Have you come across the term “Closed-Loop Manufacturing,” often abbreviated CLM? It has become increasingly common in recent years, but what does it mean? How can such a solution save up to tens of millions of dollars for larger companies?

Here’s what a principled and slightly simplified CLM approach looks like:

In the context of factory production and on a machine level, "closed-loop" means that you work with an automatic control system in which the operational control, process or mechanism is regulated by feedback of operational data. When it comes to the operation of machines on the shop floor or in a production line, one can imagine an IIoT (Industrial Internet of Things) connected platform that captures all operating data from the machines, and which continuously matches these against predetermined templates for how the production output should look. Imagine that the system can also send an alert when something goes wrong, is able to tell where the problem is and what caused the deviation—and maybe even is capable of suggesting measures to fix the problem.

It is not hard to see the benefits of such a system, which at an ideal level could lead to significant efficiencies in production. In larger plants or in groups with several factories, increased efficiency by even a few percent can be worth millions.

A Self-Monitoring, Self-Measuring Tool for Closed-Loop Problem Solving

This is the background to PTC's recent launch of ThingWorx Digital Performance Management Solution (DPM). An interesting aspect of the solution is that it meets parts of the process described above.

ThingWorx DPM is a real-time self-monitoring and self-measuring tool intended to drive efficiency and performance in manufacturing loops. It all sounds very convenient—to automatically catch feedback data from the production apparatus to a system that can identify bottlenecks, send alerts and communicate all of this in an understandable business metric: hours. If the solution lives up to its promise, DPM will facilitate these processes in a way that looks very interesting.

I discussed the new software, its functionality and the competitive position with Craig Melrose, PTC's executive vice president for digital transformation and the man behind the system, as well as PTC's chief executive, Jim Heppelmann.

“This software marks the beginning of a new phase in PTC's IIoT growth strategy as we now develop the positioning of ThingWorx into a suite of powerful solutions that drive significant production efficiency to create business value on the bottom line,” says Heppelmann.

He is undoubtedly right in that it is a milestone for PTC; but is it in terms of being a ready to use and contextually broader Closed-Loop Manufacturing solution? Siemens begs to differ. I'll examine that later in the article.

To Manage Constantly Fed Back Data

Manufacturing according to the closed-loop concept means that you must plan your processes in a way that allows you to match the requirements for more efficient production. One consequence is that data on how production is performing should constantly be fed back via an IIoT solution.

Principally, this is based on setting up Key Performance Indicators (KPIs) right from the start and establishing clear systems for monitoring, collecting and managing data from the connected production apparatus. In the next step, measurements are made, as are adjustments that meet any discrepancies. Then you reset your KPIs and the loop begins again—the closed loop.

The Father of Thingworx DPM

PTC's EVP for digital transformation solutions, Craig Melrose, knows a lot about these things. Behind him lies a career of 20 years at the consultant firm McKinsey, where he led transformations to optimize factories around the world. He is also the father of DPM.

What are his and PTC's views on the recently launched new approach to solving the problem of streamlining production? How should one regard ThingWorx DPM in relation to PTC's definition of CLM?

To understand this approach to Closed-Loop Manufacturing, which is a little different from the first thought that the phrase brings to mind, I discussed the issue with Melrose and PTC chief, Jim Heppelmann.

Melrose states in response to how DPM meets CLM that the tool “provides performance insights and enables problem-solving with closed loop in real time.” Moreover, he emphasizes that it gives a universal view of performance, communicated in a comprehensible business measure: hours.

This measure is easy to understand for front-line employees as well as managers, and provides a basis for a solution built on the question: “How do we streamline production?”

Generally, in all problem solving—manufacturing processes included—one must have insights and relevant information to be able to navigate and act correctly. To fix bottlenecks, for example, you need to know what they are, where they arise and how far it can be improved before another bottleneck comes into play.

With DPM, Melrose claims that companies can identify the right performance issues and enable frontline employees to take corrective action. It enables you to move fast, with initial results in as little as 90 days.

Capacity To Drive Transformation on a Large Scale

All this is of great importance, especially now when the digitalization trend is beginning to reach full effect.

For example, getting clarity on how much a transformation investment is worth and thus being able to validate it based on production data in real time, undeniably sounds like a sensible measure.

“Of course it is,” says Melrose. “Manufacturers believe that digital transformation is significant, but often see only gradual improvements in contrast to large-scale transformation improvements. Our new ThingWorx DPM solution enables companies to address the most valuable manufacturing enhancements and solve common challenges to drive large-scale manufacturing efficiency and transformation.”

