 1 - 1.5 million litres of waste water which THE PRODUCTS EX600 Series Modular Fieldbus System Designed for total application flexibility, the EX600 I/O system offers many advanced features.

A full suite of diagnostics and programmable parameters allow the EX600 to meet the most stringent requirements. The SI Unit is the key building block of the system and various I/O blocks and valve manifolds can be connected to it. The EX600 can be configured as a centralized or a decentralized I/O system, or a combination of both.

Mechanically the system features sturdy metal M12 connectors (SPEEDCON compatible) as well as a patented hinged clamp design.

This assures that all the modules are held together securely, while still allowing adding or removing individual modules without the inherent limitations of a more traditional tie rod design.

28 FEBRUARY 2017 Manufacturers’ Monthly

must be processed according to regulatory requirements for release back into the sewerage system.

The waste water contains solids (physical lumps of meat, bone and so forth) as well as ‘suspended solids’ (such as fats which have dissolved into the water).

Environmental regulations state that both must be removed.

While the removal of the solids is relatively straight forward, moving the suspended solids is trickier. They can only be collected and removed via a chemical process.

When the waste water records a specific pH level, and following aeration, the suspended solids bind together as actual solids and can be separated from the water. So the task is to achieve this given pH level. This is done by dosing the waste water with acid and alkaline which, in turn, requires a precise automated dosing system which is both reliable and sensitive.

The process relies heavily on pneumatically driven componentry, process valves, dosing pumps, pressure and flow measuring equipment.

The traditional method Traditionally, equipment used in such processes has been controlled through simple valve manifolds via. on/off switching systems. Or at best, more sophisticated set-ups involving additional analog equipment, hard wired back to the PLC I/O, have been used.

While these methods work, they are limited in terms of functionality and capacity. Because they involve direct wiring from a central controller to the equipment, they require the use of long runs of cable and several large control cabinets. And they are limited to short runs.

A better solution The abattoir decided against the traditional model and in favour of an EtherCAT enabled system designed by a customer of SMC Pneumatics, the world’s largest manufacturer of pneumatic automation products.

This system is more polished than the traditional alternative. It allows for more precise dosing of the waste water and therefore a more efficient and more profitable operation.

This multistage process of treating the waste water is carried out in a decentralised system that covers approximately 40m x 50m square meters of floor space.

Apart from the sheer size of the system, the process taking place within is complex and decentralised.

It required a communication system that would provide the speed and bandwidth requirements for processing a multitudes of analog data, as well as effortless setup and enough flexibility in topology to accommodate for long lengths and network redundancy.

EtherCAT network protocol was able to meet these requirements in a very cost effective manner.

The process is heavily reliant on pneumatically driven componentry, process valves, dosing pumps, pressure and flow measuring equipment. SMC drew on its range of 12,000 standard products with over 600,000 variations and provided a complete solution which consisted of an EtherCAT enabled pneumatic valve and IO manifold as a central interface to each stage of the process.

The company’s R&D team successfully utilised EtherCAT technology to transform a simple valve island into a real time operating, modular valve and IO platform with standard on-board

functionality such as diagnostics, error log, preventative maintenance, remote parameter configuration over EtherCAT, general monitoring and full compatibility for network redundancy.

The system, which includes a fully integrated control system with a local HMI running the inputs and outputs using an EtherCAT redundant loop, can be remotely accessed via computer or smart phone.

SMC’s EX 600 and EX 260 are used as communication interfaces to the network. They enable the company’s pneumatic products to be placed on that network for direct control from either the master controller or PLC. As such, they are alternatives to individual hard wiring.

There are five concrete tanks, two tank aeration systems, a rotary screen, an 80kL DAF, a 20kL fibreglass tank, over a dozen VSD controlled pumps, a dosing pump station, and a 5m³/h rated decanter fed with steam-heated process sludge.

The SMC cabinets – which control the sensors, valves, and dosing pumps in each area - are located in five locations across the plant.

The advantages of using EtherCat By not individually hard wiring each pneumatic valve, the plant saves on labour and equipment; and benefits from the flexibility of being able to add and remove modular IO at the local stage of the process.

This reduces the length of cable required for sensors, or additional EtherCAT nodes.

In addition, operators can access diagnostic feedback right down to the point of IO and have remote manmonthly.com.au

Automation THE PRODUCTS EX260, SI Unit EX260 series is a compact and cost effective fieldbus solution for output applicable to SMC’s most popular directional control valves such as New SY, SV, VQC, and S0700 Series. It can control up to 32 solenoids in one manifold.

