Data-driven services in mechanical engineering – optimizing sawmill production and reducing downtime

Hello Sven, hello Thomas, welcome to the IIot Use Case Podcast. Glad to have you with us. Best regards to Sindelfingen, Baden-Württemberg. Now, before we jump right into your customer project with a machine manufacturer for sawmills, I would start with a round of introductions. Thomas, could you briefly introduce yourself and also say something about your core business at logicline and exactly which customers you work with?

Thomas

Yes with pleasure. Hello Madeleine, thank you for the invitation and a little side note: We are not only located in Sindelfingen but also in Bremen. So nice greetings from the north from here. I am Head of Sales at logicline and I’m actually always in between the business department, IT and management. I move in this triangle and also do a bit of business development. About logicline itself: We focus on digital service solutions for machine builders. So there’s actually our core business and of course their customers. What are we doing? This ranges from mobile OEE apps, to IoT solutions, to knowledge management systems, to complete customer portals, and then also integration scenarios, for example in CRM and here in particular the topic of Salesforce. Actually, we do everything that our customers and especially then the manufacturers from the mechanical engineering sector need in order to concretely connect with their customers and to be able to improve their value creation. That means moving away from this old idea of “I’m just a salesman for my machine” to “I’m a value-added partner for my customer.” That’s actually the basic idea that we support here. And of course it is then also a question of expanding our own competitive advantage from the OEMs, i.e. from our machine builders. Why might the mechanical engineering scenario be so strong? Perhaps a word about that. We belong to the Lenze Group, which is itself a supplier of automation and drive technology, so we have one hand in the oil and the other on the touch screen.

 

Yes, perfect. Thank you very much. What you just said, all the services around it, whether it’s OEM apps, customer portals, or even integration into the CRM, I’d like to ask you more specifically later on what you’ve built here with your customer. Perhaps to conclude the round of introductions. Sven, I’m looking virtually in your direction. Would you also like to briefly introduce yourself and your position at logicline and then we would also jump right into the topic. 

Sven

Yes, with pleasure. I am actually from Sindelfingen. From that point of view, you’ve already got it right. I’m Head of Product Management here at logicline, which means I’m responsible for the operational side of project management at our company and I’m also in charge of Customer Success. From my background, I’ve been doing this for ten years, over ten years at logicline, a lot of requirements, a lot of business requirements, a lot of discussions with business departments, and now I’m also doing project management and supporting our project managers in the doing, so to speak. The customer, on the basis of which we present the use case, manufactures sawmill technology, i.e. band saws, in-cut saws, etc., everything you need to cut a large log into small boards and chips and are actually also the market leader there, especially the technology leader. 

 

Maybe the question to you again Thomas: You are working with a wide variety of customers, but also with mechanical engineers. What relevance does the topic of digitization have here specifically for your customers, for example in mechanical engineering, to provide a bit of context. What do you see there?

Thomas

Perhaps a general look at this and also the experiences from the last few years: Initially, many customers were concerned with realizing additional revenue streams with the topic of digitization. That was what was promised everywhere and everyone said, okay, great, we’ll do that now. And these expectations, they were not necessarily met in many places. Let’s take a simple example: If, let’s say, I sell a machine that costs 1.5 million and I want to offer digital services in parallel, for example in a subscription model that might then be available for €100 a month, then these digital services easily fall behind because they suddenly no longer play a role in the purchase price and are simply pushed aside in the negotiations. And the result was that we looked at these businesses and realized that there were no revenue streams that were triggered by them. Today, that is changing somewhat. Increasingly, we and our customers are noticing that these digital services are becoming must-haves in the sense of: Customers are asking for them and if I can’t offer them – at whatever price – then the customer will simply go to the competition. This is what we see. 

 

Digital service then means what to you, for example? So remote service, that’s been around for a while. Is that what you mean by that? Or is this a new issue towards additional service? 

Thomas

These are rather additional services. Something like inventory, that I know what assets I have out in the field and where they are, pretty interesting for component manufacturers. The next stage is then typical condition monitoring. Condition monitoring answers the question of how they are doing at the moment, and predictive maintenance then goes something like this: what do I have to do to ensure that they will still work tomorrow? 

