Industry 4.0

Digitalization is not just one of the global modern trends. Today it is already a necessity, a tool not only for development, but and survival. About his international experience in introducing digital technologies to the magazine “New Defence Order. Strategy”, said Igor Bogachev, General Director of Zyfra.


First of all, please explain to the readers what does “digitalization of production” mean in plain terms.

Digital Transformation is implementation of modern technologies in business processes of a company. If we look at stages of digital transformation, at preparative level we see sensors, diagnostic systems, we get already approximate results, and in some specific cases – diagnostics of technological systems. Gradually, this passes into system monitoring of equipment which improves performance. Top level is robotic systems, i.e. “unmanned technologies”.

“Industry 4.0” begins from data collection and real-time intellectual planning and continues with everyday control and additional adjustment. The aim here is traditional enough for any business: to produce more for less money. So far, digital solutions existing in Russian production facilities, as a rule, are connected with detection but not solution of a problem. Whereas, for successful competition, companies need digitalization at all stages of production process, and preferably, of a product life cycle also – in order to increase staff productivity and service profitability.

Digitalization of enterprises, the use of elements of artificial intelligence in production process are resources for increasing workforce productivity. Before starting any programs to upgrade process equipment, which might require billions rubles in investments, it is logical to deploy it first in full. It is best to get the most out of your existing equipment stock first by reducing its downtime and increasing productivity via digital monitoring. When you do digitalization, you don’t change equipment. This is the case with Uber: running the same vehicles with the same drivers, a new model is created to manage and use the same service. The same can be done in industry at large – changing production structure with the same equipment, processes, and workers.

We work with customers from several key industries: mining, metallurgy, oil-and-gas production and refining, chemistry and mechanical engineering. Functionally, the approaches in each industrial sector differ, but there are three basic elements everywhere. The first level – interconnection of industrial equipment, its monitoring for analysis of capacity utilization, causes of downtime and availability of free resources for further optimization. The second level consists of digital management of production using the first-level data. The third level adds machine learning technologies to optimize production processes on the real-time basis and creates “autopilots” that assist people in making right decisions.


Igor Bogachev, General Director of Zyfra


What are the opportunities that production digitalization brings to industries in general and to the defense industry in particular?

– Today, the Russian industrial sector requires new management models and technologies rather than only substantial material resources for modification. Existing infrastructure can work faster and more effectively. This is a global challenge of today in response to which we should undertake efforts towards digitalization and not wait for the appearance of industry standards and ready-to-use typical solutions proven by industry leaders. It’s important to take into account that the digital economy is not a thing in itself, and there is no sense in perceiving it just as a fashionable trend fed by the close attention of state and business. This is backed by real economic effects.

Previously the question of how to make a general transfer from manual to machine operations at the mechanical level has been addressed, but now the actual agenda aims towards enhancement of equipment operation and technological processes efficiency, the delegation of routine and hazardous operations to robots or artificial intelligence. A new process management model based on digital transformation should be quick, precise, and eco-friendly in the broad sense of the word.

Primary conditions of sustainable development of any industrial facility include real-time automatic control of productive assets, predictability of systems’ operation, as well as reducing transaction costs. Meeting these requirements in contemporary reality is provided with the use of data-based management. Data collection as such is still a weak point of the industry. In particular, in Russia and in most part of the world, 90% of industrial equipment is not being monitored, parameters of its operation are not accounted for and analyzed. Thereby, country mean utilization of machine pool accounts for 30% on average. Therefore, a path to digital production starts from connecting to the Industrial Internet of Things (IIoT).

Today’s systems provide real-time monitoring of production equipment, anytime and anywhere, and support connection to Computer numerical control (CNC) machines, industrial robots and production lines. You can evaluate the state of your machines by dashboards, a timeline, or on an interactive shop floor layout using a traditional Windows application or a modern Web client.

