By Markus Schäfer:
In the history of technology, it appears, the only constant is change itself. But what’s most impressive these days is how fast fundamental changes in our society are taking place. For example, back in 2015, the year AutoParts Asia was launched, you called a taxi when you needed to get from A to B, downloaded an MP3 file when you wanted to listen to your favorite song, and saw no need for your fridge or TV to be connected to the internet.
In most cities today – just three years later — it is more promising to summon an Uber driver via an app than to look for a traditional cab, to stream music via a platform on your smartphone with access to every song in the world within seconds, and more than 11-billion devices of all kinds worldwide are connected on the Internet of Things (IoT). By the way, that latter number doesn’t even include computers or smartphones. We are talking about devices such as smart TVs or smart fridges and, of course, about machines and robots in automotive factories worldwide.
It’s truly amazing how much has changed in such a short period. And when I recall what automobile production looked like back in 1990 – the year I joined Mercedes-Benz – it feels more like three centuries rather than three decades have since passed! What we are experiencing right now is arguably the most pervasive paradigm change in the history of the automotive industry. At Mercedes-Benz Cars, we no longer only face our traditional competition with other automobile manufacturers. New competitors –including start-ups or companies from the IT sector – are entering the automotive industry with disruptive business models. Let me make this point crystal clear: We take these new entrants very seriously. After all, the history of our very own company began with a disruptive idea: 132 years ago our founders, Gottlieb Daimler and Carl Benz, profoundly changed the world with their invention – the car.
This pioneering spirit remains an integral part of our Mercedes-Benz DNA. And that’s why we are not afraid of new competitors. Instead, we are standing up to the challenge. We look forward to playing a crucial role in shaping the future of the automobile – and consequently, the future of automobile production. And we are doing so from a position of strength. In 2017, Mercedes-Benz Cars sold 2.4 million vehicles, more than ever before in our long history. We produce these cars in more than 30 plants in 19 countries on five continents. In Asia, our plants in Beijing, Pune (India), Ho Chi Minh City, Bangkok, Jakarta, and Pekan (Malaysia) are key components of Mercedes-Benz Cars Operations’ global production network.
Of course, all production facilities in our network are connected today. From the desk in my office – and even from my smartphone — I can access every machine and every robot in our production network. But we go one step further with Industry 4.0: we are making use of the advantages of digitalisation across the entire value chain. New technologies offer entirely new possibilities, especially where other actors come into play. RFID technology, for example, will allow us to follow the path of every part – from the moment that it’s shipped by one of our suppliers to the second it rolls off the line in one of our vehicles. Think of the point of intersection between R&D and production: Virtual reality applications allow us to optimize the process of manufacturing in the earliest stages of the development process. In short: Smart production will make us more flexible, more transparent and more efficient. In times of volatile markets and individual customer demand, smart production is important to success.
So, how does Mercedes-Benz Cars make its production even smarter? One answer is full-flex assembly. That means we are preparing our assembly lines and machines for possible changes of framework conditions in the future. In other words, we are equipping our assembly with a basic configuration that can be easily complemented by smart flex modules. Thus, significantly different vehicle architectures can be efficiently produced on the same assembly line. For example, cars with combustion engines will be built on the same line as hybrids and fully-electric vehicles. At the end of the next decade, all our production sites will be ready for full-flex assembly; established plants, as well as those now being built.
Take the example of our Factory 56: This production facility is coming to life at our long-standing site in Sindelfingen, Germany – and it serves as a blue print for the automobile production of tomorrow. It will be equipped with cutting-edge digital technologies, be a role model for flexibility in production, and will help significantly reduce emissions. Earlier this year we laid the cornerstone for Factory 56. And one day in the not-too-distant future we will also build fully automated passenger cars in this plant.
In addition, the opportunities provided by Big Data are paving the way to smart production. Modern, smart machines in our production facilities are producing terabytes of data. Historically, the larger the amount of data becomes, the harder it was for us to handle it. This is where Artificial Intelligence comes into play: The automated analysis of large amounts of data has made cutting-edge technologies such as predictive maintenance a reality. That means we can maintain our entire production infrastructure before a breakdown occurs – thus we reduce standstills and the number of defective parts. And, speaking of detecting defective parts, let me add that we now use a very similar approach in our quality management: From the collected data, smart software can precisely predict which defect will likely occur in which part with which probability. These predictions are transmitted in real-time to employees at our quality gates. We call this predictive rework. As our workers already know where defects are most likely to occur, they need not waste their time searching for these defects anymore – and can immediately start fixing them instead.
This example shows: Digitalisation and cutting-edge technologies also make life easier for people in all our production facilities. Intelligent software helps them with their daily duties. Wearable devices and paperless documentation systems support them in their manual work. And, as all production steps are tested in virtual reality before series production starts, ergonomics at their work stations are much improved.
Let me make this very clear: When I think of smart production, I am certainly not dreaming of factories that are devoid of humans. The exact opposite is true for us at Mercedes-Benz Cars. In the age of digital production, our employees are at the centre of all our actions and considerations. It cannot be denied that there are (and will be) production jobs, as well as in planning or administration, which can be more effectively done by (smart) machines. And we will certainly not refuse to accept this truth. But when you manufacture a premium product there will always be tasks that require truly human characteristics – creativity, vigor, passion, and know-how. Artificial Intelligence will provide excellent support to our highly skilled employees – but it will never replace them.
In fact, we have even decided to reduce full automatization in certain production steps in order to improve them. Take the calibration of head-up displays as an example. Until now, this was done automatically by a machine placed at a fixed position. In the future, the same job will be done by any employee with the help of a standard tablet computer and a camera module. This is just one of many examples that proves there are many instances where the intelligent collaboration of humans and machines makes us far more flexible than we ever could be with full automatization. My staunch conclusion is what was true 132 years ago remains true today and in the future: A Mercedes-Benz is built by human beings, not by machines.
I’ve said it before and I say it again: The automotive industry is going through the most fundamental change in its history. Digitalisation has the potential to turn things upside down. Mercedes-Benz is up to the challenge.
We know we will have to transform thoroughly our business and question the business models that have served us so well over the decades. We will forge new alliances with traditional competitors, as well as with new entrants that are yet to come. And we will change to stay what we are today: The global number one in premium cars.
(Markus Schäfer is the Member of the Divisional Board of Mercedes-Benz Cars, Production & SCM)