Joe Black (00:02):
I had a fascinating conversation this week with Sebastian Elmgren. We talked about everything 5G, the business opportunity there, the risks and the rewards. We discussed the future of manufacturing, including how Ericsson is investing $100 million in their smart factory in the US, certainly practising what they preach. I hope you enjoy this conversation as much as I did from Red-Fern Media, this is ReMake Manufacturing.
Joe Black (00:34):
My guest this week is Sebastian Elmgren, head of business development and product marketing at Ericsson. They're leading the charge in industry 4.0 right now, and pioneering 5G in factories to boost productivity and propel manufacturing forward. So Sebastian Elmgren, welcome to the show.
Sebastian Elmgren (00:50):
Thank you very much for having me.
Joe Black (00:53):
So, the manufacturing industry is going through a tremendous technological shift right now. Maybe we can start by outlining what you feel are the most significant changes happening in manufacturing today?
Sebastian Elmgren (01:03):
So I would say that the strongest driver right now within manufacturing is the need for increased flexibility. The market demands that you have extremely flexible production, both when it comes to different product mixes and volumes going up and down. And to be able to address this explosion of variants with the same volumes as you had before is a challenge for the industry as I see it.
Joe Black (01:30):
And there's so much talk about 5G in manufacturing. Can you tell us what 5G mean for manufacturing businesses as you see it?
Sebastian Elmgren (01:38):
So I see 5G as the enabler for this flexibility. I mean, when we start to talk about flexible production, wireless communication is the logical next step. And you need not only flexible wireless communication, but you also need something that has the stability and the security that is needed for these industrial applications. And that's where we have a very good fit with 5G.
Joe Black (02:02):
And can you outline the size of the business opportunity that 5G represents? What's the main business case here, is it cost reduction, efficiency, and new business models? What's the centre of all this?
Sebastian Elmgren (02:14):
I would say where we see most traction, and where most companies start, is with internal efficiency. To improve the efficiency of your production, a tool in your lean production toolbox is really to have this, by being able to collect more data you can have different insights, and you improve your internal efficiency. But once you have that, I mean, the next step is to start to look at the cost reduction, can you make your product cheaper? Can you make them smarter? And then we also see that quite quickly you also come into new business models when you talk about connected things. So it's all three of them really, but I would say internal efficiency is where it starts.
Joe Black (02:53):
And there are so many different ways to use 5G across many different industries. Has that been a challenge, communicating the many benefits to manufacturers, or finding a message that works for everybody?
Sebastian Elmgren (03:05):
Definitely. I mean, it's work we need to do to get the industries to understand how they should use this technology, and also how they need to adapt their ways of working to get the most value out of 5G. I mean, it's not only adding this new technology into your existing processes, you should also change the way you are working to get the most out of this technology. So, that's something we put a lot of effort into, to work with the industry, and so they understand how this should be used.
Joe Black (03:33):
Can you give us an example of that?
Sebastian Elmgren (03:36):
I mean, if you look at the flexibility point of view, I mean, if you just take your existing equipment remove the cables and have wireless connectivity to your machines, that won't give you many benefits. You need to also look to say, "Okay, now we can actually move and optimise the layout more often," and change the way of your work, and utilise this increased flexibility. So I think it's those kinds of things that we need to look at too.
Sebastian Elmgren (04:01):
And also when it comes to how your organising work because what we are also doing with this new technology is that we are taking a lot of the systems and supports that normally were in the back office, and putting that in the hands of the people at the production line. They would have all the access to your information, could do all the analytics and so on, with the devices that they have. And therefore, we also need to give them the mandate to take action and become more agile. If you still need to rely on an engineer coming down to the shop floor, you are losing that extra agility. So those kinds of things need to be in place as well here.
Joe Black (04:38):
And can you give us some idea of what the most exciting applications are that you've seen?
Sebastian Elmgren (04:45):
So as I say, one of the most exciting applications right now is really when it comes to energy monitoring and management. And it also had a very nice sustainability twist to it, which makes it extra attractive. And this is really about taking the smart metering concept into the production lines.
Sebastian Elmgren (05:04):
So today, even if you're a big consumer of electricity, you only have visibility of how much electricity goes into your plant, and then you pay your monthly bill, that's what you have to work on. And instead of just having that, we take smart meters, 5G connected, and put them on all the equipment that we want to measure. Suddenly we have a much better resolution of what equipment is using electricity. And then we utilise the low latency of 5G, and we can go from having a monthly bill to sub-seconds, to see what parts of the process are we using electricity, and when. And we get a much better understanding of how we can optimise.
Sebastian Elmgren (05:42):
We have done this ourselves in our factory in the US. That's a brand new factory, but still, we could reduce energy bills by 8%. So that's great, but that's only the first step.
Sebastian Elmgren (05:52):
The next step is, once you have that kind of visibility of electricity, and you can start to control that, when you have part of your production which is more have a buffer capacity, like if you're a steel plant you have a big oven, or it could be a big freezer, or a compressor, or something that you could turn off for one or two seconds without interrupting the processes, you won't lose heat in the oven, then you use this to cut the peaks in your energy consumption. Because then you can monitor and see, "I have a peak coming up now," and then you can turn off that big oven for 1.2 seconds or whatever, cut that peak. And those peaks are what's most expensive for enterprises when it comes to electricity, so that's beneficial.