Monitoring of most modern CNC machines is simple – all you need is just connect the network cable to an appropriate port on the machine controls (a list of supported CNC controls is available on the website and from authorized dealers) and configure it to transmit data. In this case, you automatically receive not only information about the state of a machine (its cycle, downtime, alarm conditions), but also a large amount of data regarding the process: numerical control (NC) program number, coordinates, speed, feed, tool number, etc.; and many system variables: temperature, spindle load, alarm number, etc.

To connect to any other piece of equipment, you can use a wide range of hardware products (including a proprietary TVV monitoring terminal and various sensors) as well as third-party products (Android tablet computers and MOXA network equipment).

TVV terminals and tablet computers help an operator to work more efficiently – they are used to specify reasons for downtime (i.e. setup, no tools, no task, no workpieces, etc.), which are used to notify (by SMS and E-mail) respective specialists and production departments. The terminal displays information that is useful for completing a job: order number, documentation (setup sheets and drawings), machine status, number of machined parts; an NC program is selected for transfer to the machine. Optionally, a barcode scanner can be connected to register the operator and technological operations, specifying reasons of downtime.

Data from each machine is transmitted (24/7) and stored in a server. Many tools are available for users to get a full view of production efficiency and its bottlenecks. You can choose from more than 100 predefined reports (OEE, KPI, reasons for downtime, machined parts, alarms, defects, etc.), including tabular data and diagrams, or use the report generator, which generates analytics in accordance with selected criteria.

Main functions available are monitoring the load, state, and operating modes of equipment; identification and classification of downtime reasons; assisting operators in performing production tasks; notifying specialists and production departments regarding accidents and unplanned downtime; compiling analytical reports on the equipment operation and production efficiency.

Currently, there are more than 50 large industrial holdings which use our MDC-plus Industrial Machine Monitoring and Manufacturing Data Collection System, including the United Aircraft Corporation (Russia), Russian Helicopters (Russia), the Rosatom State Atomic Energy Corporation (Russia), the Godrej Group (India), Indian Railways (India), and many others. We see the potential to work in this direction with our European and Indian colleagues from companies in the aerospace sector. MDC-plus is the first Russian system that uses not only the technology of the Industrial Internet of Things but also artificial intelligence. With the help of predictive analytics, the system can predict equipment breakdown and control tool use.

Recently, Zyfra and the United Engine Corporation have deployed MDC-plus real-time machine monitoring and manufacturing data collection system in various manufacturing facilities across the country. MDC-plus is designed to track machine operation, personal productivity, and parts manufacturing progress. Its tailored reports and charts can be used to eliminate unreasonable downtime, evaluate overall equipment efficiency (OEE) and reduce production costs. On average, equipment monitoring increases production efficiency by 15%.


What are the challenges that come along with this digitalization of production?

– Lack of data is one of the main problems hindering the development of such digital models for Russian companies and enterprises. In my experience, at least six months’ load of data on the operation of the target facility is needed in order to build such a model. The company should have its data stored in digital format, not a hardcopy, and be easily retrievable. It’s difficult to retrieve undigitized information and use it. According to Zyfra, three-quarters of Russia’s total pool of 800 thousand machines are not equipped with numerical control, and this complicates connecting them to industrial monitoring systems.

Other barriers to digitalization are the conservatism of some enterprises, plus the resistance of management: sometimes, managers don’t want the plant’s processes to become more transparent so that their abuses or deficiencies would become apparent. 

Lack of general knowledge about the capabilities of digital technologies in production is slacking up the process as well.

Some manufacturers say: “Let’s try digital technologies for some secondary process, and then we can go from there.” But it is impossible to note a significant effect with a small production and minimum economy.

The first and most important rule for business is to implement new technologies. The second is to change management by integrating new technologies into it. In addition to the implementation of new technologies, it is necessary to transform the management system by making it more flexible and able to respond faster to changing conditions.


How would you evaluate digitalization in the defense sector in Russia and in other countries where you operate?