He adds that with DPM, companies can:

• Identify the right performance issues to increase efficiency.
• Give frontline workers the opportunity to take corrective action.
• Gain insight into bottlenecks, underlying causes and the most critical areas to focus on for improvement.
• Measure results with outcome data to ensure that actions yield the desired results.
• Achieve fast time to value and scaling, with initial results in as little as 90 days.

Concrete Problem Solving on a Deeper Level

That said, Melrose drills deeper into what the solution PTC is now putting on the table can produce.

“First and foremost, this is a system for understanding and improving production or throughput of production in factories,” he explains. “In this context, let us assume that a manufacturer has 50 factories in its company. The first place to use DPM has 100 processes or lines in the factory. In this case, DPM would understand the efficiency and throughput of the entire factory for all products/SKUs (Stock Keeping Units) that go through the different paths and different combinations in the 100 processes/lines. Let's say that DPM determines—which is something the program can do—that ten of those 100 processes/lines are limited, constrained or have bottlenecks. In this situation, a manufacturer should only focus on these ten processes/lines, as only improvements to bottlenecks here will lead to economic uplifts of P&L (Profits & Loss), either in terms of costs or production of additional units.”

“Now that we are focused on these ten processes/lines,” he continued, “DPM deepens performance from a throughput and efficiency angle and looks at all performance losses, such as planned and unplanned downtime, product changeovers, speed losses, minor stops, quality losses and more.”

This way, Melrose explains, one can focus on problem solving for the most important areas and also progress to a deeper level of understanding within the pareto analysis—where pareto is a word which means that an economy has resources and goods allocated to maximum efficiency.

“Here you can look at things such as adjustments, and then even move to deeper levels to understand the amount of time, frequency and, for example, determine that an action such as changes from product A to product C can be the biggest problem in terms of variability across shifts and across events, leading to time losses from production that can be compressed and improved and captured in additional efficiency.”

All this is now judged on a basis that the system has a single common unit of measurement, which is absolute and intuitive—that is to say, hours.

“Therefore, 100 percent of all hours for an entire week (168 hours) are reported and performance-determined,” Melrose adds.

Can Increase the Output by Up To 20 Percent

But the capabilities described above only cover half the of the system loop in DPM. The second half is about change management and responsibilities. This means that, now that you know what the ten bottlenecks are and what losses they generate, the company can put action packages in the DPM system's "action tracker" to ensure that the responsible employee performs action X on Y date, using alarms and accountability.

“All actions are captured and managed in one place and then moved to a ‘scorecard,’ which means a check that the actions taken improve performance as expected. Then you go back to the starting point for bottlenecks and deal with the next bottleneck,” said Melrose.

At the end of the day, we are talking about a completely closed performance loop that will drive significant improvements in the throughput of the factory.

“That’s right. Throughput efficiency can reach 10 to 20 percent levels in just one factory,” commented Melrose, adding that if you then introduce and roll out DPM throughout the company, it can add up to millions of dollars saved when all plants use DPM.

“But this is not just a question of money, but also of investments that lead to a true digital transformation,” Melrose says.

How Does PTC’s CLM Differ from Siemens'?

All of this is about capable elements in the effort to meet the challenges that lie in closed-loop manufacturing. But is it, as Jim Heppelman asserts in the press material, “a first-of-its-kind offering”?

Engineering.com has previously reported on Siemens Digital Industries and their CLM solutions—for example, the implementations at ball bearings company SKF and car battery developer Northvolt—which at a first glance appear to be on a PTC-like track. However, there are crucial differences. “How do PTC and Siemens differ?” I asked Jim Heppelmann.

“When Siemens refers to manufacturing in a closed loop, they refer to automation and control systems, which are really closed loops. But DPM works at a higher level, monitors and optimizes the entire production process over all automated equipment, old non-automated equipment and all employees, who are not automated at all,” he replied.

Moreover, he says that DPM does not control equipment as a Siemens PLC does.

“But it collects IoT data and data about everything that happens, from users. We talk about every minute of use and our solution reports all the time spent in the production process. In a way, it is a time accounting system. This enables the manufacturing team to identify and resolve major bottlenecks,” Heppelmann says.

What can create such a bottleneck?