 

Perfect. I’d like to jump into the practice now. In the podcast, we always talk about specific projects in order to make the topic tangible in practice. Sven, I would now look again in your direction. I would first be interested in the topic of the wood processing industry in general. What drives your customers here and can you give us a bit of an introduction to what it’s like on site at a sawmill? And also, what are the challenges here, just to get to know your customers a little bit, and then go in a little bit concretely in the next step. How can we perhaps counteract what Thomas had already mentioned, building up these services? Can you tell us a bit about the issues affecting the woodworking industry?

Sven

Yes, with pleasure. The wood processing industry is not just the sawmill, but rather the entire value chain, i.e. from the forestry operation, which plants and cares for the tree and then at some point cuts it down, to the sawmill, to the wood processing industry, and finally to the furniture store. And this entire value chain needs to be considered. Nowadays, it is also important for the industry, among other things, where the tree comes from. Is it sustainable, what region does it come from, how has it been processed, what pesticides are used or not used. It is about this whole chain and this consists of data points, of data that comes from different sources and that should be brought together accordingly to then show the added value as well. Or to provide the customer with clarity in the context of sustainability, where there are also certain certifications, such as an FSC certificate, to simply show that and this issue has occupied our customer in the case and they have taken the first step together with us, to see what they can do in their sawmill, in their profession there first, to take the first step in the direction of digitization. 

 

Now, to create another virtual image in your mind, Thomas, I would look again in your direction. How should one now imagine a manufacturing wood factory? What does that even look like in there? Simply also once again for those who have never been in a sawmill. Can you describe this for us? 

Thomas

Perhaps Sven can explain this better than I can, since I have not yet been to his place. What is so generally imagined is that this is quite romantic in the forest. I don’t think so, Sven, do you?

Sven

No. So idyllically situated on the river, this is no longer the case. This is actually a highly complex plant where trees are delivered every minute, completely sawed through, automated, they are partially x-rayed at the front, measured with lasers to get the optimum cutting lengths and even what is typically left over, the wood chips, are then processed further – be it in energy generation or be it to by-products. So, unfortunately, it’s no longer as beautifully idyllic romantic as up in Finland in the forest, but it’s really a high-tech construct. 

 

And can you tell us a bit more about that. What exactly does it look like in there? How do you have to imagine it in terms of infrastructure? What happens there? And what might it come down to then? 

Sven

What everything revolves around is the tree. So, tree is delivered, tree is processed and that is actually the key figure for the sawmill operator as well. So the cutting volume. How many trees can I saw in an hour, in a minute, and then they are paid accordingly. It’s not so relevant what comes out the back, it’s the cut in the front that’s the key metric. I.e. it’s all about how effectively can I get trees in one after the other from the truck into the plant and then out the back the boards. 

 

You had just talked about cutting volumes etc. – this is probably about machine downtimes, about committees, about all such topics that are probably also relevant there, in order to give efficiencies somewhere, isn’t it?

Sven

Exactly. In this aspect, sawmills are not atypical to other industries. The aim is to avoid unplanned downtime at a sawmill, to optimize maintenance times, to schedule them at times when things are perhaps not so busy, when the supply chain is perhaps at a standstill. The point is to find out why a machine is at a standstill, i.e. what error codes are there, what operating temperatures, what fill levels the machine has, and then to be able to react accordingly in order to optimize the input or output. 

 

Okay. To perhaps stay with the problems and challenges in the current operation and move in the direction of digital services or to go down this path as well. Actually, there is always a concrete challenge at the center. What are the typical problems or challenges that you encounter in your daily life? What does it come down to? 

Sven

This customer case was about getting started. You already have a relatively large amount of data locally on site. This is not an atypical scenario either. They collect the data there in the database and they already have it, but it’s just always local, so if you want to access the data, you have to go there as a technician with a USB stick and pull the data off and then bring it back. This is actually not a good scenario. I.e. the first idea was that for the customer, be it at home on the sofa, the managing director, the plant manager at home on the sofa looking at an application and seeing what’s going on there in the sawmill, how fast it’s going, whether it’s on target. But also use the data for information like: Why are machines standing, how fast do machines run, how well does it work, can I look at that and then not just a sawmill, but to be able to compare that worldwide. How do machines run differently, how do they run in relation to regions, are there any parameters there that I can see that I can provide better service or that I can optimize the machine that more can run through. These were the challenges of this project. 