– If we talk about modern equipment, modern production management systems, then, of course, defense enterprises are equipped better than civil ones. There had been various systems before the time when everybody began speaking about digitalization. Enterprises are equipped with more or less up-to-date machines.

Equipment connectivity is important. The basis of production optimization lies in the physical possibility to get structured information about equipment operation. The baseline requirement consists of the availability of numerically controlled (NC) machines. If a machine has no wire in it, and Wi-Fi can’t be provided, then miracles do not occur: you will not have any data from this machine.

By our estimates, about 14% of factories in Russia are already at high stage of readiness for digital transformation: more than 50% of their machine pool are NC machines. Additionally, according to results of our survey, approximately 20% of enterprises are actively increasing machine pool – equipment amount gain in these companies for the last three years has exceeded 20%; almost 80% of respondent enterprises are going to purchase machines in the nearest three years.

More advanced industry sectors include aircraft industry, automotive industry, and machine-tool building. Share of NC machines in aircraft engineering amounted to 30%, and within the last three years almost 40% of additionally purchased machines were indeed with CNC. In automobile factories, about 60% of new equipment contains already CNC modules, the gross share of automated equipment did not exceed 7% here. In machine-tool building, 41% of new equipment is automated, the current percent is just above 10%.

As for the comparison with other countries, I would divide this question into two parts. The first is workforce productivity. Notwithstanding positive first outcomes of the implementation of “Workforce productivity and employment support” national project which aims to accelerate the pace of increase in productivity in medium and large enterprises of key non-raw-material industry sectors by 5% minimum per year to 2024, workforce productivity in Russia (GDP per hour of hours worked) is approximately half as high as a similar indicator for another countries’ companies. Figuratively speaking, in the same term, in Russia one house is constructed, and in America and EU – three houses are.

This lagging of Russia can be eliminated using end-to-end digitalization of all real sectors. Technologies of Industrial Internet of Things and artificial intelligence allow to increase equipment and personnel productiveness by 10% on average, and finished product output – up to 15%.

Second, there is the level of digitalization. The global technical market does not differ greatly from the Russian market. We work in various countries and see the same situation. Everywhere people try to implement in production process technologies of Industry Internet and artificial intelligence. Everywhere pilot projects run, but this is far from saying that some countries are much ahead. In other words, we have a chance to build new economy and be among the first to get results, as Russian industry is known for not only being large but also for the fact that people working in the country are well educated, not afraid of taking risks and can manage changes.


Igor Bogachev, General Director of Zyfra


How does the rise of digital platforms benefit the military sector?

– In some production facilities where, for instance, engines (not necessarily for military-oriented purposes) are manufactured exclusive quality standards are applied. For military products, these standards are even higher, including those for parts traceability. This is one of the current tasks for us now – to trace a path from raw metal to the finished part. This is called a “product digital certificate.”

In civil industry, it is not of great importance, for instance, who made a part for a vacuum cleaner; this part can be replaced and everything will work fine. And in the defense industry, it is very important. If a missile has not taken off, this is not equal to a broken vacuum cleaner. It is important to know everything, including which enterprise has delivered metal. A part blank has passed through 20 machines and 30 hands but, in the end, something happened to it, and it can’t be determined who is to blame. Maybe, it was the company that supplied raw metal.

It is also important to understand technological modes in part manufacturing process. For each product, it is possible to review all its transitions, all manufacturing operations which have been made, and who executed them and how they have been performed. Also, manufacture technological parameters are to be recorded. This is a complicated task but we are approaching its solution. This is also becoming interesting for civil enterprises, but everything depends on product cost and manufacturer’s liabilities to clients.

As for the rest, digital technologies benefits are similar for civil and military enterprises. I can give a specific example. In 2018, we connected 45 CNC machines at a subsidiary of Magnitogorsk Iron and Steel Works (MMK) to our monitoring system for industrial equipment and personnel. The system monitored basic modes of the machines: “production,” “idle,” “no data” and others.

