The Amazon for cutting tools delivers tools from the IoT cloud 24/7

Resource-conserving action and sustainable production across the entire value chain – this is high on the agenda of almost all manufacturing companies. A supplier network of truly innovative partners is an important key here. A prime example is Ceratizit, a precision tool specialist, which has developed an IoT service for its customers. The linchpin is their automated tooling system for the manufacturing industry, which, in cooperation with their partner and IT service provider Materna, is now making the data usable and, above all, integrable for the future. Keywords here include SAP and scheduling. In this episode, we find out which business case is being implemented and which technologies are being used.

Hello Marcus and Tobias! Marcus, you are Vice President IoT Consulting & Development at Materna Information & Communications SE. For more than 40 years, you have been very successfully implementing IT and digitization projects for customers from the business sector, but also from the public sector. Worldwide, you work at 35 locations with more than 3200 employees. You are a family business, which means you also work a lot with medium-sized companies, but also with corporations and government agencies, and you want to expand innovations and new services together with customers accordingly.

Marcus

That’s right. We not only have a wide range of customers, but also a very large portfolio to offer. This ranges from check-in machines at airports to security solutions for business and public authorities. Of course, the development and also the operation of software solutions, with us in our own data center or also in the cloud. The topic of Journey to Cloud is a very important one for us, where we work together with our customers to find solutions for moving existing applications – when it makes sense – to the cloud. Some customers have a very great need in this direction. And last, but not least: the topic of IoT – which is why we are sitting here together today. Where it’s not just about the technology, but also the business models behind it. These are all topics that we take care of with a very large development team, but also with many colleagues who address the issues around them.

It is also important for us to have a long-term partnership with the customers, so that we really develop joint solutions and pursue a common goal.

You’re not there alone today – who did you bring with you and what is this specific project about?

Marcus

I am very pleased that Tobias Baur has agreed to participate. We have been working together on the Tool-O-Mat project for six years now. From a technical point of view, we connect vending machines that are equipped with Ceratizit products to an SAP system so that we can manage both sales data and warehousing. The whole thing supports a corresponding business model, which I think is also a very important point behind it – it’s not just about technology, but also about a suitable business model.

Tobias, you are Director Business Administration at Ceratizit Deutschland GmbH. You are the precision tool specialists with over 100 years, you could say, and do everything around sophisticated hard material solutions for machining and wear protection. For a wide variety of industries, such as tooling, steel and metal, construction, automotive, you name it.

Tobias

That’s right. I am based here in Kempten. The Ceratizit Group has manufacturing sites around the world. We in Kempten are the sales unit for cutting tools. As Marcus has already mentioned, we simply try through our services to enable customers to deploy their tools in the best possible way.

The basic idea of our company founder: He realized that many tool manufacturers only sell tools, but do not show how to use them properly. He then very quickly realized that more service was needed. That was then two building blocks: The team of technical service and sales staff was quickly joined by requirements for availability – logistics expertise that we had to build up. From today’s perspective, we would say an Amazon for cutting tools. This means that we now have around 60,000 standard tools in stock here in Kempten, which we can provide to customers the next day with 99 percent availability. Also orders until 7 pm in the evening.

Challenges, potentials and status quo – This is what the use case looks like in practice [05:31]

Marcus, you just mentioned that you are working with very different use cases. I’m also pleased that you have already presented a wide variety of them to us in the partner network. Very briefly, what use cases do you have at Materna in general? And then maybe we can make the transition into the project to go deeper into that.

Marcus

I can give you two examples that are quite different in terms of content. The company behind one project is ITW, Illinois Tool Works. They come from America, a corporation with annual sales in the billions. They deal with different areas. We’re in the Food Equipment Group (FEG) business there. This is about the fact that the FEG manufactures equipment for professional kitchens with various companies. These are ovens, stoves, dishwashers, refrigerators, all of which are found in the professional sector, that is, restaurants, large canteens. The challenge was that although these devices now store a lot of data locally, it was difficult to access it – or only on site using the appropriate technician tools.