 

Ultimately, this is also the added value that comes with the cloud, perhaps across the board, that I also have the option of sharing data across trades or even perhaps making the data available to those involved in the upstream or downstream process in order to increase efficiencies. What interests me now, Thomas, once again looking in your direction: You have a wide variety of customers. Do you see challenges like this with other customers in the field? How do you have to classify that?

Thomas

Nice segue to me. Exactly what you just said is something that concerns companies everywhere, namely: How do I actually manage to operate this digitization across company boundaries, i.e., into the upstream and downstream scenarios? So, Sven just talked about it. The story starts with the tree standing in the forest and ends with the tabletop then standing in a living room somewhere, for example. And in the process, this tree does take various company boundaries that it crosses, and I would like to be able to map this entire process. And we actually have such a scenario frequently in customer meetings. The architecture must be prepared accordingly, and we need open interfaces and the like, because very different systems have to interact with each other. At the same time, these are also the challenges that customers are facing right now. 

 

Does this also involve integration in a wide variety of system landscapes? I mean, Sven, you had just said, this is a highly complex operation, also already partly digital, these are different systems, infrastructures already in place. Is it also about integrating data from different systems? Or are the sawmills of the world today not ready yet, or even others you know from your environment? 

Thomas

I might be able to say something about that. One of the issues behind this is sorting out this digital service within the company boundaries in the first place. Because originally, many of these approaches were synergy-driven and people said, “Okay, we need digitization and we have to do something that works,” and that often did not lead to the success they had hoped for, especially in relation to the customer. And what our customers do today, they clean up. They’re cleaning up a whole lot of things that they’ve started before but maybe weren’t successful to that extent, consolidating that into a digital strategy. That is the issue behind it. And Sven can certainly say something about it from a technical perspective. 

Sven

If you think about it a little bit further: If I tidy up my home, then the real added value only comes when I share this data with others, with other partners, i.e. with other departments in my company or be it in the entire chain. If the carpenter knows when the boards are coming and in what quality, he can adjust to them. If he knows that there was a certain infestation or non-infestation there, so sharing that data throughout the chain and offering new services, new services based on that, kind of a platform economy, that’s really where value is added, not just on its own. 

 

We have already talked a bit about data: the cut quantitiesvolumes that are obtained from the logs, the services both internally and externally, perhaps certain machine-related data, something like filling levels, but also in the direction of the carpenter, who then knows the quality of the boards that arrive – is there infestation yes/no? Such issues are, of course, extremely interesting. Now I would be interested to know what you have done specifically with this customer? You are now offering various services there, be it OEE apps, customer portal, etc. What have you actually done with this customer and what does it look like in practice?

Sven

If I may get into the technical side of things a bit – then Thomas can put the professional view on top of it. It’s like this: We have created a KPI app, which is a mobile app, i.e. it is available in all mobile stores, in the Google Play Store or in the Apple Store, and in this app we display KPIs in real time, i.e. the plant manager can see on the move, without having to go directly to the machine, how his machine is doing, whether it is down or running, whether it is producing, whether it is ahead or behind schedule. I defined a cutting volume, then I have the actual results immediately on my display and can see whether I have to rework or not, whether I have to adjust my shift schedules, whether I have to work on Saturdays or whether I can give the colleague the day off at noon on Friday. So that was the first step: to make these KPIs, which I actually only have close to the machine or when I’m on site at the sawmill, transparent in a mobile app. 

 

To put it briefly: KPIs in this case are simply key figures that are relevant, such as fill levels of a machine or the average cutting volume per day or how the shift performed. This is the kind of data you mean?