Sebastian Elmgren (06:32):
But then the third step you can take is actually, that kind of peaks exist on a national level as well. So once you have that possibility to control your plant, you can sell this capability to the national grid. So when there is a peak in energy consumption on a national level, you become a virtual power plant and sell, not consume, electricity, and balance the national network. And this is sought after now, when we see more and more renewable energy sources being introduced, which vary more than the traditional ones. There is a big need for that kind of capacity to be able to balance the network. So I think that's a great example of how we can utilise 5G, connecting a lot of sensors, using the low latency and high reliability, to be able to match those peaks in consumption.
Joe Black (07:20):
I mean, it sounds really exciting. What are the main forces that have come together to enable this opportunity? Can you talk us through what the main points are? Technology, for example, regulation, knowledge, what's being gathered together to make this happen?
Sebastian Elmgren (07:35):
I think that there are a couple of things coming together here. Of course, it's the maturity of 5G now, and proven technology that we can put into these kinds of demanding situations. We also see now more and more countries introducing dedicated spectrum for enterprises, which makes this more available as, as I say, you can get a spectrum that makes it more accessible. But we also see a maturity in the ecosystem, because even if you have a great network, there need to be devices that you can connect to the network. And that's also coming in place. Consumer products have, of course, be the first thing we've seen in 5G, but now we also see industrial devices coming in. And I think when these pieces come together, it really enables this.
Sebastian Elmgren (08:21):
And then of course we have the complete industry forward zero movements with all the technologies there, big data requiring technologies like AR, AI, predictive maintenance and so on, which are also enabled for this. So it's a perfect storm coming together now.
Speaker 3 (08:38):
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Joe Black (09:04):
And let's talk about the ecosystem of people who are making this work. There must be a ton of other vendors that you are working with to make it a reality? So what does that ecosystem of partners look like?
Sebastian Elmgren (09:16):
I mean as I said, we are only the infrastructure provider. We understand that we need to have ecosystem partners that can deliver the pieces that we don't have, to have this end to end solution.
Sebastian Elmgren (09:30):
So, we have a few different categories, or whatever we should call them, that we are working with. We work with our device partners, as we call them, they are the guys who build gateways and modules and so on, that you use to retrofit onto your equipment to 5G enable it. We make sure that their devices work in the network, and help them to optimise it for these kinds of industrial networks.
Sebastian Elmgren (09:53):
We also have what we call independent software vendors, the guys that are consuming the data that is being generated. Here we work with our APIs, exposing them so they can easily connect to the network, and extract the data that they need to do. Have these pre-integrated solutions so we have easy building blocks to pick from, if you want to use specific software, that should be easy to integrate. Then we have what we call the OEMs, so the equipment vendors, of course, I mean the big industrial players, we try to help them to build native 5G equipment, so to say. If you want to have a 5G ADV or a 5G robot, that should be off the shelf, so that's also part.
Sebastian Elmgren (10:37):
And then we have the system integrators, of course, that need to be trained on all of this and have access to this ecosystem, because often they are the ones who take these pieces together, and put it to a complete solution.
Joe Black (10:50):
And there is a common idea at the moment that businesses have to go all-in with 5G, but that's not necessarily the case, right? Is it possible for people to walk before they can run?
Sebastian Elmgren (11:00):
Definitely. I mean these networks are built to be able to grow as your needs expand here. I mean, that's also what I would recommend; to start with a couple of use cases that you see would have the most value, and you can also start just in a part of your factory, these networks are very easy to expand as you grow. So you can add on capacity, you can add on coverage as you go here. I mean, if you're not building a new factory, I would say start slow and then grow from there.
Joe Black (11:31):
And has any work been done on the ROI of 5G for the enterprise?
Sebastian Elmgren (11:38):
Yes. I mean, that's something we are also looking a lot to. We have done a couple of reports together with Arthur D. Little and looked into this together with big industrial players, and what the return of investment looks like. Also, of course from our own experience, when implementing this in our factories we see good examples. We have, for example, in China, we run a 5G connected drone to do inventory in the warehouses, and that is done 50 times faster than when we do it manually. So, instead of having an army of workers scanning everything, we just fly through and scan it, so that's a really good use case.
Sebastian Elmgren (12:21):
We also see from the ADL report looking at a use case like AR support, which leads to 50% less downtime for equipment. And that has been, of course, very popular now during the Corona time where we couldn't have experts flying around, I would say that has had an even larger impact.
Joe Black (12:46):
So Sebastian then, once 5G is established, what would be the next challenge that you would be coming up against?
Sebastian Elmgren (12:54):
So I would say, I mean, what we have been talking here about a lot, is 5G in the local perspective, 5G in the factory, the connected factory. But I think the next step is really look beyond the connected factory because 5G is also a global infrastructure, it exists outside of the factory as well. So you can look beyond the connected factory and look at the connected supply chain, you can look at the connected life-cycle of a product. And that opens up a completely new box of use cases that is extremely exciting to look at. And I would say that's my next challenge; to start to connect the local and the global connectivity, and have this network everywhere, and connectivity everywhere.