Available protocols are EtherNet/IP, Profinet, EtherCat, PROFIBUS DP, DeviceNet and CC-Link.

EX260 series has standard dual port connectivity to eliminate the need of switches or branch connector, reducing wiring and component cost. IP67 enclosure rating ensures protection against dust and wash-down environment.

access to parameter configuration over EtherCAT. Commissioning, parameter configuration and diagnostics can all be carried out using a hand held panel and there is network redundancy support.

The result Today, the abattoir processes roughly 250kL of rendering effluent per day. It is able to reduce the level of suspended solids within its waste water from 40,000mg/L down to as low 150mg/L. The concentrated product, which is referred to as sludge, is fed into a decanter and heated to 90°C. The decanter separates the product into concentrated solids, which are disposed of. There is also a water by-product, which is returned to the beginning of treatment; and tallow, which is sold to third parties in the food industry.

Other applications Of course, the benefits of using

manmonthly.com.au

EtherCat are not limited to abattoirs. The network protocol can just as easily be employed in any waste water application (e.g. by food and beverage processors or manufacturers) or indeed in water plants or sewerage works.

But its usefulness goes beyond these water management examples.

In fact, EtherCat is for everyone.

No process is too big or too small to benefit from its implementation.

It has no limitations in terms of capacity. On the one hand it can run a simple module for a single PC, while at the other extreme, the largest EtherCat network ever implemented featured 10,056 nodes connected and running simultaneously with update times of 1000 digital IO distributed to 100 nodes in 30us (0.03ms) and 100 servo axis (each 8 byte IN / OUT) in 100us (0.1ms).

It’s not just applications in the field of process control that stand to benefit from this technology, but also those in the manufacturing

sector and elsewhere. Building automation projects, for example, can benefit from its introduction.

Until now, the thing holding this change back has been the caution that tends to surround the introduction of new technologies.

“Why take a Ferrari around the block to pick up the milk when you can ride your bike?” has been the attitude of many engineers and designers.

This analogy totally misses the point. In the world of automation technology it’s the other way around. Far from making systems unnecessary complex and expensive, EtherCat actually simplifies operations.

It can help reduce the use of unnecessary hardware, make commissioning easier, improve system accuracy, and save businesses a lot of money.

SMC Pneumatics (Australia) 1800 763 862 www.smcworld.com

Manufacturers’ Monthly FEBRUARY 2017 29

ManufacturingINNOVATION How an export champion maintains its innovation edge A frequently-used case study on what Australian advanced manufacturing encompasses – including a global mindset, high-value products and sophisticated technology – ANCA is a local manufacturers’ manufacturer. Co-founder Pat Boland told Brent Balinski a few things about what guides the company’s approach to innovation.

W

HEN we spoke to ANCA co-founder Pat Boland, shortly after the company won one of its many export awards, the conversation began and ended on the same subject. Specifically: the needs of its customers and how these drive innovation.

Concepts like “listening to the customer” and “understanding their problems” is a staple requirement when it comes to service rendered and should always be a top priority.

Responding to customer problems has been the primary method of innovating for ANCA during its four decades-plus history. Customers are highly varied – including in electronics, medical and aerospace industries – and located all over the world.

It can be a “sort of failure” that drives a project – where something doesn’t work exactly as it could – or other identified demand for better performance. Boland mentions on-machine measurement of a tool, achieved by a probe inside a unit, as an example.

“That was basically because the approach that we and other people were using did not work when it came to cutting and grinding tools,” he told Manufacturers’ Monthly.

“The geometry of cutting tools is too complex… And that really came out of sitting down and saying ‘how are we going to get this to actually work?’”

Other improvements come out of the periphery of problemsolving, which is underpinned by a sophisticated understanding of users’ issues.

“Sometimes we’re trying to solve one problem and have an engineer say ‘well look, in searching this, I’ve found this paper and I suggest

30 FEBRUARY 2017 Manufacturers’ Monthly

we confront this much bigger problem, by taking this approach,’” explained Boland.

“And that’s really how the development of our 3D simulation software [CIMulator 3D, an industry first] came about.”

Bayswater North-based ANCA exports 99 per cent of its cutter and grinder tool machines, and counts companies including Boeing, Rolls Royce and various Apple suppliers among customers.

The company was established

by Boland and Pat McCluskey, who worked together at a government munitions factory, in 1974.

