Breaking Industry 4.0 Barriers

[00:00:00] Filip Popov: Hello and welcome to another episode of Espresso 4.0. Today, we are joined by Andrew Sparrow. Andrew, welcome.

[00:00:10] Andrew Sparrow: Thank you Filip. How are you doing?

[00:00:12] Filip Popov: Very good.

[00:00:13] Andrew Sparrow: I am armed with my multiple Espresso, as I might add.

[00:00:18] Filip Popov: You came prepared, and that's what I appreciate. You brought enough espresso for both of us. Excellent.

[00:00:26] Andrew Sparrow: Yeah, I need it.

[00:00:29] Filip Popov: Why don't, so now that you are, uh, actually, yeah, you're in a much different timezone, I believe, but it's quite early in the morning where you're at.

[00:00:35] Andrew Sparrow: I'm in southern California, Orange County. Yes. So, what is that, 9 hours behind you?

[00:00:39] Filip Popov: Bright and early. Bright and early. Um, well, um, I hope you're ready for the questions that I have for you. But, before we dig into those, let's say, why don't you tell us a little bit about who you are and what your main responsibilities are?

[00:00:52] Andrew Sparrow: Sure. Sure. Well, my responsibility is we're XD Innovation. I head up software and services. So, I'm the go-to-market guy who brings out what we do on a daily basis. Um, and I guess what we do on a daily basis is bring great ideas. This is what gets us up every morning: great new product ideas. Bring those to market far more efficiently, far quicker, far more profitably for organizations and therefore long term more sustainably.

Um, and I like to think we remove the BS in the product life cycle. Um, and there's a lot of that in there. There's a lot of stakeholders in there and it's putting that thread all the way through that product life cycle to get the idea into the hands of your customer quicker than you might be doing it today.

[00:01:44] Filip Popov: Gotcha. All right. Well, thank you. In fact, you and I have connected a little bit offline. So, the questions that I had spurred out of that conversation. Um, the first one being, um, what are the primary challenges you observe in implementing industry 4.0 solutions, particularly regarding data silos and their integration that we spoke of?

[00:02:06] Andrew Sparrow: I think the industry 4.0 challenge has been going on for a number of years, and it's really interesting to see how across geos, it's quite varied. I remember when the whole term was invented in Germany and how we saw that region just kind of grab hold of all these different technologies. Then we saw Western Europe be a little hesitant, saying: I don't want to be the guinea pig.

Let me see if anybody else is making sense of this. And then we went over to North America and everybody's like, I'll have a bit of that. I'll try it all. Give it me. But today, what does that mean in terms of the challenges? I think you're right. Number one. Data silos. We've got inconsistent data formats across your MES, across your PLM, across your ERP, your supply chain. Um, there's just a lack of real-time integration between operational and enterprise systems. I mean, take it. I mean, a lot of people don't have more than an eBOM. Maybe some people don't even have more than a cadBON. But I mean, to find an integrated CAD, eBOM, mBOM, Bill of Process, pBOM, see that is extremely rare today.

It still is. So, I think it's integration and data silos, um, that is the big one. Um, you know, what are the results of that? Just a lack of digital thread. Um, you know, you're missing that end-to-end visibility from design to manufacturing. Things get bottlenecked and stuck in design and engineering.

The manufacturing guys are saying, give it here, give it here because we don't even know if we can make this thing yet. We don't even know if it's real yet. Never mind getting it into the hands of our customers. So, what is the biggest challenge behind that, honestly, it's, it's culture, isn't it?

It's, teams are just hesitant to adopt new technologies, new ways of doing them without a clear ROI and ROI isn't just a C suite issue. It's a personal issue. You know, what's my return on change? What's my return on personal investment, um, or training, et cetera. So, I think that kind of fragmented ownership of the data governance within organizations creates real roadblocks.

[00:04:21] Filip Popov: I'm glad you mentioned culture because that kind of ties in perfectly with my next question. And also you've mentioned another thing being the ROI, which is not solely something that C level execs are concerned. It might mean a different thing, but all people across all levels are also concerned.

Uh, everyone has their own pain chain. It looks different, but within that pain chain, digital transformation, um, may solve some of those issues. To that end, can you elaborate on your experience with the cultural hurdles across different organizational levels, uh, when driving digital transformation projects?