The desire was to build a solution there that would allow access to the data via a mobile app or a web application, respectively, so that users could access it with complete ease. The challenge for us was, on the one hand, that these are very different devices. A refrigerator and an oven – you can imagine – have very different data. If you then add in the dishwasher, the most diverse values and also interests in the individual values come to light. Our task was to combine all these different devices into a single interface – which is quite complex in itself.

In addition, there is another specific situation with the customer: the companies that manufacture this equipment are all independent. Therefore, in addition to the technical integration, there was also a personal integration level in the project, which is also really very international. I had already mentioned, ITW itself is based in the USA. But we have companies in Germany, England, France, Switzerland… so there are also a lot of cultural differences to consider.

The whole thing comes in another form. We currently do consulting and are not the ones who develop the software. Unlike FEG, where we operate a cloud solution based on Microsoft Azure. The front ends we develop there, for iOS and Android, also come from our company. At Pomo – a company from Finland that manufactures radiators, heating valves, cooling solutions, underfloor heating – we are on a pure consulting project. Pomo actually focuses on the production of radiators and valves, but due to market requirements it needs digital solutions there as well. There is also a very strong desire to have digital solutions in relation to smart homes, for example. An app that allows you to control the heaters, set the temperature. With which you can see how the heating is currently doing; what the status is.

Pomo works there with suppliers in the international area, and we as Materna are involved and advise them on the requirements for the solution. We ensure that a discussion can take place at eye level with the suppliers. This is because Pomo’s technical know-how in the field of app development in particular is not sufficient to really discuss every detailed solution down to the last detail. That’s what we’re in it for.

This is also very exciting in that we have the customer with the kitchen appliances. Then we have the radiators. And it’s always similar that you say you bring intelligence and additional data, where you want to leverage added value, to the individual pieces of equipment … And today it’s all about the vending machines. In other words, the logic is always similar: you want to use data; leverage added value through data, which is also to some extent the requirement of the market. Quite exciting to see!

Marcus

That is abstracted quite well, I would say. You can really find this pattern in different places. Again, we see it the same way here: we have vending machines, some of them the kind you see in everyday life. Where you typically pull a Snickers or a Coke, and which in our case are now stocked with tools. However, this also extends to machines that are built very specifically for their application, because there are sometimes very specific requirements. But ultimately, you’re right: it’s always about, you have a hardware, you have a digital component that you add there to significantly increase the utility.

Thank you very much, you can see very nicely what types of projects you are addressing. Tobias, you have already introduced your founding mission a little bit. It’s about the service; especially the use of the tools – bringing more intelligence into it. These topics of resource-saving action, sustainable production … What potentials or visions do you have with DIGITALIZATION? What direction are you going in?

Tobias

We, a team of around 120 application engineers, field service staff – sometimes only in the DACH region – at the customer’s site. That’s where we come from, from small and medium-sized customers to major customers in the automotive industry, for example. Here we cover the most diverse requirements. In addition to our team at the customer’s site, we are of course also available 24 hours a day via our e-shop solution. We are available by phone 12 hours a day, from 7 a.m. to 7 p.m. – that’s still important, too. And we even still have a fax where we get orders … that still exists too.

The peculiarity is, until 7 pm the order, and then the package will be shipped today and will be with you tomorrow in the production. And that all over Europe! Whether in Zwickau or in Zaragoza in Spain.

In addition to these standard tools, we also develop technically specific tools for certain requirements. If this concept is not enough, we have been offering our Tool-O-Mat concept for almost 25 years. The idea back then, as Marcus alluded to, was comparable to simple Snickers or Coke vending machines. For whom it is not enough to have the tool with them the next day, but perhaps also small companies that are not so well organized – “I need the tool when the wear is reached … when it is used up, on site, to be able to continue production directly and continue manufacturing”

The idea – with tools that of course have a higher value than Snickers or Coke – was simply that we then use a cabinet to take over the complete tool procurement or the purchasing of tools for the customer. The first cabinets even had integrated cooling, because there were no specific manufacturers. We now also schedule the warehouse, i.e. the contents for him, and also take over the tool output. The special thing here was that our claim is to really do EVERYTHING for the customer in this context. We speak of a “closed system” in our case. He doesn’t really do anything else except extract. We fill and we also dispose for him. Via the interface, our SAP probably also knows the customer’s consumption better than he does.