Boland describes the company’s approach as combining academic/

engineering sophistication and “practical trade skills”, with the machines needing to be robust and simple to use.

Following a recession in the early 1980s, the two Pats – who initially made just CNC control systems – decided to chase an export market for machine tools.

New technology for new materials Demand for these systems has grown sharply since, with the company successfully innovating around changing needs of their customers, which make the tools that make products that we use every day.

In recent years, this has included

responding to increased use of carbon fibre-reinforced plastics, particularly in aerospace and automotive. These can be tough on tools, which might have to – in an aerospace example – go through multiple layers of different material.

Demand for CFRP has increased the use of polycrystalline diamond tooling, for which ANCA has engineered solutions such as its EDGe units, which can grind both PCD and carbide.

The pipeline of projects for the company is always much bigger than can be completed, said Boland. The company has developed formalised priority settings to try and deploy R&D where it is most meaningful.

It is currently working to formalise its development programs, including collecting customer feedback and writing innovation programs into engineers’ objectives. (Of 400 staff at Bayswater, about a quarter are engineers.)

An important area is striking the right balance between customers’ general requests and working on what can be applied generally. A lot of work is “sort of on the edge of innovation,” Boland said.

“It’s that fine line between contract engineering and innovation… It’s what we look for when we’re doing work in relation to a customer. We’re always trying to generalise it so it can be applied across a wider range of customers.”

It can be a tricky to maximise the value created from an R&D budget (at ANCA this can be as high as nine per cent of revenue) he added.

“Some minor projects end up being very, very successful and some big projects end up not so successful,” he said. manmonthly.com.au

ManufacturingINNOVATION International orientation ANCA manufactures in Thailand, Germany, US, the UK and Taiwan, and has about 900 employees worldwide. It credits its highly global focus as helping it remain competitive, and has said that competing locally and on cost is a losing strategy for Australian manufacturers. This is a view shared by many in the advanced manufacturing community.

Its approach has seen it widely celebrated as an example of what Australian manufacturers have to do to succeed – to focus on high-value, high-technology products, serving the value chains of multinationals.

Its numerous awards include Manufacturer of the Year at the Manufacturers’ Monthly Endeavour Awards (most recently in 2015) and Australian Exporter of the Year in 1995 and 2015. Last month it entered the Australian Export Awards Hall of Fame (one of only 11 companies to have done so.).

For 2015, the company achieved records for sales and production.

In 2014 – 15, revenues were nearly $200 million. Boland describes this

manmonthly.com.au

as “the crest of a wave” due to the IT industry in Asia tooling up for new products such as smartphones and tablets.

The co-founder described 2016 as “very solid” but a “return to normality”. The US – where ANCA is currently expanding its showroom – has been a standout.

While manufacturing isn’t in boom times there, many manufacturers are trading in old equipment for new, seeking productivity improvements.

The United States is sometimes cited as a country with approaches to innovation worth learning from.

Boland believes their approach to taxation for business investment is a good one.

“I think that there’s room for more targeted tax rates, things like accelerated depreciation, investment allowances, which actually – rather than spread the tax cuts through the whole economy – have some focus on where it is the companies which are investing can operate in a lower-tax environment,” Boland said.

“I think a lot of the objections on it all going off to fund the banks and whatever would evaporate if the

same level of tax cuts was pushed into something like an investment allowance. We see in the US where for various projects there’s always a spike in investment, where customers are trying to spend money to take advantage of that tax.

“I think for manufacturing in Australia, one thing we need is more investment in capital.”

To continue with the US, ANCA recently made a trip to Chicago’s International Manufacturing

Technology Show. Boland said there and elsewhere, the focus on the Internet of Things (sometimes used synonymously with Industry 4.0) was obvious.

“Everywhere it was taking information from the shop floor and collating it and interfacing into ERP systems where you would have a real-time connection from what’s happening on the shop floor to management software through to just machine monitoring,” he said.

Sometimes dismissed as a fad, linking the virtual to physical world – with the intelligent use of data from machines – is something ANCA’s customers are very much interested in.

One recent Swiss visitor to Bayswater told their host that all capital purchases were made according to a 40/140 rule. No machine tool would be bought that didn’t give 140 hours of output from 40 hours of manned operation.

“To achieve that, that really implies that Internet of Things, because obviously there’s a lot of monitoring that’s got to take place if you’re going to achieve that sort of outcome,” Boland said.

And as with elsewhere, spurred by a major customer problem, this is where ANCA will be innovating now and into the future.