“It could be something like it takes too long on the production line before an employee gets the next part he or she needs and can load it into the machine. This is due to, for example, the factory layout being ineffective (reconfiguring the factory), or that a shift change or an inspection takes too long (can be remedied via augmented reality), or that a safety stop is triggered too often (re-design of the process needed), or that a machine is down (predictive analysis and maintenance). This ability to review the entire process—not just the modern automated equipment—is extremely powerful, necessary and unique to PTC's DPM solution,” Heppelmann sums up.

Craig Melrose added, “Siemens’ and others’ solutions refer to a closed loop in a machine and usually to the machine's sensor package and control level, which limits focus and does not optimize over entire processes. Even fewer understand people's impact, and the ongoing product impact of flow or lack of flow through the factory.”

Siemens CLM Definition

“A limited CLM focus,” says Melrose about Siemens’ and other’s solutions.

“Is it?” I asked Mats Friberg, Siemens Digital Industries Software’s chief of the European Nordics operation.

“Everyone is entitled to his or hers own views,” he replied. “But according to my opinion, it’s just the opposite. Siemens’ definition covers the broader perspective on Closed-Loop Manufacturing. Our CLM ‘attack’ is built on the seamless integration of three major domains: PLM, ERP and MOM (Manufacturing Operations Management). CLM must enable synchronization and optimization along the complete value chain from product design via production engineering and planning to manufacturing execution and shop floor intelligence.”

His point is that CLM does not only contain the production lines, machines and output, but also coordinates product design, production engineering, production planning and production execution, and enables direct cross-domain feedback loops from upstream to downstream processes and vice versa, including processes such as change management and non-conformance/defect tracking.

“We have the powerful solutions to do this in the Xcelerator portfolio, a platform that enables the IoT/OT (Operational Technology) connectivity via our IIoT platform, Mindsphere, and additionally machine connectivity in legacy situations via Siemens Brown Field Connector, combined with our Edge capabilities,” Friberg says.

He added that, for example, Siemens PLM suite already contains Teamcenter’s Cost Management solution—which in terms of its objective, but with broader capabilities, addresses the areas that PTC now, years after Siemens, has developed a solution for.
“But it doesn’t stop there: Where PTC relies on the partnership with Rockwell, we have already seamlessly integrated MES (Opcenter), etc. The list can be made much longer but ends up in the general capability to use standardized products and solutions to provide seamless integration. It is industrially proven CLM that continuously improves the cost, time and quality of the manufacturing process to accelerate delivery, maximize quality and minimize cost,” he said.

“We’re already there, while PTC still has homework to do to catch up.”

A Milestone in PTC’s IIoT Operations—But There Are Challenges

In any case, Jim Heppelmann claims that the release of PTC's ThingWorx DPM solution represents a significant milestone in the company's IIoT operations.

“This software marks the beginning of a new phase in PTC's IIoT growth strategy as we develop our positioning of ThingWorx as a suite of powerful enterprise solutions that drive significant business efficiency to create business value,” says Heppelmann.

It is clear that this is PTC's first cohesive solution in the area. Likewise, the pedagogical approach to working with hours as a unit of measurement is an exciting angle that is understood by most stakeholders involved in the production chain.

Furthermore, Jerry Gootee, Global Advanced Manufacturing Sector leader at the consultant Ernst & Young, reacts with a thumbs up to the news from PTC regarding DPM.

“Absolutely,” Gootee says. “All our manufacturing customers, regardless of industry, face the constant challenge of identifying and quickly eliminating production bottlenecks. The market needs a scalable technology solution that can systematically and dynamically identify production constraints, prioritize underlying causes, recommend and manage corrective actions and validate results measured as new production hours of capacity.”

PTC's new ThingWorx DPM can become a solid answer for these needs to eliminate bottlenecks and boost production efficiency in manufacturing, as we move deeper into digitally driven manufacturing setups. In terms of functionality, it is not the first solution on the market. As Siemens points out, they are already there with an even broader CLM coverage—given their different definition of the concept—and have also implemented real-life CLM solutions in SKF and Northvolt; however, with some crucial differences compared to what PTC produced, where the new measurement approach of hours stands out.

But it is a complex matter. Among several tough challenges are that PTC's new approach needs time to mature and sink in among its potential customers, and that it must not be perceived as complicated in terms of implementation. It must also be presented with an attractive business model. All of this needs to be accompanied by fast and profitable ROIs. It can happen, but my guess is that it will take some time before the new DPM can be translated to substantial revenues.

After all, the production efficiency of factories is not the only digital challenge that needs to be addressed.

On the other hand, there is a lot to be gained for those who get it right. As usual, the secret behind successful investments lies in finding the right timing and balancing investment strategies.