Rebirth of manufacturing in the digitalized world

Manufacturers need to change rapidly because digital technologies are disrupting not only the way to do business and to collaborate with customers but also the manufacturing supply chains and manufacturing operations. If manufacturing truly adopts the next ware of digital technologies, productivity will explode.

According to IDC FutureScape Worldwide Manufacturing Predictions 2018, already by 2020, 60% of manufacturers will rely on digital platforms, which will support as much as 30% of their overall revenue. By 2021, 20% of the top manufacturers will depend on a secure backbone of embedded intelligence to automate large-scale processes and speed execution times by up to 25%. The main innovation accelerators are:

* IoT
* cognitive computing
* next-generation security
* 3D printing
* robotics, and
* augmented and virtual reality.

Furthermore, cognitive technologies will drive towards highly automated supply chains with optimized asset utilization.

Productivity explodes

The speed of the change predicted is huge. Can we understand what this actually means for industry? For quite some time, productivity has been stagnated or only slowly increased. One of the reasons is that the current digitalization development has reached a mature level, where most of our practical operations work well even when using slightly outdated computers, smart phones, software and connections. Advances in such technologies do not necessarily add much to effectiveness or disrupt current operations.

The next, already ongoing, wave of digitalization (IoT, big data, digital platforms etc.) is different. We are witnessing the convergence of digital and physical worlds where decision-making is based on full situation awareness and where actions are optimally automatized. As traditional sectors, such as manufacturing, truly adopt the next ware of digital technologies, productivity will explode.

Customers and ecosystems are central

This is a great opportunity for agile actors to make manufacturing in high-cost countries profitable again. It also enables true customer-centricity where consumers’ and users’ individual needs are followed and future desires anticipated.

As a result of the increased overall efficiency due to the adoption of digital technologies, automation and material and manufacturing innovations, unique products can be produced with mass production efficiency. Cognitive technologies support fast product introductions and delivery, which in turn increase customer satisfaction and profitability.

Those companies that want to belong to the 60% share of manufacturers that adopt digital platforms by 2020 to support their business, need to act. The change is hardly carried out alone but in ecosystem with other companies and partners.

At VTT, we study and develop digital platforms, cognitive methods, robotics and many other enabling technologies in manufacturing context. A VTT-funded strategic project on Cognitive Factories has been started and companies are welcome to join. We also continue to define digitalization pathways for manufacturing companies in a European project Connected Factories where input from Finnish companies is gathered. Would you like to know more? Please contact us. We step forward to support the manufacturing companies in the rapid and profound change.

Read more: VTT Lighthouses – Industrial Renewal
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Riikka Virkkunen
Manager, Digitalising industries
riikka.virkkunen(a)vtt.fi
@VirkkunenRiikka

IoT sensors – why your R&D partner could also be your ideal manufacturing partner

‘A trillion sensors, a million applications and a fragmented market ’

In a hyper-connected IoT world it is not hard to imagine a trillion sensors collecting rich amounts of data that will provide new insights that will shape the way we live in our intelligent homes or commute in our self-driving cars. There is certainly no shortage of market research predicting healthy growth in the market for such sensors. This has led to much discussion about how to economically manufacture large volumes of sensors and the potential need for new manufacturing technologies, such as roll-to-roll printing, to meet these needs.

While there will undoubtedly be a need for high volumes in some applications, a closer look at the market predictions tells a different story – one of deep fragmentation where there is tremendous diversity in both markets and applications within those markets. Essentially the opportunities for electronic sensors comprises of thousands of niches where annual volumes can range from hundreds to thousands of sensors – with very few applications with requirements for millions or billions of sensors of the exact same type.

Why does this matter?

What this means is that the demand for new sensors can be mostly satisfied by existing semiconductor processing & packaging techniques and in many application cases, the volume of wafers required will actually be quite low. If we take a typical 150mm wafer with a sensing element that is 4mm2, a single batch of 25 wafers can produce close to 90,000 sensors (assuming an 80% yield) – enough to satisfy the annual needs of many companies. Such low wafer volumes are not interesting to most contract manufacturers and the actual production cost is dwarfed by cost of R&D to develop the sensor and to potentially transfer the technology to a new facility.

Wafers

Sensor development versus manufacturing costs

The process of developing new MEMS, micro or nano-electronic sensor elements can be an expensive business. Depending on the complexity of the sensor and the maturity of the technology platform, development costs can run into millions of euros and take upwards of 2 years. While some companies do all of the work in-house, many others partner with R&D organizations, leveraging public funding and national infrastructure to develop the technology platform to a level of maturity where realization of multiple individual products is viable.

To use an example from VTT, a hyperspectral MEMS sensor manufacturing platform may have cost €5M to develop over 3 years yet a single batch of 25 wafers for a specific application might cost between €50 & €100k to manufacture and could yield upwards of 50,000 sensors. If these sensors are subsequently integrated into an instrument that sells for €1,000 per unit, then a €50M business is enabled and sustained from a very low wafer manufacturing volume.

Traditional cost model

Historically, the prevailing logic has been to take the developed process and then transfer to a production facility but does this always make sense? Manufacturing processes for MEMS sensors are notoriously specific to the process flows, recipes and equipment on which they were developed and undertaking a technology transfer project to a new facility can be expensive and time consuming. If the subsequent volumes are low, it does not make economic sense to redevelop processes for a new facility as these costs may well exceed the ongoing low-volume manufacturing costs.

Many sensors but few wafers – Manufacture in an R&D Fab

When ongoing production needs are relatively low (<1000 wafers per year) it’s worth considering your R&D partner as a primary or secondary production source for sensor elements. In fact it offers you a direct path to production with some major benefits. Being able to save on conducting an expensive and potentially risky technology transfer project will likely offset any component price benefit gained by moving to a pure production fab.

New cost model

In an increasingly fast moving world, it is also possible to accelerate time-to-market by many months which can be especially beneficial to SMEs where cash flow is critical and lost time is lost revenue. It’s also worth noting that while the sensor element is the key enabler of many systems, the product value tends to be created at a system / service model level, with the actual sensor being a relatively small part of the overall system cost. Why undertake a risky tech transfer to reduce the cost of a €10 sensor by €3 when the system as a whole sells for €300 or even €3000?

Key question

From a business strategy perspective, the important question to ask is “Does the future marginal cost benefit of manufacturing in a production facility, exceed the combined value of the lost time, risk and cost of a tech transfer project?” Any technology transfer project should have a sound financial justification measured over the expected production timescale and total system costs.

A seamless route from R&D to volume manufacturing

There are a number of RTOs such as VTT that will offer manufacturing services as it’s a good way to better utilize expensive fabrication facilities and ensure financial sustainability and future investments. It can also be useful to have the researchers who developed the product, be readily available to troubleshoot if production issues occur. That said, there are pitfalls to be avoided (particularly operational and quality procedures that are geared purely towards R&D) and you should ensure that your partner has an organization that is managing the fab operations in a professional way to ensure both process capability and repeatability.

By providing the necessary operational competence and quality certifications your R&D partner could be your credible production source – offering you a ‘seamless route from R&D to volume manufacturing’ in sensor production.

Howard Rupprecht VTT

Howard Rupprecht
Vice President, Micronova manufacturing services