“That is a distinct call from our customers – for increased unmanned operation,” Boland said.

ANCA 3 9751 8200 http://www.anca.com/ Manufacturers’ Monthly FEBRUARY 2017 31

Manufacturing SHOWCASE Showcase provides insights into manufacturing’s future A large audience gathered recently at the Victorian Manufacturing Showcase in Ballarat to hear from business leaders about challenges and opportunities in emerging growth sectors, with a strong emphasis on new ideas, products and markets, writes Hartley Henderson.

K

EY factors considered central to success in today’s changing manufacturing environment included an ability to adapt and change, development of a risk-taking culture, and exploiting opportunities for collaboration with other companies and universities.

Also highlighted was the critical role of strong leadership, involvement of employees in seeking productivity improvements, and recognising the importance of consistently delivering quality added-value products for clients.

Thales is a leading provider of systems, products, and services in both commercial and defence areas including the provision of protected mobility vehicles and naval support services, through to air traffic management systems, cyber security solutions and transport systems for the commercial sector.

The company, which has some 3,200 employees across Australia, generated revenue of $1 billion in 2015 and $1.6 billion worth of exports in the last 10 years.

Thales CEO for Australia and New Zealand, Chris Jenkins, said the defence sector, which was formally overshadowed by the automotive industry, is experiencing positive change, is more agile and competitive, and that we can now see what the future of Australian manufacturing should look like.

“The automotive sector in Australia failed because it did not have a globally competitive model.

High quality performing products that are globally competitive and delivered on time are central to success in today’s global marketplace,” he said.

“It’s important to develop a 32 FEBRUARY 2017 Manufacturers’ Monthly

culture of greater risk-taking, but to do this it is necessary to have courage and the capacity and ability to carry through.

“A key factor in our success is change and growth of the supply chain whereby there is no longer a focus on our own supply chain, but rather developing relationships and using the supply chain of other enterprises, and critical to this is the ability to adapt.

“There is an increasing reliance on the supply chain, commencing right at the design phase, and involving the development of longterm relationships, such as we have with Ballarat-based company Albins Performance Transmissions in development of the Hawkei, which

has delivered around $1 billion of revenue into Australia.

“This is a next generation protected vehicle that meets the requirements of global defence forces for a highly protected, mobile and integrated vehicle able to operate in an environment under threat including from improvised explosive devices, mines and ambushes.

“A strong alignment between government and industry has been developed that is proving to be cost effective and assisting the defence sector to be at the cutting edge of technology.

“Continuing innovation is also important, which involves sustaining deep knowledge and

Chris Jenkins, Thales CEO for Australia and New Zealand

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ManufacturingSHOWCASE

skills to create a knowledge network.”

Jenkins pointed out that most of Thales’ business activities are technology-intensive, which means that innovation is a strategic priority and the driving force behind the long-term development of the company.

“We apply a model of open innovation where we work closely with the academic research community and our customers to ensure the development of solutions that meet customer needs,” he explained.

“Thales is one of Australia’s leaders in R&D – it is our company’s lifeblood, and we build on that to create, manufacture and support a wide range of truly innovative products. Our decentralised approach to R&D assists the company to differentiate its products and gain a competitive advantage.” manmonthly.com.au

Winning edge

Albins Performance Transmissions was founded in 1978 and is a privately owned Australian company based in Ballarat that specialises in the design, engineering and production of driveline components for extreme duty applications.

According to the company’s CEO, Stephen MacDonald, Albins is the largest high performance gear manufacturer in the southern hemisphere and recently won a tender for a five-year exclusive gearbox supply agreement for the Australian V8 Supercars.

“We also work with European GT race teams and are involved with supplying products for major events such as the Dakar Rally, Baja 1000, and European and Australian Rally Championships,” he said.

“Albins has also expanded into the defence supply chain where we are a tier one supplier to Thales

Australia on the Hawkei program.

Our involvement with Thales includes drive chain innovation assistance and specific axle/ transmission location in Hawkei vehicles.

“Our journey has been tough at times, but we are now expanding our global market reach, including into South Africa and the USA. There are huge opportunities, but it’s important to establish close collaboration with supply chains and customers, including building strategic supply chain partnerships.

“We have developed a vertically integrated structure and are putting increasing effort into the front end of our operations including design and prototyping, through to production.”

Albins boasts a range of advanced design, machine and general machining capabilities including CAD and CAM 3D, gear and transmission design,

and electronic design. Machine capabilities include gear grinding, and CNC turning, milling, gear cutting and CNC Palloid Spiral Bevel.

