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Performance of Value Chains: The Driving Force Behind Digitalisation

Tech2B John Blankendaal | Sjors Hooijen - Performance of Value Chains The Driving Force Behind Digitalisation

Digitalisation is indispensable in the manufacturing industry to enhance agility and efficiency; to continue production in a time of tight labour markets, and to achieve sustainability goals, such as the European targets for reuse and recycling. Above all, digitalisation is crucial for the future of supply chains around OEMs (Original Equipment Manufacturers). "The success of OEMs is driven by the performance of the entire value chain. For this, you need to exchange information. This is a major driving force behind digitalisation," says John Blankendaal, director of Brainport Industries. Sjors Hooijen, CEO of Tech2B, notes that leading Dutch companies like ASML, VDL Groep, and NTS have succeeded by working well together. He stresses the need to go beyond just people working together and tackle the issue of separate software and tools that don’t connect. Hooijen is pushing for a more unified and digitally-focused way of collaborating.

Entrepreneurs from SME manufacturing companies proudly share photos on social media of their new machine, or their cobot or robot. However, they prefer to postpone upgrading their ERP system to the next year. This may be because financing investments in digitalisation is harder than raising funds for hardware. But more likely, they delay investments in digitalisation because they are not sufficiently aware of both the necessity and the returns.

Connected Value Chains

John Blankendaal, director of Brainport Industries, recognises this picture. That's why he is pleased with the projects from the European Union to support SMEs in the transition to more digitally connected chains. No manufacturing company can escape the need to digitalise. There are several reasons for this. The logical reason is that OEM systems are becoming more complex and they need to respond faster in an international arena. Then, digitally connected chains are necessary. "You now see initiatives where PDM (Product Data Management) spans entire value chains. When that happens, we need to be ready," says John Blankendaal. If supply reliability is crucial, you need to have current information about what is happening far ahead in the chain. And if an OEM needs to respond quickly, it's no longer sufficient that only the Tier 1 supplier is digitally connected. This applies just as much to the supply chains of Tier 1. And these are generally the SME manufacturing companies. Working smarter is another reason to digitalise. This is the concept of the digital factory: doing more with fewer people so that the OEE (Overall Equipment Effectiveness) of machines reaches a higher level.

Sustainability and Digitalisation

There is a third reason why complete value chains must be digitally linked: sustainability. John Blankendaal says, "Sustainability is an important element. The government is working on legislation, such as CSRD and CO2 regulations. The EU is focusing on more reuse and recycling of materials and is therefore introducing a Digital Product Passport." Data are the fuel for these initiatives. When OEMs like ASML, Philips, and others must report annually on CO2 emissions in scope 3, the indirect emissions throughout the entire value chain, all suppliers must report on their CO2 footprint. "Across the entire value chain," emphasises John Blankendaal. "You need data for this. As soon as this reporting comes into effect, you cannot avoid digitalisation." The CSRD legislation includes more data, such as information about where your raw materials or semi-finished products come from, whether there was no child labour or coercion involved in their production; information that all parties in the chain must provide. "And for which it is useful if this happens in a standardised and digital manner," Blankendaal believes.

Reuse and Remanufacturing

Europe wants to be less dependent on regions outside the continent for raw materials. For this reason, there is a focus on reuse and remanufacturing. In the Brainport region, the first Tier 1 suppliers are currently gaining experience with modules from machines that come back and whose components are reused in new machines. This has implications for the agreements that apply within the chain. For example, what to do with Technical Product Documentation (TPD) that says you may not make any changes? The Brabant Development Agency (BOM) has drawn up a roadmap for reuse and remanufacturing. This also looks at extending this concept to second and third-tier suppliers. "Reuse is a joint responsibility; we haven't solved everything yet. Digitalisation is indispensable here, for example, for track and trace of components, information about how they have been used, their lifespan, etc.," explains John Blankendaal.

Accessible for SMEs

Brainport Industries has been involved in both national and European projects regarding data management, storage, and processing for some time. With the Smart Connected Supplier Network (SCSN), developed by the industry itself in one of the Smart Industry Fieldlabs, the Netherlands leads internationally. About 500 SMEs now use SCSN to digitally exchange information with chain partners. This places Brainport Industries back into European networks. The early adopters, according to John Blankendaal, see the added value as data exchange increases transparency across the entire value chain. SCSN has deliberately chosen to keep usage accessible, so that smaller companies can also participate. However, it remains complex for most companies. "If you normally talk about 5-axis machines and then suddenly it's about data spaces, you can no longer rely on the knowledge you have in-house." Therefore, he advocates a step-by-step approach. With vouchers, they lower the barrier for SME manufacturing companies to bring in coaches and experts. The so-called service providers, such as providers of ERP systems that conform to the SCSN standard, are a low-threshold access to digitalisation.

Digital Skills in Education

Brainport Industries is currently discussing with the education sector how digital skills can be integrated into curricula. This cuts both ways: it can spark young people's interest in the manufacturing industry and the companies will soon have new employees who possess the digital skills required. John Blankendaal says, "We need to make it clear to the target group that ICT is more than just developing an algorithm on the Amsterdam Zuidas. Here, we need ICT to monitor and control the high-tech workflow worldwide, as we have these companies here. You could work at a bank, and then AI might take over your job in a few years. Or you could work in our sector where you can pioneer and invent."

European or American Data Spaces

Digitalisation will thus leave its mark on the manufacturing industry. And everyone must join in, including the smaller manufacturing companies. Only if mistakes are removed from the entire value chain does the performance of the chain improve. Until now, the market for data sharing and data storage has been dominated by American players like AWS (Amazon), Google, and Microsoft. The EU wants to be less dependent on these. Therefore, initiatives like Gaia X, Catena X, and Manufacturing X have been started in Germany. Gaia X is the European initiative that covers data and cloud services in multiple sectors; Catena X is a similar initiative for the automotive industry, and Manufacturing X is specifically aimed at the advent of data-driven production. With SCSN, Brainport Industries is working to connect to these initiatives. John Blankendaal believes that the Netherlands with SCSN has shown where you can get to if you develop these kinds of initiatives from the bottom up, from the industry. According to him, Europe leads the way when it comes to secure and sovereign data spaces, where manufacturing companies remain in control of their data. That sectors have their own data spaces is no objection. "As long as they are interoperable. As long as the building blocks are standardised and exchangeable."


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