[00:04:58] Andrew Sparrow: It's consistently the biggest thing. I mean, I think people think cultural and they think it's the elephant. Um, it is the big elephant that you've got to eat up and get over, but I think it's dealt with in bite-sized chunks. So let me deal with it from a shop floor to a top floor perspective. Um, I think at a shop floor level, you've got operators and technicians who may see automation and Industry 4.0 as a threat to their job security. They may even struggle to adapt to these new technologies. Um, you know, I've, my experiences in a few cases, poorly introduced solutions have created a lot of hostility, particularly on the shop floor, because workers have felt just imposed that, you know, here's a brand new shiny toy for you, and frankly, they're not interested in it. And so there's pushback, or they ignore it, or they keep their head down. I hope it'll go away.

[00:05:57] Filip Popov: Yeah.

[00:05:57] Andrew Sparrow: So, for me, what has to happen is that you have to focus on the kind of co-creation of involving operators in these solutions. You know, in the testing of them and showcasing these improvements, um, for instance, kind of add-ons for better fault reporting or digital twins for safer testing, you know, all these different things.

So, I think number one, it's shop, from shop floor. Then you kind of come up with IT, OT, and teams misaligned. You've got disparate goals between IT, who's trying to bring in security and governance. And then you got the OT guys, who are more interested in uptime and performance. I mean, they just come at it from a totally different mindset.

So, that creates clashes. I think then if you then go up a little further. You're into obviously C suite issues. You've got ownership gaps in digital initiatives. Um, you know, digital transformation often lacks a real clear accountability. Um, and that leads to stall projects.

 If you then come up to another level, you're dealing with middle management resistance; you've got people who don't want to change; they often fear disruption to KPIs or to workflows because they fear that they have senior managers watching them every day. And that leads to resistance against not adopting new processes. And then if we then go up to the Senior Management, the C suite level, I mean, ever since I've been really hands-on in the product lifecycle, and I say this story a lot.

I never forget sitting down with some friends of mine at Dassault Système. Um, and they're saying, how is it that an SAP ERP guy walks into a business and comes away with a hundred million dollar check for business? I'm struggling to get a million dollars to get their product lifecycle fixed. And it's consistent that the answer to that is, what do you tell them about percentage improvement? When you go to a C suite, they're not listening unless you can give them a dollar value on that investment and that return. So, I think there's a whole bunch of things from the shop floor to the top floor. Forgive me. I know I'm being a little verbose here. There are, but there are a lot of factors.

[00:08:14] Filip Popov: Not at all, not at all. Uh, it was, uh, it was a very interesting insight, and I think we can all relate to those at least, uh, at least, uh, us, some of us who have had the pleasure and opportunity to work with on all of these different levels. Um, you, you've now mentioned culture as one of the things, uh, and, um, silos, the digital silos, and lack of digital thread, um, as potential kind of, um, challenges to having a successful deployment of a digitalization project. Um, how do you determine, having said that, how do you determine whether a company has the right foundation to begin an industry 4.0 initiative and what key indicators do you look for?

[00:09:00] Andrew Sparrow: These are good questions. These are good questions. I think there's no simple answer to that one because it, you know, if you're a startup going through growth trajectory, if you're a legacy Fortune 500, um, if you're a 100 million business, but I think what we tend to look for because we operate in that sweet spot of 100 million up to fortune 500, um, we look for the key indicators that a company is ready, um, definitely leadership is demonstrating a willingness to commit to iterative improvements rather than a one time overhaul. So, they've got to be kind of realistic. I think as much as I love to be at that C suite level and understand the business drivers behind change and improvement, continuous improvement. If they just think you could just swamp in, eat the elephant, and 18 months later, you've got a new shiny business, then that's just never going to work. So, I think it's that, again, willingness to commit to iterative improvements. Number one, I think when they've got existing systems like a MES or a PLM or an ERP, they are functionally disjointed. Um, they've clearly, in the first place, recognized they need some form of best-of-breed across those areas of their business. But I think that, and that's a good sign. That's a good sign. They're ready to adopt technologies that can improve their business. So, that's a great sign. Now, what we've got to do is kind of connect them up into what we call a critical thread; the digital thread is another terminology. You know, we think of it as the critical path through the digital thread.

So, I mean, everybody wants a piece of the digital thread, but do you really need it? Is it critical? Is it going to improve profitability? Is it going to really speed things up in the hands of the customer? So, I think we look at it in that respect. Um, I think it's the other things where there are clear pain points that exist that can be addressed with a measurable return on investment. For instance, faster, faster MPIs. So, faster new product introduction, improve quality. If you've got customers starting to complain about the quality of products, we want to be there. We want to be able to fix that. Um, if they've got, they want to lower their scrap rates, they want to lower their rework rates, all of these kinds of things.