Examples of product development capabilities include individual gears, axles, spiral bevel and hypoid gears, sequential shift transmissions, and custom transmission solutions.

Stephen emphasises that a key focus of the company is to provide customers with a competitive advantage and winning edge by developing innovative and effective solutions using the latest technologies and quality systems with on-time delivery.

“We are able to provide outstanding through-life support and deliver greater reliability, higher performance and lower maintenance costs for customers over the life of products,” he said.

“It’s important to see things through your customer’s eyes and focus on what is important to them, not what is important to you.

“In looking to further expand our operations, we are honest about our capabilities and what we can do well and what we can’t, so there is a focus on identifying and addressing any critical capability gaps, and striving for maximum profitable growth, including through growing our military business.”

Stephen MacDonald, CEO, Albins Performance Transmissions

Manufacturers’ Monthly FEBRUARY 2017 33

What’sNew

Brought to you by

High-precision torque sensor BESTECH AUSTRALIA has introduced a high-precision torque sensor designed for both static and dynamic measurements on non-rotating applications.

Applications for the sensor include torque measurements on extremely small electrical actuating drives and micro-mechanical actuator elements, or for measuring reaction torques, for example on micro-motors. The

high accuracy of measurement also makes this sensor ideal for use as a reference in many fields of industrial manufacture, or in laboratory research and development projects.

As it does not contain any rotating parts, it requires no maintenance if used properly. Installation is made easy with the inclusion of mounting brackets and flange adapters, allowing quick and practical

integration of the sensor into existing or newly developed setups and test benches.

The strain-gauge based sensor’s modular design allows precise configuration for specific applications: mV/V with standardized output signal, ± 10 V output signal, configuration via USB, and ± 10 V output signal, configuration and measurement via USB.

Bestech Australia 03 9540 5100 www.bestech.com.au

Cordless hydraulic pump for load testing tools ENERPAC has released the XC-Series cordless hydraulic pump to increase the safety and flexibility of load testing tools.

The company provided turnkey engineering specialists Mr Lift It the solution for its load testing tool, which is used to test eye bolts, pad eyes, roof bolts and anchor points up to 12 tonnes.

The load testing device uses the hydraulic pump fitted with a V-66 load holding valve and connected to a stainless steel control panel. A variable load can be gradually applied using an Enerpac V-152 relief valve.

The pumps actuate hydraulic tools as fast as a basic electric powered pump and create up to 700 bar (10,000 psi) of pressure; making them up to five times faster than manual hydraulic pumps and up to two times faster than popular pneumatic powered pumps.

Designed to provide optimal safety to operators, the XC-Series offers several safety features, including zero trip hazards through cordless design, overload protection circuitry from excessive amp draw

or temperatures, and a trigger lock-off mechanism to protect against unintended operation during transport.

Engineered as a long-lasting pump that can be used in hard-to-access areas, the pumps are constructed of lightweight materials, featuring a 28-volt, Lithium-Ion battery technology.

With its bladder reservoir, the cordless pumps eliminate venting and offer leak-free operation in any orientation. In addition, the overall body, handle and trigger have been ergonomically engineered to maximise ease-of-use and portability.

XC-Series cordless pumps deliver oil flow of 2.05 litres per minute at its low-pressure setting and .25 litres per minute when operating at full pressure, up to 700 bar.

Additionally, the lithium-ion technology ensures XC-Series pumps provide end users with the battery runtime necessary to accommodate demanding application requirements.

Enerpac www.enerpac.com/en-au

Machinery health monitor EMERSON has released its AMS 6500 Machinery Health Monitor, which is now certified for Safety Integrity Level (SIL) 2, providing users greater confidence against asset and process failures.

Common examples of process applications where SIL 2 advanced safety integrities are needed are steam and gas turbines in power plants and critical refinery and nuclear industry assets.

The monitor’s certification gives users added assurance that it will reliably deliver the appropriate insight into the health of critical assets. Whether organisations need SIL certified equipment to meet company guidelines or to comply with legal requirements, SIL ratings help evaluate whether a specific technology meets the selected risk tolerance for industrial applications.

For critical mechanical equipment, the monitor provides predictive intelligence and protection capabilities, helping organisations achieve operational certainty through improved reliability and safety.

Emerson www.emerson.com

34 FEBRUARY 2017 Manufacturers’ Monthly

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Internet OF THINGS The top IoT software platforms Q4 2016 A new report from Forrester has identified and compared the top 11 IoT software platform providers for the last quarter of 2016. Stephanie Stefanovic writes.