Sven

Exactly: efficiency, productivity, downtime, but also things like error codes and error causes. Why was the machine down – that is, not just that it was having downtime, but why, for how long, and then in proportion. Is it still within its performance? It must actually always be available 80-90% of the day. Is it above or is it below? And if so, has it been planned because there was maintenance or setup? Or was that unplanned due to a malfunction? 

 

One last question about this. You just said Google Store, Apple Store, meaning I can just download them? So I could download you live to my phone? Is it available? 

Sven

Yes. You can just download them. Then you’re still missing a bit of something, and that’s a sawmill first. Then, in terms of the on-site setup, it is an edge gateway, i.e. a computer that ensures that the data from the machine goes to the cloud. Into the cloud here is called Cumulocity, which is a device cloud from Software AG. There, the devices in the machines are managed, the data is also aggregated accordingly and the KPIs are calculated and then delivered to the app for display. 

 

That means if I’m a sawmill now, I can download the application and then I would be connected to the Cumulocity Cloud, so to speak, and then I have my dashboard where I can then see the data accordingly. Of course, there’s a bit more to it, you still have to collect something in advance, but it’s cool that it’s online and you can access it directly from the app store, very nice. What would be the next step then?

Sven

Now I know what my sawmill is doing. Of course, I can go a bit deeper in terms of more data, more KPIs, more live data. The next step would actually be to look: Okay based on comparative values in terms of analytics to look at what happens next. Am I still in the range of what’s good for my machine or am I already getting out of ranges and having to do maintenance or schedule service times, meaning I’m doing something like predictive maintenance. I know the level is going down, the chain is wearing out and then I can plan my service call more specifically. This is the first step for me to leverage efficiencies and optimize service. 

 

How do I record the data on site now? Do I have a gateway at the machine that then collects the data or do I connect the machine directly? So how does this work in practice?

Sven

In practice, the situation is that I have an edge gateway on site. Then you just have to connect it to power, internet and to the machine and the rest works automatically. But this also means that the customer has full control over which data or whether he wants to send data by simply unplugging it or configuring it accordingly on the edge gateway, and the data no longer goes out. So he has control over it. That was important, and the simple set-up is also important because typically a sawmill like this doesn’t have a large IT department, which means it should be a plug-and-play system. I plug it into the power and into the Internet and then the data is available online. 

 

Yeah and then there’s probably updates, just like you know from other apps. They then run via the cloud? I then also have the possibility to import new software stocks probably. How does this work in practice? 

Sven

So for the app, it’s relatively simple. There is a new version in the App Store and you can update it. Then it works. For on-site functionality, it’s a bit more complex. There we have intended that there be fleet management. This is based on Balena. This is also a cloud solution, which ensures that new software can be installed on the gateway, and that additional applications can be installed, which can then run other analyses or extract other data. That means the scenario is that I can maintain, update and apply security-related patches to the many distributed devices that are located all over the world, in locations that are not always completely accessible, from the central office. 

 

And so a new update then could be, for example, a new dashboard or any new features that I might have on my machine, or what does an update like that look like, for example? 

Sven

Yes, on the one hand it’s a new dashboard, new metrics, so new fancy things, but in particular it’s just open for analytics of the machine, so you can then just bring analytics service on it to then create new applications accordingly. 

 

How are these cloud services now being accepted by your customers or their customers again? So if I now imagine that I am a sawmill and now have the opportunity to additionally save costs somewhere by also being able to optimize my shift schedules, I can plan resources relatively easily, and have the most diverse added values. But I think this is not such a simple topic. How is that received? So are all customers open to this for the time being, or are there hurdles? What does it look like?

Thomas

Yes, you can’t make a general statement about that. The thing we perceive is that it’s changing in the market right now. So now not only concerning the timber industry, but a bit broader focus, because we are also active in other industries. There you can say certain industries, it was like, “Cloud is not an option” and was absolutely rejected. And that’s when we simply installed solutions on-premises. Then there were mixed scenarios where smaller things went into the cloud, but larger scenarios were not allowed into the cloud. We then created a kind of familiarization scenario, getting customers used to the cloud, so to speak, with the first non-critical applications and then, with the additional benefits, more and more cloud was accepted, and in the meantime, from my point of view, we are also seeing critical corners such as pharmaceuticals opening up in the direction of cloud services. So we see a very clear trend there, similar to what you used to see with CRM systems. Today, everyone is using Salesforce, everyone is in the cloud scenario. So there we see a clear development. But of course it has to do with the fact that the benefits are significantly higher, and secondly also with the increased security requirements that have to be met there. 