We want to be jumping all over to fix those things. Um, and I guess, last but not least, the other sign we look for is kind of a workforce and management showing an openness to learning, to adapting to new processes and tools. And there's, I guess there's a lot more.

[00:11:44] Filip Popov: I see that you're coming at it that really what's really important in starting these, um, projects, getting them off the ground and motivating people in management is communicating value, or defining very clear metrics of success. So, I want to turn over to AI, uh, when discussing AI as a role in industry 4.0, how do you balance between its actual measurable impacts and the hype surrounding it?

[00:12:15] Andrew Sparrow: That's a good point. My background was in the late 90s when we wrote the ERP wave of the millennia bargain and probably the greatest anticlimax that I've ever experienced. You know, you hit the year 2000, and everything was still there, to the next day or the next minute. Um, so I think you're right; there is a lot of talk about AI. I think, you know, what's really important with AI is to realize that it is moving incredibly fast, and everyone is jumping on the bandwagon right now. Um, we take a very clinical view. I think you, as a customer, have to look at AI and not just say, what's the business case? I start there every time; it has to be a business case. Don't go and get the new shiny toy unless it makes a return on investment KPI impact. I'm gonna come back to that in a second. But I think when you're in there, you know, I'm already seeing people out there. We know that generative AI is the future. That's where we are today. That's where we're going. And everybody's playing on those words today. But the reality is that most of them are traditional AI. You know, most of them are with these clunky semantic role-based AI solutions that are rigid, um, that are not changeable and not going to be scalable with your business. So, if you're going to look at AI, you need a business case, and you need to make sure it's the right AI that's going to give you that agility going forward to adapt. Because nobody really knows today what AI can really, really, really do for us. And I think it's incredible. So, let me just come back to that business case thing. What is the business trying to achieve by bringing in AI? And it's intelligence, it's speed, it's automation, it's all those kinds of things. And that sounds great. Let's not go for percentage improvement again. Let's equate that back to the C suite, be able to go toe to toe with a CFO and say; this is the return on a bit on an investment you will get, um, in your business if you invest in this AI. So, the AI use cases directly overlay for me the critical thread, the digital thread, um, to enhance your visibility, your automation, your decision-making across processes. Um, you know, some of the more recent great examples are predictive analytics. Um, in MES or in MOM or in manufacturing execution, I should say, to reduce unplanned downtime or generative AI in PLM to accelerate design iteration cycles or change automation. There's some really good things going on right now that is built upon a generative AI that can directly connect to return on investment, not just a percentage improvement.

[00:15:12] Filip Popov: Gotcha. Okay. So, you've mentioned the need for horizontal and vertical integration and systems of both machines and people. In fact, what does an ideal integration roadmap look like to you?

[00:15:25] Andrew Sparrow: I think key outcomes of that roadmap, if that's where you're going, I think a unified digital thread, and that, and that does not mean one vendor who's telling you they're all linked up. It really does not mean that. You've got your favorite ERP, you've got your favorite PLM, or your favorite MES or supply chain. It means actually getting them working together. The way of the future is collaboration. It is not this kind of monolithic single vendor. So, it's a unified digital thread that enables full traceability and decision-making across the product lifecycle. It's real-time; it's actionable insights. Um, it's pretty agile that it will adapt to market demands. Um, it'll reduce your lead times. It'll enhance your quality. Um, so it's very much about strategic alignment between centric kind of product-centric innovation and enterprise execution.

[00:16:29] Filip Popov: Okay. I want to go back a little bit of what you said earlier, because I found that pretty interesting that, naturally, we all know the disconnect between IT and OT and that they come at a problem from very different angles. Um, how do you advise organizations to tackle, uh, the disconnect between these two, as well as how do you advise they tackle the disconnect between, you know, operators and engineers versus C suite executives?

[00:16:56] Andrew Sparrow: Oh, connect the dots. You're all on the same team. You're all, and I know we say this with customers: we're on a ship together, and we're on that ship with you now. So yeah, we can go all the way back to the port. And we can have an argument, and we can offload and go and get a whole new team together, but that really is going to slow you down, and you were never going to win the race. So, now we're on this ship together. Let's make it work together. So, for me, the C-suite perspective, which is focused, should be on the strategic outcomes like return on investment, the IRRs, the internal rate of return, your operational efficiencies, and long-term scalability needs to connect with a line engineer's perspective.