A

CCORDING to the report, IBM, PTC, GE and Microsoft lead the pack, while AWS, SAP and Cisco Jasper offer competitive options, and LogMeIn, Ayla Networks, Exosite and Zebra Technologies lag behind.

Forrester evaluated vendors based on 25 points of criteria, which were divided into three “high-level buckets”: Current offering: Vendors’ current offerings were evaluated according to the functional categories of connect, manage, secure and analyse.

Forrester looked at the breadth of protocol support and cloud integration, the strength of the management console for managing virtual devices using a rules-based engine, support for developers through SDKs and prebuilt applications, and the platform’s identity and access management functions. Forrester also examined each platform’s capacity for analytics, including advanced capabilities such as predictive analytics, augmented reality and edge analytics.

Strategy: Forrester assessed each vendor’s strategic positioning as a factor of several evaluation criteria, including planned enhancements, geographic reach and the robustness of its partner ecosystems.

Market presence: This category indicates the relative ranking of the vendors in the areas of customer installation, geographic client distribution and dedicated employee resources.

Why IBM, PTC, GE and Microsoft top the list IBM: “The Watson IoT Platform can serve a broad range of advanced IoT use cases. The tech giant doubled down on IoT in 2015 with an investment of $3 billion dollars to create a new IoT business unit. The new organisation includes more than 36 FEBRUARY 2017 Manufacturers’ Monthly

1000 researchers, developers and designers dedicated specifically to developing the Watson IoT Platform.

“Since then, IBM has added significant capabilities to the platform, including augmented reality, cognitive capabilities, blockchain, edge analytics, analytics tooling and natural language processing, to name a few. With a strong commitment to open source standards and a robust global partner ecosystem, IBM is well positioned for market leadership. However, according to some customers, Watson is not well integrated with analytics engines, and IBM’s product portfolio terminology is confusing and hard to decipher.”

PTC: “PTC has invested $1 billion in IoT offerings since its acquisition of the ThingWorx platform in 2013.

The company’s broad protocol support for both short-range and wireless connectivity options, strong digital twin functionality, and a multitude of prepackaged applications that include asset management, alert management, product relationship management, and workflow management place PTC in the top tier of vendors for this evaluation.

“The company also boasts the strongest augmented reality capabilities in this evaluation, due in part to its acquisition of Vuforia in 2015. Despite these advanced capabilities however, some references reported a shortage of technical expertise within PTC’s professional services division in addition to a lack of communication and clarity regarding newly released features.”

GE: “The vendor offers its Predix platform primarily for IoT applications. GE has been using its Predix platform to support its own native offering before making it available to others to build upon.

Predix enables remote monitoring and advanced predictive and edge analytics and features this evaluation’s most advanced digital twin capability, which allows customers to design and test new capabilities of connected highvalue assets like wind turbines and airplane engines using a high-fidelity digital model of the asset.

“Numerous customer references cited GE’s intense focus and history in the industrial market as a key differentiator over its competition.

This evaluation did uncover some areas to improve, such as developing more packaged, end-to-end solutions for IoT use cases beyond asset performance management.”

Microsoft: “The Azure IoT Suite integrates an array of specialised tools and analytics services to support IoT platform functions. The offering includes preconfigured solutions for predictive maintenance and

remote monitoring to help customers implement IoT solutions efficiently.

These preconfigured solutions use Azure services such as IoT Hub for device connections, authentication and monitoring and use Notification Hubs, Machine Learning, and Stream Analytics to capture insight from connected assets.

“Microsoft’s Azure IoT Suite has a strong road map and extensive global reach in 13 regions, including China and Germany. In addition, Microsoft acquired Solair in March 2016 to expand its IoT solution capabilities for retail as well as food and beverage customers. However, Azure IoT Suite is currently available only in a public cloud environment and is not yet available in hosted private or private cloud environments.”

Information for this article was sourced from The Forrester Wave: IoT Software Platforms, Q4 2016.

Figure 1: Forrester Wave: IoT Software Platforms, Q4 ’16

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The LastWORD Robots and the real world All over the world, ageing populations and changing attitudes are making it harder to hold on to workers, believes Dr Rodney Brooks. Brent Balinski spoke to Brooks, founder of Rethink Robotics, about some demographic and technology shifts to watch out for and why it’s best to be realistic.