 

Yes, I think the benefits must also be made clear first and foremost. I think that’s also a process that may even take a few years until you get to that point, and the topic of security is of course incredibly relevant. Sven, can you add a bit from the field? I would be interested to know, if I now imagine a carpenter, who has an enormous added value if he knows when my boards will arrive, in what quality, and then prefers to buy from this sawmill rather than from another, where I already receive these digital services, or how do you see it in this chain?

Sven

Yes, it is a bit like Thomas says. It’s a bit type-dependent, that’s what I would call it. There are still concerns about sharing the data and also passing on the data, because some of it is also sensitive data. If I now put myself in as a carpenter, perhaps not the small craftsman on the spot, but as a large carpenter, and I then make it transparent that instead of 1,000 boards, the city now only orders 500 boards a week, then someone else can conclude from that, perhaps I’m not doing so well, perhaps I’m producing less. It’s a bit like Daimler, when fewer cars come off the assembly line, it’s always a bit critical. There are still fears that production-relevant or company-relevant data can be derived from such data. So it’s important that we embed that in a system that is secure, that is stable, and that also ensures data integrity. This means that the person only gets access to the data that is relevant to him – partially analyzed, so that these fears are addressed a bit. This is also important for the platform operator and for the data providers, that they can decide for themselves which data they want to share. That’s already a recurring requirement feature that we see. 

 

Maybe one more intermediate question. I don’t know which of you can answer this best, but we now have quite a few different mechanical engineers in our network as well. They’re all going down that road somewhere now. Can you summarize what the advantages or the added values are for me as a mechanical engineer?

Thomas

The main advantage, I believe, is customer proximity. Customer proximity and then the time the machine is with the operator, to be the operator’s value-added partner. So it goes well beyond scenarios like the one we’ve been discussing today. We are currently seeing a trend among machine manufacturers toward pay-per-X models, i.e., that the machine is no longer sold, but rather that the customer is a permanent value-added partner, and that the customer actually only pays for the performance that the machine then delivers. And that means I have a much closer relationship with my customer and have to understand his processes much better. And that’s a scenario that a lot of mechanical engineers are working on at the moment. On the other hand, it has to be said quite honestly that the market, i.e. the operators’ side, is often not quite ready for this yet. There are first great examples that work quite well, but there is a lot of activity among machine builders right now to prepare for this scenario. Then I also have to be able to sell not only the machine itself, but I have to know what my operator does with it. Because a pay-per-X model like this only works particularly well if I manage to operate my machine better than the previous operator. Only then does it make economic sense. And that can only be done on the basis of data – data that is cleverly evaluated. 

 

Yes, absolutely. I think, as you said at the beginning, becoming a value-added partner is exactly the right keyword for mechanical engineering. Because, as you said, that gives me exactly the proximity to the customer and also all the possibilities, whatever they look like in the future. We also have a few examples in our network of pay-per-X or pay-per-use models. This is also exactly the trend.

Thomas

Absolutely, and I’d like to add one more sentence: In the past, we looked at technology and feasibility, but today we look more at economic efficiency. What is the actual benefit? I am only a good value-added partner for my customers if it brings them a benefit. And technology, no matter what it is, is a means to an end and not an end in itself. That’s how we use things like this. 

 

I think it’s also important to work closely with the end customer and to bring in a certain methodology, perhaps even a methodology, to drive projects like this forward, which brings me to the next question. And it is also a bit of a competence structure that you bring with you – what does your customer bring with him, for example, and what does his end customer bring with him, in this case the sawmill. What competencies do you bring to the table and how does this interaction between your customers and their end customers work?