So, shop floor to top floor and everything between. So, you've got to be able to highlight the tangible benefits like reduced downtime, better machine reliability, um, streamlined workflows, how they then connect back up to that C suite. So, it's all about communication. And they're all connected. There's no silo there. Just because you've made you, you've reduced your downtime, that has an impact on the top floor. Um, it really does. And if the top floor can see minimizing scrap, minimizing inventory is going to save them 20 million a year or whatever it is, you can bring that all the way down to the shop floor and how real time monitoring, real time inventory control on lines directly connects back up.

So, I think it's all about, all about that. So, for me, we introduce an operational framework like critical thread that maps high level business objectives to the day to day operational goals. Um, you know, that's the big one.

[00:18:53] Filip Popov: Connecting the dots. Okay. I like that. I think, um, thanks for sharing, uh, all that information with us and with the audience. Um, I want to go into a little bit more lighthearted, uh, questions that I usually ask all our guests at the end of the episode. Um, first one being what innovations or technologies are you most excited about right now?

Not necessarily in industry and Industry 4.0.

[00:19:23] Andrew Sparrow: The more you get to know me, Filip, I'm extremely focused on Industry 4.0 product lifecycle because it's everything. Everybody's buying stuff, some more than they should. Um, and so it is to me, it's all about innovation. So, I directly connect to new products and how we get them to market quicker, faster, and more profitably. Um, so for me, um, I'm looking at issues such as how can I reduce my downtime? How can I improve my testing? How can I improve my inventory? How can I use AI, um, to design better? When a customer wants something personalized, how can I get my change request into a change action into change execution on the shop floor?

So, I'm looking at all those kind of things on a daily basis. And I love that because and I can relate that to me. If I want to go out and buy, I don't know, a cell phone, I can see that I want it to be personalized to me. I want to make sure that I can see all the way through to how they make that cell phone and how they do it quicker and more profitably, et cetera.

So that's what really excites me. So, I think anything like product validation and simulation, um, you know, material planning, inventory management, virtual factory, mass MOM integration, all of that kind of good stuff is out there. I'm really, and I love it. I think it's really fascinating.

[00:20:57] Filip Popov: Real smart manufacturing geek you are Andrew, but we love you for it. Um, and if I called you at 2 PM on a Sunday, what would I be interrupting you in?

[00:21:09] Andrew Sparrow: Okay, I gotta, I gotta get my soapbox here. Um, you know, we're building a business. Um, and we're trying to make a real difference. That is a seven-days-a-week, um, job. It really is. And I don't even want to call it a job, and I don't want to get cliched. Um, thankfully, my wife is also a workaholic, I've got to say.

[00:21:33] Filip Popov: I was going to ask.

[00:21:35] Andrew Sparrow: Makes things a lot easier. Kids grown up, that makes things a lot easier, so don't get me wrong, I'm not one of those, you know, brutal mercenaries, you know, my lifestyle is that. But we, as a business, are trying to make a real difference, and I hear all this work-life balance stuff. It's simple to me. Love your work. Love your life, and the balance takes care of itself. You know, I do 80-85 hours a week, and I have done it for years and years. And so when people go, oh, burnout, I go, yeah, okay. I think I would have had that 30 years ago when I was doing it if I was not, not today. So, I think I'm pretty used to it, but it's because, you know, we kind of loving what we're doing.

We're really enjoying it. Um, but if you're asking, what am I doing outside of my passion? Um, you know, it's three other things. It's getting time with my wife when she's not working as well. It's just doing stuff together, taking a walk, doing stuff together, sharing together, or, you know, from a personal sports perspective, watching a good game of rugby or even watching a good game of football or American football if we're going global for the moment.

[00:22:50] Filip Popov: I was going to ask, but you have to specify your accent and your location. They can somewhat be confusing in terms of, uh, what football means, right?

[00:23:03] Andrew Sparrow: You got it.

[00:23:04] Filip Popov: To different people. Um, well, okay. Well, thank you for showing us a little bit under the hood. Um, impressive that you do 80-plus hours a week.

Um, I want to be you when I grow up, uh, and manage to.

[00:23:19] Andrew Sparrow: You've got to wait for the kids to grow up, though.

[00:23:21] Filip Popov: Yeah, I managed to actually maintain my sanity. Um, but, uh, but yeah, thanks. Uh, thanks for sharing that. Thank you for, uh, sharing or spending your coffee break with us very early in the morning. And, uh, we hope that you can, that we can be able to grab another coffee with you sometime in the future, Andrew.

[00:23:43] Andrew Sparrow: Cheers. Pleasure.

[00:23:45] Filip Popov: Cheers. Have a good one.