I

N the markets where Rethink sells its collaborative robots, ageing workforces and a shortage of younger workers available to replace retirees are a combination troubling manufacturers, according to founder, chairman and CTO, Dr Rodney Brooks.

It’s a problem that’s been brewing for many years, and an issue in China which he picked up on early in the millennium as co-founder of iRobot (which still produces its Roombas there, at a rate of around two million annually). The same goes for Adelaide-born Brooks’s adopted home of the US, he said. Ditto for Europe.

“They just don’t know what’s going to happen in some of those factories in the midwest states; the workforce is ageing out,” Brooks told Manufacturers’ Monthly recently.

“In the US and Europe the average age of factory workers is going up all the time. BMW has special programs to retain the older workers. They’re not trying to get rid of them – they’re trying to keep their elderly workers! They’re the ones with all the knowledge.”

In much of what he’s seen, people simply don’t want factory floor jobs as much as they used to.

As a roboticist, his solution is unsurprising: more technology, specifically more robots. Industry 4.0 is a topic some get carried away with, but not Brooks. Most of the world’s manufacturing is low tech, he said, taking place in brownfields factories with low-skilled, highturnover workforces. He dismisses the Industry 4.0 vision as “top down” and based on some often unrealistic assumptions.

The factory of the future might have a seamless flow of information across value chains and self38 FEBRUARY 2017 Manufacturers’ Monthly

optimising machinery, but the factory of the present – in China and elsewhere – can be cramped, run by ageing equipment, and not even networked. Creaky, decades-old machines will be kept as long as they still do the job.

He recalled the GE Minds + Machines event where he made the point as a presenter: “Some GE [General Electric] Digital people came up to me and whispered, ‘We’ve still got factories like that, too.’ But it doesn’t fit the narrative of stuff coming from above and all the bits whizzing everywhere.

“Investment has to provide incremental value. ‘Invest a whole lot and then you’ll get some undefined value’ [is unappealing].”

Three shifts to watch According to Brooks, there are three big disruptions to expect in the industrial world.

One is the “demographic inversion” and accompanying labour issues mentioned above.

Another is high numbers of 3D sensors, with high quality and low prices driven by developments in the video game industry (Microsoft Kinect is the go-to example).

Then there will be a generational shift in how industrial equipment is designed, incorporating regular software updates. Brooks expects this concept – comparisons include Tesla’s car and Apple’s iPhone software updates – to become common on the machinery on plant floors, and to provide tangible benefits to users.

“Traditional equipment… had embedded software and it’s buried in its ROM or something, but these devices live through regular software updates,” explained Brooks, pointing to his phone.

“So you buy the piece of hardware,

but its capabilities continue to evolve over time… Imagine the results of new deep learning algorithms, trained on millions upon millions of things elsewhere, downloading that onto the machine and now the machine can deal with seeing new parts or new things that weren’t invented at the time the machine was built.”

Baxter and beyond According to Brooks, Rethink saw a “massive increase” in sales in 2016 driven by its Sawyer robot.

Sawyer was the company’s first for the world’s manufacturers (its predecessor, Baxter, was only designed for US factories).

The last time this magazine spoke to him, in 2015, they had clocked up a claimed 1,000-plus sales. This number is currently in the “thousands” Brooks said, whose company announced several new distribution deals over the last year.

The topic of technology and its impact on jobs – in manufacturing and elsewhere – continues to be a thorny one. The realists will concede that manufacturing will remain important, but employ fewer and fewer people in total as automation drives productivity upwards.

Within the United States, president Donald Trump and his supporters are contending that it’s possible to bring lost jobs back.

High-profile cases including Carrier, Ford and General Motors have emboldened those sharing the view, though opinion is divided on how productive tariff threats are for the country’s manufacturers.

(For context’s sake, this interview took place on December 5. Brooks was in Australia at the time for UTS Business School’s Future of Manufacturing conference).

The roboticist - who started his current company with a vision of making American manufacturing more competitive - said he understands the optimism around bringing production and jobs home.

However, he feels it is misguided.

“I’ve seen press stories – some woman in Toledo, Ohio saying ‘it might take Mr Trump two months to get steel production back’,” he observed.

“It’s just totally unrealistic. And I don’t know whether it was thought out at the high level any better than that.”

In manufacturing, as with everywhere else, nostalgia has its place, but it’s always best to be realistic.