The system showed that the machines stayed in their off mode for 33% of their working time. Causeless downtime was 22%. There was a huge reserve for optimization, and the decisions taken based on the results of that survey of the situation made it possible to almost double the equipment workload. Monitoring power consumption revealed more reserves in the use of equipment, as a result of which the technological cycle of part processing was shortened. Thanks to the transparency of production processes, it became possible to improve operators’ labor discipline.

A machine-time reserve of 3,300 machine hours of downtime per month was revealed. Each hour of downtime per one machine cost the company almost $20. Using the system made it possible to increase the workload of equipment by 31%. This led to an increase in output by more than $110 thousand a month. The whole project paid off in 7.5 months.


The digital transformation is bringing forward so many new players to the market who try to provide new relevant services. How would you evaluate relevance of those services to the current needs of the market?

– Practice shows that such solutions pay off in six months. And we set for ourselves the goal: to ensure that all of our projects feature a payback period of six months, maximum. And that’s our competitive advantage, in fact.

In addition, these systems are not intended for super-professionals: they are systems that will make it possible to raise production to a new level, while at the same time attracting staff with little work experience that can produce high results in a short time. All of this ultimately affects workforce productivity and job attractiveness for young professionals. A college or technical school graduate should generally be eager to go into production. A graduate with a smartphone in his hands is not interested in going to work in a workshop that is stuck in the last century.


How fierce is the competition in the market of production digitalization?

– You often hear startup owners asserting that they have no direct competitors. But this is actually an illusion.

When we were in the process of entering the Indian market with our product in the field of Industrial Internet of Things (IIoT), we “got acquainted” with our competitors in a tender. They didn’t even have a website, but they worked on a system similar to ours, which was known to a narrow circle of users in the local market.

Competitors will always be there, especially if you plan to start selling your product in developed countries.

Even if your product or technology has no comparable products today, no one can guarantee that tomorrow a company won’t appear capable of implementing your idea faster or cheaper. Therefore, it’s necessary to look for potential competitors and assess their capabilities in the country where you plan to operate.

There are simultaneously many and few competitors. Moreover, sometimes there are competitors inside companies themselves. The point is that in Russia it is very fashionable to create a company’s own IT-divisions, this is such a purely Russian “trick”. Probably, we have too much programmers who need to be placed somewhere.

Therefore, there is competition with people who are working inside companies, but the difference is that they do almost the same but on a limited scale and with limited experience. We, on the other hand, are working with hundreds of companies and can transfer the best practices from one to another.


Zyfra has international partnerships. Can you tell us briefly about that?

– The revenue of the Zyfra Group amounted to 2.4 billion rubles in 2019, which is a 37% increase on the previous year. The export revenue reached 400 million rubles, having increased by 21%.

The main points of business growth and revenue for Zyfra are new products based on artificial intelligence technology and robotics. In Kazakhstan, the new Safety product has been launched in AK Altynalmas for managing safety and work orders for all types of work.

Regarding industrial perspective, most of the revenue (68%) was provided by projects in the mining industry and metallurgy. Ten more mines began using Zyfra’s products, and their total number has reached 81. Two new foreign projects have been launched. In India, Intelligent Mine is being implemented by the largest Indian coal mine operator Thriveni Earthmovers at the coal Pakri Barvadi mine (one of the largest mines of NTPC, the leading energy corporation in India). Peruvian mining company Cosapi Mineria has implemented the OpenMine mining management system at the Shougang Hierro Peru open-pit mine. Investments in the project amounted to 750 thousand US dollars.

We have connected 10,000 CNC machines to our MDC-plus real-time machine monitoring and manufacturing data collection system. The projects have been implemented in Bulgaria, China, Finland, France, India, Romania, Turkey, and Singapore. By 2021, we are looking forward to more than 15,000 MDC-plus installations across the globe.


How can a company like Zyfra help industrial companies during the Covid-19 pandemic to improve production?