In addition, there are still different mechanisms, different securities. For example, our refill service, which travels to the customer at certain intervals, or as needed. When a consumption is extraordinarily large, we immediately know it is becoming critical; a critical stock has been reached. Then we also immediately send a package to him that he never runs out of tools. That is our quality promise: That he gets transparency about his consumption; but also that he is always available. That the tools he has in the cabinet are always within reach for him.

In the meantime, we are also using our solutions from the Group – for example, our ToolScope solution – to identify the customer’s needs even earlier and always provide him with the right tool at the right time via various data flows.

I’m trying to visualize this. So a little bit of the vending machines that we know – is that how it works with you guys, that I have a spiral like that that spins out, and then a drill or a cutting insert just comes out of there?

Tobias

Exactly. In the first generation, for example, beginning were predominantly spiral machines. As I said, quite analogous to what I think you know of the various vending machines. In the meantime, however, we are moving more in the direction of what fits better with tools? After all, it takes a lot of effort to pack such a small cutting insert into such a spiral, for example. Mainly these are now vending machines with conveyor belts, the classic drawer cabinets. Or our flagship is an intelligent slide vending machine that, among other things, also offers state-of-the-art, video-monitored mold dispensing.

Solutions, offerings and services – A look at the technologies used [15:04]

It’s also about, you brought intelligence in together with Materna. What have been your challenges in the process? It sounds like it … Tool-O-Mat exists on the market, it works. But what specifically is the challenge related to the vending machine? And also potentials that you saw in these processes – where did you want to go there?

Marcus

As Tobias mentioned – the solution has been around longer than Materna and Ceratizit have been working together. So when we joined, there was already a connection between the vending machines and the SAP system. However, it was actually already overtaxed at that point. On the one hand, an old mobile radio technology was still used, the so-called CSD – to be precise, modem ringing via a mobile radio connection. This takes a very long time with the data transfer and was also not particularly stable and reliable. In connection with a polling function that has been implemented there, it really took many hours to query all the vending machines and collect the data. That was a challenge: this whole issue is growing enormously. We have quite a few machines in the field now, including internationally. Another way of scaling simply had to be found.

At that time, we converted the whole thing to Edge – GSM-based technology. Digital data transmission has enabled us to extremely shorten transmission times. In the meantime, we are in the process of switching to 4G and 5G, since GSM networks are now also coming under increasing fire, I would say. In some countries, such as Switzerland, GSM has even been switched off. That means you simply have to take the next technological step.

The important thing is actually this integration with the SAP system. What Tobias has just mentioned: The administration of the vending machines, the inventories, the accounting … that all takes place in the SAP system. The vending machines are, strictly speaking, the front ends and output devices for the system.

What data is of interest here? Is that about classic sales data?

Marcus

Of course, the sales data is also exciting. Ultimately, Ceratizit would like to write an invoice for the things that customers have taken out of the vending machines. In any case, this is very important information. This data is transmitted nightly; that is, the vending machines send their corresponding sales lists to the SAP system. The SAP system can perform an assignment to the individual customer or even to individual projects at the customer’s site via metadata that we send along, so that the customer receives structured billing there. So that’s actually the sales data in the classic sense.

So, which customer bought, how much did they buy? When did he perhaps also buy and so on – that is so the data?

Marcus

Exactly, exactly. This is such information. But now we have already briefly said that we really have a lot of machines in the field. This means that we absolutely need a central administration of the vending machines. So whenever we make software updates, whenever we make updates to the product catalog or also to the UI, the user interface that we display on the vending machine … then it is, one has to say, almost a no-go there to do that manually, to run from one vending machine to the next with USB sticks. From the very beginning, the requirement was to have a central software and data distribution system.

