Continental, one of the world’s largest producers of components for passenger and commercial vehicles, is under increasing pressure from auto manufacturers to increase operational efficiency and visibility. In this conversation with SupplyChainBrain editor-in-chief Bob Bowman, two Continental executives — electrical technician Antonio Porras-Martinez and SAP-ME project manager Hendrik Neumann — explain how the company is building “smart factories” to meet rising customer demands.

SCB: Tell me about the increasing demands of vehicle automakers today. How are their expectations rising with regard to how Continental serves their needs?

Neumann: The main customers in our area are commercial vehicle manufacturers. There’s an increasing demand for getting additional data about the product. Normally they would get it on a piece of paper. Now they want it in the cloud.

SCB: What needed to be done at your factories in order to keep up with these rising expectations, and improve Continental's efficiency?

Neumann: We needed a manufacturing execution system [MES] that was up to date and state of the art. Otherwise we couldn’t fulfill the requirements of our external and internal customers. Therefore, we needed to invest in hardware.

Porras-Martinez: Another challenge was finding software that could map our processes, and at the same time provide the technology for future requirements.

SCB: We hear a lot today about the “smart factory.” What’s your definition of the term? And is that what you were going for?

Neumann: A smart factory is characterized by real-time intelligent integration and collaboration of humans, machines and IT systems. It needs to be flexible about changing production and customer demands.

Porras-Martinez: You have to digitalize the whole process. That's also a part of the smart factory.

Neumann: There are three main areas in our approach to creating a smart factory. One is digitization of the process, which Antonio just mentioned. To see what’s going on in real time on the shop floor. The second is automation and robots. And the third big area is standardization. If you want a quick rollout of digitization and automation, you need to extend that process in all plants.

SCB: How did you get started in moving ahead with this initiative?

Porras-Martinez: It was four years ago. We had seven different business units, and everyone was running their own MES software. We were not able to give support to so many different kinds of software. So we started a proof of concept and analyzed the MES software on the market. And we decided to go with SAP.

Neumann: We didn’t want too much customization. We wanted standard software, and didn’t want to rely too much on the people who would customize for us.

SCB: You started with one machine, in one production area, at one plant?

Neumann: It was a couple of machines, but it was one production process. We started with the most complicated one, a use case for public rail, where we have a very high quality standard. We developed our proof of concept long before we started implementation. We said if we can map this process with the chosen software, we can met the needs of all our processes.

SCB: It sounds like you were requiring a complete switching out of your MES. What was running the plant before?

Neumann: We had different software solutions in different plants. We didn’t replace our SAP ERP [enterprise resource planning system]. It runs the business, while SAP ME [Manufacturing Execution] runs production. The different kinds of in-house software we were running in the plants have been replaced by one system, SAP ME.

SCB: What issues did you face during implementation? And what lessons did you learn in the process?

Neumann: We took a year to analyze of all of the processes in our plants. We traveled around to get all the requirements. We had customized software for specific processes, so we asked, do we really need this? How do we get to standardized software? That was one big point.

Porras-Martinez: For everyone in the plant, it was mind-changing to break with the old roots.

Neumann: There was a big change going from summation on a spreadsheet to where you can see [the data] now, and react immediately.

SCB: How long did implementation take?

Neumann: Instead of going plant by plant, we would take a production process for a certain product group, then go from that to another. The process is still running; we’re in the middle. We’ve connected around 200 workstations. There are no big bangs.

SCB: How many individual processes are involved in this project?

Neumann: We have a total of seven different production processes, and up to now have implemented five, but each process has multiple lines. For example, in railway products we have one line in Hanover and another in Hungary. We have around 40 different production lines worldwide.

SCB: What other innovations are you undertaking?

Neumann: One big innovation we’re implementing is serialization. Before, we had batch production, and we’re now going toward serialized production of each part. The important thing is that we can collect information for each product, which we later can make available to our customers. That’s a big innovation.

SCB: How long before this smart factory project is complete at all of your plants?

Neumann: We think we’ll need a total of seven years to complete it at our five plants. We’re in the second year now.