– In the days of “Industry 4.0”, it is already quite allowable to ask the question how digitalization will help to overcome crisis. Industrialists are not all ready yet to change over to full automation of production. Economic effect of the introduction of modern controllers or appearance of robotic installation in a shop can, in the beginning, amount to only fractions of a percent, therefore it is easier to rely on old proven machines and workers. Under conditions of the pandemic of dangerous virus, the picture appears to be quite different. Robots cannot be ill and do not infect people, therefore quarantine on the shop floor can become an impetus for the implementation of robotics. Industrial Internet of Things (IIoT) technologies are becoming current, due to which various equipment can interact with each other without people participating in this. 

One of our European customers, a lifting and transporting equipment manufacturer, has managed to reduce the negative effect of the COVID-19 pandemic with the help of a monitoring system to complete strategically important orders in time. The company has managed to set priorities and redistribute its orders depending on their urgency while also keeping some machines in off mode. It helped to move 25% of workers to remote working without sacrificing the total output of production. 

Of course, there is always the possibility to stop a plant or a factory operation. But in the metallurgy industry, such a decision is equal to close off. Blast furnace, because of steelmaking process peculiarities, is working continuously throughout its service life – from construction stage to overhaul or closing. Therefore, projects of construction of autonomous factories or mines where participation of people in production process is minimized, unmanned vehicles run about factory or open-pit mine, and technical equipment operators can reside in several dozens or hundreds of kilometers from the enterprise now seem not so fantastic. 

Time of crisis is always characterized by lack of proven information, therefore, it is becoming vitally necessary to have an exact vision of the current situation in your own company. Today, data on production volumes, equipment condition, forced downtime are already successfully collected by automated technological and production process management systems based on artificial intelligence technologies. Afterwards, Big Data processing technologies help to analyze the information collected and make necessary management decisions while being anywhere. Equipment digital monitoring is simply rising the company’s production capacity. Meanwhile, product output can be controlled precisely taking into consideration external conditions, which fact is also of significance.


How will the current global crisis shape the future of the digitalization of industries, military industry in particular?

– The coronavirus epidemic will accelerate the development of digital technologies, inspire their more active employment in ordinary life. Many technologies that have been planned to be implemented in practice within 10 years, now will be put in motion within 3–5 years. This will concern defense enterprises, among others.

Furthermore, we suppose that transition to “limited manning production” will be accelerated. Equipment and personnel monitoring system actually performs tasks of remote people to communicate with each other. If we run through all tasks we will see this. Let’s take for example a machine operator. Now he has got digital place. He can call any service, get shift task, account for shift task. To do this, a foreman does not need anymore to gather all operators personally around himself and give everybody written or oral task as before. A foreman does not need to walk around machines and supervise everybody. Now, he does not need to run, he sits at his working place and watches how each worker is working, and whether a worker fulfills a plan or not. A foreman is able to contact with a worker. The same relates to the shop manager, to the administrative body, and to the general director. Thanks to digitalization, it can be easily seen who, how and where is working.

We analyzed why there has been no really deep implementation of the systems so far. This is because life did not force us yet! Of course, for a shop manager it is easier and more comfortable to gather fellow-workers, whom he has not seen for the whole day, at a kick-off meeting and to talk for two hours about life, instead of examining circular or linear chart. But today it’s impossible as he has already got a tool which can be used without collecting anybody at all. And eventually, even while staying at home. We have already got it.

The same can be said about services: technological and energetic ones. Of course, it is impossible to repair a machine while being at home, but the same manager or technician can already see what happened with the machine while sitting at his working place. He does not need to communicate with an operator, asking for details, and what there was and what there is now. He can see “remotely”, so he can take everything that is necessary, and go and do the repair. For example, management staff of a shop manager level can avoid practically any contacts with workers.


Interviewed by Reem Mohamed

©New defence order. Strategy  №5 (64) 2020

Our partners