This means that, in return for the data we receive from the vending machines, they also always receive updates from the SAP system regarding the configuration or, as I said, complete software updates when we roll out new functions.

In other words, the primary aim was also to replace such old, obsolete technologies. You mentioned modems. What else were important requirements at the beginning?

Marcus

In fact, it is also important to increase the speed of data transmission, and also reliability. That was one point. And in the meantime, since we currently support three vending machine lines, we have the issue that we would naturally like to bring about a standardization of the software there. That’s one thing we’ve already addressed. We now also have the option of combining different vending lines at the site. I don’t think we’ve even mentioned the numbers yet. There is the TOM 60, i.e. Tool-O-Mat 60 – the number always stands for the number of possible products in the machine -, the TOM 80 and the flagship, the TOM 840. The really allows 840 different products in the vending machine. You can imagine that they have different form factors. They look quite different. We took the approach of having a uniform user interface and the option of placing a TOM 80 next to a TOM 840 if we wanted to expand the outputs.

In the show notes I will link a picture, there you can have a look how such a machine looks like and how it feels.

Tobias, you have over 120 employees on the team as well. Is that when you said that’s a requirement, to facilitate those kinds of activities for your team?

Tobias

The 120 employees in sales, that’s the DACH region alone. As Marcus said, we now have well over 1000 devices placed worldwide, in 22 countries. Of course, that was also a big issue for us, a big requirement together with Materna, that we need remote access to the vending machines and that is becoming more and more important. Because it is no longer possible, when we have problems, to drive quickly to the vending machine, to make a service call. That might work quite well in Munich. But in Mexico, for example, where we now have some vending machines, it is very time-consuming, cost-intensive, and probably not quite ecologically sensible to fly there. And just so simple activities: The classic example, reboot the device. If anything is not working that we can do it remotely from one of our TOM hubs.

This has meant a massive reduction in support – from technical service, but also simply from our application engineers on site, who have always tried to solve problems. Of course, things break sometimes, even on the vending machine. But it has become extremely rare for us to have to repair anything on site, and virtually none at all from the technical side. We can do that from Kempten. That has helped us enormously.

I imagine something like that is also something where you guys work closely with your end customers? This whole topic of resource-conserving action and also sustainable production is becoming increasingly important. Just across the entire value chain. You are, so to speak, pioneers in taking forward-looking measures to safeguard these issues. In the end, as you say, it’s about making sure that there is no downtime. That you can see things beforehand and it also generally makes it more agile, the whole thing, and data-based, right?

Tobias

Absolutely. I mean, the promise, which is very important to us: availability for the customer. A failure of such a device, he can not remove – this, of course, the super-GAU. What you’re also saying, though, with this centralized delivery at specific times – that’s a more sustainable approach, to deliver a lot once and then fill it up, rather than shipping small quantities over and over again and creating far more overhead as well. Our packaging is also recyclable. In that context, we do a lot, a lot here.

Marcus, I think you know such issues from other customers as well? Sustainability is such one of the biggest points, isn’t it?

Marcus

Yes, absolutely! This is a point that is becoming more, more important, for a variety of reasons. This is, of course, the companies’ own motivation to position themselves a little better. But in the meantime, there are also legal regulations that encourage people to think more in this direction, to put it mildly. This is clearly a driver for many projects. Sometimes the focus is on sustainability, which is the actual project theme. Sometimes, however, it is also something that comes about as a favorable side effect, because it allows you – as we have just seen here, for example – to reduce unnecessary journeys and achieve better positioning as a result.

To put the solution you built together in more concrete terms: You basically modernized these IoT-enabled vending machines and equipped them with new technology. Exactly what hardware do you use on site, i.e. how does the data acquisition work?

Marcus

We actually use standard vending machines. They are not built specifically for this project, although they are modified for it. So this is not what you can buy right off the shelf. We work accordingly with the manufacturers of the machines, who make adjustments so that they are suitable for Ceratizit’s application.