Joe Black (13:34):
It's a fascinating glimpse into the future. I thought you were going to be cheeky and say 6G, but you gave me a great sensible answer, so thank you for that.
Sebastian Elmgren (13:43):
Yeah. I could have said 6G, but then I couldn't give you any extra information there.
Joe Black (13:52):
And Ericsson has also invested over 100 million in their own smart factory in the US. Can you tell us what was the thinking behind that decision?
Sebastian Elmgren (14:01):
So, I mean, with 5G now we needed to ramp up our production. We also wanted to be closer to the US, which is one of the primary markets right now, to minimise the shipping that is needed to be done. But then why we choose to go with all this technology into it is, of course, we also face this problem with a massive explosion of variants, and need to handle that rationally. And the introduction of all these new technologies when we build from scratch is a natural way of doing that.
Sebastian Elmgren (14:33):
So there is a fundamental business reasoning behind that, but then as we happen to have now this very modern factory, it also becomes like a testbed for other new use cases, where we can bring in partners and customers to try out different solutions in a real environment. And we can also evaluate it from our own supply organisation's perspective.
Sebastian Elmgren (14:57):
And then finally, of course, it's about proving that we are drinking our champagnes, of course, to have the credibility to show that if we are not using this technology, I mean, why should other people trust us in using it?
Joe Black (15:14):
Absolutely. And what lessons have you learned from this enterprise?
Sebastian Elmgren (15:25):
I mean, one of the big things I would say when we start with this, is of course the importance of data. I mean, even if we start to connect the equipment and factory, we needed already from the beginning to make sure that we were in control of the data, and we needed to make sure we had an agreement with all the different vendors that we had, so we can access data from the equipment. And that's not normally the way it always is. I mean, there are some protective activities from machine vendors to lock in the data, but that was very important for us, so that was a big learning.
Sebastian Elmgren (16:00):
Then also of course the cross-functionality of this, I mean, this really makes data flow in all directions in the company, new data being available, we needed to put together cross-functional teams so we could make the most out of this. And then as it happened to be, we really saw the stress testing of this technology when we were ramping up this new factory in the middle of the Corona crisis, where we couldn't travel, we couldn't bring in our experts, we couldn't have the designers on-prem. And then we got to understand how we could use the equipment in that kind of situation as well.
Joe Black (16:43):
In general, the manufacturing industry has been quite slow to adopt new technology. Is the same thing happening with 5G, or are you seeing something different this time?
Sebastian Elmgren (16:53):
I mean, it depends on what you compare it to. I mean, if you look at the consumer side and the adaptation of new technologies like 5G there, of course, it's not that fast, but still, I would say there is huge interest now for 5G, and I think that other technologies have been pushed to the limits. So there is a built-up need for a new technology here. I was just last week at one of the largest events we have in this industry, the Mobile World Congress in Barcelona, and I saw a huge interest from many industrial players there to start to adopt this technology. And that's also what we see when we look at the rollout of the networks. So I would say compared to what we normally see from the industry, they are moving much faster now.
Joe Black (17:39):
And if we can look five years in the future to a point where 5G is ubiquitous across automotive, mining, aerospace, and every other sector you can think of, what would've happened to enable that revolution?
Sebastian Elmgren (17:52):
I would say it's the ecosystem in play again, we need to get the ecosystem in place to make the technology roll out on a big scale. Not only the network we need to have, I mean, all the different pieces that you need for your 5G use cases off the shelf. So again, it's an ecosystem play, and that's what needs to come in place here.
Joe Black (18:18):
And conversely then, if things don't quite happen the way that you want, what would've been the obstacles that had stopped this from happening?
Sebastian Elmgren (18:26):
I don't see that, I'm quite confident that this will happen. I mean, I see this from all the different players now, the movement in this direction, and also there is this need for it. So it needs to happen to realise the promises of digitalisation and 5G.
Joe Black (18:43):
So we'll end the show the same way we do every week, by asking our guests to tell us the one invention that if it was never manufactured, your life would be unbearable. So what invention could you not live without?
Sebastian Elmgren (18:56):
I would say the washing machine, I mean, the amount of time that it's unlocking and making available for other uses is enormous. So it's maybe not as appreciated all the time, but if you reflect on how your life would be without it, you do realise that's a key technology.
Joe Black (19:17):
And we'd also be a lot smellier without it, great answer.
Sebastian Elmgren (19:19):
Joe Black (19:20):
All it leaves me to do then is to say thank you to today's guest, Sebastian Elmgren, great chat. Thanks very much, Sebastian.
Sebastian Elmgren (19:27):
Thank you very much.
Joe Black (19:30):
Subscribe to this podcast at all the usual places; Apple Podcasts, Spotify, Amazon, and Google Music. Thanks for listening to this edition of ReMake Manufacturing, I'm your host Joe Black, see you next time.