“I had the same thing when I was running computer science at [Massachusetts Institute of Technology]. A lot of people, older faculty members, were like ‘why can’t it be like in the 60s when DARPA [Defense Advanced Research Projects Agency] gave us a block grant and we decided what we wanted to do,” Brooks said, who headed the MIT Artificial Intelligence Laboratory and then the Computer Science & Artificial Intelligence Laboratory from 1997 until 2007. “‘Can you make that happen, Rodney? Can you go to Washington and make that happen?’ I can’t make that happen. That’s where the technopolitical situation was in the 60s. It’s a different world now and no matter how much you liked it then, it isn’t coming back.

“We have to figure out how we operate in the new world. I’m not trying to denigrate any particular group of people; the MIT faculty had exactly the same nostalgia: ‘Why can’t it be like it was back then?’” manmonthly.com.au

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By Lou Washington

In our fast-paced, internet-enabled marketplace, whether they are B2B or B2C, customers no longer have patience for long, tedious sales cycles. As a consequence of this, there are now numerous sales automation tools, configure-pricequote (CPQ) solutions and CRM packages that offer many valuable benefits to the user. These tools can help a great deal, but at the heart of any selling effort, there are two critical elements that must be well served: the salesperson and the buyer.

Lean and how lean impacts selling and the sales organisation starts with a simple premise: Sell the right product, and sell the product right.

Here are four key areas in which a lean approach can benefit your sales efforts:

1. Velocity of Selling Unlike many activities, the metrics of success and failure in sales are easy to identify and evaluate.

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Sales reps that meet or exceed their targets are heroes; those who don’t are unemployed.

Sales organisations have to be relentless about meeting their revenue numbers, but more importantly, they have to challenge themselves to sell faster.

There isn’t a sales rep alive who hasn’t expressed frustration with the length of time needed to close business. Time spent closing one sale often comes at the expense of closing another. Eliminating the unnecessary, valueless and useless activities required during selling cycles will facilitate a quicker close and ultimately more sales over time.

2. Sell It Once, Sell It Right

General George Patton once balked at an order requiring him to abandon one front for another.

His view was he hated “paying for the same real estate twice.” In selling, we see this frequently.

A selling cycle moves forward without adequate communication of need or requirement upfront.

Confidence in the proposed solution is based on a lack of information or assumption.

Ultimately, the inadequacy comes out, and everything in the selling process resets to day one. The competition comes right back into the picture, and all progress to date has been a waste of time.

Lean makes the selling process more methodical.

Step one is achieved and documented, step two builds on step one and facilities step three. Accurate and relevant data drives the selling process.

3. Proper Qualification

Nothing is more wasteful in sales than selling something to someone who can’t use it or doesn’t need it. Prospects will engage with sales for any number of reasons – boredom, curiosity, make-work and self-education. Sales reps, especially those who are desperate, will do anything to keep the flame of hope alive with a prospect that by any measure has zero intention of buying anything.

Lean gets the right prospects in front of your selling organisation. It goes beyond BANT by identifying prospects that have self-qualified through their own behaviors. Real prospects have needs they are trying to fulfil. They

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research and study solutions long before they think of talking to anyone associated with selling.

Facilitating that research and providing answers to those inquiries is how sales cycles are started.

4. Responsiveness to the Voice of the Customer

Not all customer communication comes via personal letters, emails or RFPs. Prospects are always communicating. What pages do they visit on your website? What data sheets or collateral do they download? How often do they attend your user meetings? What LinkedIn groups do they belong to? What do their social interactions tell you?

Listening to the customer or prospect is critical.

Knowing how to listen properly is what lean selling helps to accomplish. A car company recently spent a small fortune improving the drive-away quality of one of their popular car models. This resulted in no increase in sales. If they had spent any time on the owner’s club social pages, they would have discovered that quality was not an issue with their buyers – their buyers wanted more power. The quality was fine; the issue that killed the car was its lack of power.

Lean collects the right market data to support the right marketing decisions. Aligning those decisions with sales drives a successful sales organisation.

Lean selling, like all lean processes, starts with eliminating waste. Get rid of the unnecessary, ditch the stuff that serves no purpose and forget about everything that doesn’t enhance the value of what you are providing to the prospect or customer.

Lou Washington is a manufacturing expert at Cincom Systems. Cincom offers configureprice-quote (CPQ) solutions to Australian manufacturing businesses that are looking to streamline their sales and better link their frontand back-end processes.

Cincom has also enjoyed over 45 years of providing ERP solutions and modules to businesses in Australia and worldwide.

Learn more at www.cincom.com.au.

Manufacturers’ Monthly FEBRUARY 2017 39

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