An important aspect of this is the ease of use. Especially with the modern automatic lines, the TOM 80 and TOM 840, we have mounted touch screens so that the user can really easily select the tools via finger operation on the touch display. Authorization, which is of course also quite important, is done via the normal plant ID card. That is, there are NFC readers on the vending machine. You don’t need a special Ceratizit ID card – that’s another important story – you simply take the company ID card that you have anyway and can use it to authorize yourself at the vending machine.

In addition, there is a barcode or QR code reader for example job sheets that you just have to perform the current tasks and are provided with a QR code to realize the corresponding cost centers. Then you can walk up and hold this sheet in front of the machine, and then the QR code is scanned.

The further processing of the data – you had just mentioned a GSM module, which runs on the Edge, directly on the machine. How does the connectivity you built there work?

Marcus

Strictly speaking, our touch screen is actually a touch PC on the TOM 80. On the TOM 840, we have pulled that apart a bit. But at the end of the day, it’s actually a PC that’s installed there, and it uses this GSM module to exchange data over it. That’s a story that we’ve consistently pulled off everywhere.

Against the background that Tobias mentioned – internationality – mobile communications is already a matter of some complexity, because there are very different requirements in different countries with regard to roaming. This is to be considered. But of course also in terms of fee structure. Fortunately, there are now providers who cover this completely and offer standardized solutions that can be used worldwide.

In other words, you also told the vending machine manufacturer that we need connectivity, so why not install a GSM module?

Marcus

That is actually one thing that is being done as part of the project. The vending machines arrive naked, I say, and then the GSM module and touch PC are installed.

Is that what you take care of then?

Marcus

This is not a Materna task; Ceratizit actually does this as part of the delivery of the vending machines and the initial equipping.

When it comes to data evaluation – mapping wear, increasing availability. Also perform updates from the product catalog. How does the analysis of the data work, with which software and which cloud?

Tobias

For us, there are two very significant issues with the withdrawal data. Point one, when the customer removes, they have purchased a tool – we get to invoice and make revenue. Secondly, however, the removal data is the basis for the disposition in the vending machine and our promise that the customer always has his tools available on site. Here is the communication with the vending machines, the 1000 devices worldwide – every night the data is transferred directly to our SAP system, is processed there automatically. And if ever a retrieval didn’t work, for whatever reason, we have a log. Then workflows start, which are processed in our error management, and with which also a manual switching to the vending machine can be made and the problem can be solved.

But it is also very important that with the user interface that we have in the newer machines, we are able to send the mold data and all the information that we want to give the customer to the machine via the interface. These are the same data as in our webshop, in our catalog. For comparison: In the earlier days, at the beginning, we still had the catalog pages attached to the side of the machine, so that the customer knows which tool, which dimension is stored in which compartment.

Invoicing: For the customer, this is consignment stock. This means that the stock in the unit belongs to us, and the customer pays only upon withdrawal. With the TOM, however, he also wants to get transparency – also one of our promises – about his tool consumption. We often see when we install a device, maybe initially sales go down a little bit. This has to do with the fact that the various tool stores that often exist in such a production facility – be it black or desk stores – are first used up. And from us he gets daily, weekly, monthly – as he wants – his consumption. Perhaps assigned to cost centers. Perhaps assigned to employees. It’s just up to him how he would like it to be.

Marcus, if I think about it – I have to run the data from SAP somewhere into a cloud structure. How does the architecture and software side work? What did you develop to make that happen?

Marcus

The solution consists of three components in total. One is the SAP system. Then there is a central server portion that controls communication between the vending machines and also interfaces with the SAP system. This means that we have created our intermediate post between the vending machines and the SAP system, which takes care of the technical communication with the vending machines. It is important to note that the machines are of course not always one hundred percent accessible. It is therefore important that all data that is to be sent there is buffered so that it can then be transferred to the machines – possibly in several steps. That’s what we introduced there.

Of course, we also have ways of ensuring that only registered machines actually deliver data. So that not just anyone generates sales data, but that only approved devices do that.