Sven

So in terms of our approach, we’re in an agile mode, which means we try to pack large projects into small iterations so that things are manageable. But what we also do, to challenge our customer. So he always has to provide a product owner who works closely with us. And we demand that, too. We ask him, we even torment him a little bit. So he has to provide answers, he has to make decisions and he also has to think ahead about the topic, the product, the idea. It’s a joint effort thing. We help there and support there as best we can. But he is the one who has to drive everything forward, and then of course we have all the power at the back that a software development house like this has. We create the complete solution. We can also run it, we can manage it so that he’s really just the user, all the way to managing the entire projects, the entire product over the entire lifecycle, planning it and also moving it forward. That means we have the power at the back, and we drive the customer at the front.

Thomas

Perhaps there is one more important aspect. On the one hand, we take on customers, we take on the project, we do the sales, and so on. On the other hand, we also have customers who say that digitization and everything related to it is becoming a core business for me and that it is becoming so important that I don’t want to let it out of my hands. And what we’ve also done in various customer projects is to get a customer to be able to do that themselves. So we enable the customers in the sense that they build their own team, we do a lot in the beginning, we keep training the team and then we keep pulling back and supporting our own digital units at our customers. So that’s a trigger path that’s there then. 

 

Do you actually benefit from your parent company Lenze? So you also work together on a process-specific basis or from the know-how that comes from the side? Or is that completely independent? 

Thomas

I would put it a little differently. It is not us who benefit, but rather our customer. Because on the one hand we then have the deep knowledge of drive technology, which we can combine with our IoT knowledge, i.e. OT/IT combinations and also automation technology all come together. And that is perhaps also a bit of USP what we have there at the point. 

 

We now have diverse audiences as well, who come with very different challenges. We already had this a bit as an intermediate question with mechanical engineering, but how can this experience, for example, perhaps also be transferred from the mechanical engineering part? You also advise other machine and plant manufacturers. What are your experiences here in terms of the business model?

Thomas

Yes, the business model often depends on the industry. So what are the things that are just accepted by the customers in this industry segment as well. Of course, there are always some that are disruptive, and that scales very strongly from freemium models, i.e. things that I first make available in terms of basic technology in order to get a customer used to them. Then there are higher-value services that are covered in subscription models, all the way up to pay-per-X models – we have already seen this with our customers as well. But perhaps more to the question of what’s driving companies right now. Everyone has done something before. All of them were already in the field of digitization. And the question now really is: sort it and clean it up and put it all together into a digital strategy that also has an objective, which is to support the strategy of the company And there is no “one size fits all”, we see that everywhere, but it is a matter of looking at which components I actually need in order to best support the position I want to take in the market with my customers. And that’s where these digital services and the traditional business are growing together very strongly. So it’s more of a bundling of “I have a machine with digital services and then I make a pay-per-X model out of that,” for example. So this strong separation between “we sell digital services” and “we sell a machine” is just disappearing. 

 

Yes, absolutely. Basically, of course, it also needs the right implementation partners, such as you, for example, who of course have the competence and can implement it properly. Or perhaps even more broadly, an ecosystem that you build out in order to make further progress there in the go-to-market with the individual customers that I then have. One last question: What else will you be doing in the future? 

Thomas

What we are seeing right now is the confluence of systems. So we mentioned this at the very beginning, on the one hand you have this very machine related information coming from the IoT scenario, but you also have on the other hand all that is around your customer in the CRM system. And then there are developments that go via customer portals in community clouds, where you bring these worlds of sales, service and IoT together. And if you imagine such a scenario: somehow the machine reports “I’m having a problem right now,” that pops up in a community tool, the operator’s employee says:  “Oh, I need to fix this problem right now, I’m reaching into the knowledge base, this thing tells me how to fix this bug, but also tells me right now: “Oh, if you can’t fix it, then please this spare part, for this spare part there is this successor, if you install the successor, then you have to have it done by a service person from the OEM, otherwise you will lose the warranty.” You can already see that there are a lot of things that are intertwined. That’s the issue right now. 

 

That was just a nice closing word to end on. I think the topic of customer portals and also overarching interfaces, as you had just mentioned with the CRM system, will become a relevant topic. I would be happy to hear from you again on that in a while, and do an update that way. Thank you for the session!