On the other hand, we have the software that runs in the vending machines. That is what we had already briefly touched on a moment ago: The user interface, what I see as a user. There is also an administration interface. I don’t get to see that as a user. And behind that we have another component that completely controls the vending machine. There are no electronics in the machine itself that decide what is ejected. Perhaps we should also add that we do not have a mechanism that somehow says, “I would now like to have something ejected from compartment A17. But the customer goes and says, I want a 10 mm drill bit – and whether this drill bit is in one compartment, in two or three, because you need corresponding quantities, and in which compartment, the user does not know. He orders a 10 mm drill bit from the vending machine and then gets it ejected.

Results, Business Models and Best Practices – How Success is Measured [30:45]

In the end, it’s also always about the business case. We have already learned, it is also about a service. Maybe even about a new business model that comes with it. Tobias, what does the business case look like for you in summary?

Tobias

I think we have now also talked a lot about the benefits for the customer. – What do we do and how do we want to develop here? Of course, we want to become part of the customer’s process chain with the TOM. With and grow with the customer as well.

However, the TOM is also a basic building block for our entire tool management services and also an essential part of our non-touch sales strategy. This means that our top priority is always personal contact and consultation with the customer. But with all recurring orders, we want to make it as easy as possible for him to get our tools. We’ve already touched on the sustainability aspects – with the filling, centrally, that it’s just less. The COVID period showed us that the doors here were often closed. But as part of the process chain – I’ll call it External Storage, physically – the refill teams were the first ones back out to the customer. And the doors were open on everyone from Füssen to Rostock. We were thus present with the customer and were in exchange with him.

Where do we want to go? On the one hand, we see a lot of potential on the customer side. We were very focused on small and medium-sized businesses, but are now moving to large customers. But we also see that, for example, the user interface, where we have put a lot of effort and development, is actually “only” used for one output and that we want to provide targeted information to the customer here in the future, perhaps also providing direct access to our web store. But on the customer side, maybe he can use it as a bulletin board for his employees – because the device is present on the shop floor.

The connectivity, which Marcus already mentioned, that we say this communication … we want to have the data live. That the customer, with the inventory in the vending machine, can better plan their manufacturing process via other tools. Then it should also become a part: As the Ceratizit Group, we also offer customers a kind of dashboard for their manufacturing processes, where we want to provide them with unprecedented transparency. That’s where the Tool-O-Mat is a building block in terms of availability, tool output. For example, in our ToolScope we can monitor production. So we know the wear and tear, the consumption. And then also the goal of perhaps also connecting other systems and thus offering the customer maximum transparency.

That also applies to things like the one you mentioned, monitoring tool consumption and mapping that to a cost center, for example – issues like that play into it, don’t they?

Tobias

Right. And also when the tool is in use, for example, to detect wear. When will the consumption time be reached and a new tool will be necessary?

Transferability, Scaling, and Next Steps – Here’s how you can use this use case. [33:48]

Marcus, we have diverse audiences from a wide variety of backgrounds. We learned, you have different use cases, different projects with your customers. If we take this one: Do you think this is also transferable to other use cases? Do you see this often?

Marcus

On the one hand, of course, you can stay directly on the project. This means that this concept of a vending machine for dispensing different products can, of course, also be spun in other directions. It is conceivable, for example, that personal protective equipment is issued and documentation is also received at the same time. There are regulations that employers must prove that employees have been provided with hearing protection or safety gloves. This could be documented automatically.

On the other hand, you can of course also go along, as we said at the beginning: This whole issue, I have a hardware, a device, and I want to add a digital component, look at it on a more abstract level. Whether it’s a vending machine, an industrial pump, a drilling machine – in the end, it’s always similar approaches where I have a physical product, and by adding digital components, I can realize completely new business models and customer solutions.

The only important thing for me would be: Even if I am a great friend of technology … you should not start with technology when dealing with such topics. Instead, you always have to come from the customer side. Always look, what are the requirements of the customer? What is the business model? Otherwise, the most beautiful technical solution is of no use to me if it is not accepted by the market and does not bring any benefits.

Absolutely. I think in the case of Ceratizit, the business model is relatively clear, and a great direction, not only for now, but also towards the future. Many thanks to both of you!