How Kennametal is leveraging SAP solutions to build ‘smart factories’ comprised of connected systems and machines that enable real-time data visibility.
Kennametal was founded on the strength of its technological innovation. In 1938, following years of research, metallurgist Philip M. McKenna created a tungsten-titanium carbide alloy for cutting tools that provided a productivity breakthrough in the machining of steel.
“We’ve been providing tools and services for the aerospace, automotive and energy industries for more than 80 years,” confirms CIO Tom McKee. “Our products go into the manufacturing process to make products that we all use every day.” Kennametal’s global operation supports 80,000 customers in 60 countries. McKee explains that his role is to oversee the modernisation of the company’s factories around the world. He’s well placed to lead this transformation, with decades of experience in manufacturing and supply chain management underpinning 14 years spent in IT roles at Kennametal.
“Our customers are demanding more,” he says. “Whether it’s tighter tolerances and specifications, improved on-time performance and deliveries or simply higher overall quality. We needed to react and make an investment in smarter factories. A big part of that investment is in newer equipment, automation, whether it’s moving parts, moving product from one work cell to the other. But we came to the realisation early on that there’s more to this transformation than simply buying new equipment and throwing some robots on the shop floor.”
Smart factory framework
Kennametal’s approach has been to create a smart factory framework based on four pillars: machinery and automation, skillsets and resources, a solid OpEx foundation, and systems integration led by IT as the connective tissue to pull the strategy together. “I can throw all the data in the world at people, but if they don’t know how to use the information to make proactive decisions, to understand the situations they need to address we can’t progress, so OpEx is a big part of the journey to modernise our factories,” confirms McKee. “When you have real time data coming off the shop floor, it’s a whole different environment where you have to ask: What does our work structure look like? What are the positions and skills that we need? We need to answer these questions to make sure our four pillars are working in harmony.”
Kennametal has run its business on SAP’s ERP system for the past 20 years. SAP’s Manufacturing Integration Intelligence (MII) is now the foundational layer that allows the company to collect, consolidate and present actionable data to internal audiences from shop floor to corporate office. This visibility is enabling efficiencies, increasing throughput and improving overall operations as a result of real-time decision-making that wasn’t previously possible.
“SAP’s tools play a key role in enabling us to provide the right real-time insights to offer an optimised schedule; not only based on available equipment but the right available manpower, components and raw materials,” says McKee. “Additionally, we’re leveraging some of the tools that come with the basic ERP, the quality management module, plant maintenance – all of these become part of the overall system layer that we’re using to start running our initial smart factories plants. Then, as we continue to optimise the SAP tools at the plants currently in our scope, how do we take those learnings and scale that approach to all of our factories?”
Product Lifecycle Management
SAP’s Product Lifecycle Management (PLM) tool is at the heart of Kennametal’s design to manufacturing process. “Whether it’s taking the drawing information, other product process data that may reside, for example, in the Siemens NX system, how do we take the design data, the engineering data, bring that into PLM, capture our product data that’s in the SAP classification system, and then feed that onto the shop floor?” asks McKee. “SAP’s PLM is a significant part of building our capabilities where we’re taking product data, process data, engineering information, and we’re building automated dynamic routings.”
Instead of manually building out a routing and a bill of material for manufacturing, Kennametal is now leveraging the digitised data governed by its engineering and technical teams, to find the optimal process. “It allows the data to provide the visibility to help drive the optimal decision to help us bring together design information, manufacturing parameters and data, the quality plan, inspection parameters, tooling and fixturing information, and product data to better run the shop floor,” adds McKee.
Two-platform strategy
Kennametal is investing in a host of tools for a hybrid solution for its digital customer platform and already deploying C/4HANA, Ariba, SuccessFactors, Fieldglass and piloting the use of Qualtrics. “Everything we’re doing on our smart factory journey, where we’re leveraging a two-platform (SAP and Microsoft) strategy, we’re trying to make the best of SAP and the Microsoft products. It’s why the Embrace announcement (aimed at more easily migrating SAP ERP application and SAP S/4HANA customers from on premise to public cloud with Microsoft Azure) is such a big win.”
On the Microsoft side, Kennametal has recently deployed the Modern Workplace and is now a Microsoft Teams and Collaboration company. “We’ve moved SAP to Microsoft Azure last summer, which has opened up a whole new world from an Azure IOT perspective with the visibility insights we can have from a data and analytics perspective,” adds Mckee, who notes that while these two partners are critical, it does take a full ecosystem to deliver its smart factory framework. “Whether it’s AT&T for the network, Palo Alto for our firewalls, or Adobe for digital content management, integration partners like eLogic are helping us with our smart factory, PLM and digital customer needs. You can’t do it alone.”
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Training for the future
“The system and the technology are great, but if you can’t operationalise it and get the adoption, it’s just expensive technology that no one is going to use and you’re not going to get the return on that investment,” warns McKee, who’s keen that the company pillar for skillsets and resources is supported. “We’ve got a strong focus on change management and driving adoption of the tools. We have to help employees understand how these new capabilities help them to perform better in their daily jobs. Change isn’t easy, but through experiential training we can explain how new solutions relate to a team’s deliverables. It’s got to be hands-on. They’ve got to see it, use it over and over again; it can’t be a one and done. Training has to be an ongoing iterative process of feeding folks more information and more tools – let them work with it, play with it and come back with questions and insights.”
Continuing the digital journey
Mckee’s team are planning a series of transformation projects to continue the roll out of Kennametal’s smart factory framework. “We now have four plants at various stages of maturity,” he confirms. “We have several more plants next in line. At the same time, we’re in the early stages of our digital customer experience project. Growing those programmes to maturity will be key for us. Next, we need to ask how we can leverage augmented reality, machine learning, artificial intelligence? All huge opportunities yet to come for us, whether it’s managing the shop floor, gathering insights, the data telling us about customer buying patterns, how we do a better job of forecasting demand, and understanding what our customers need. We’re just scratching the surface of the value we can bring to our operations and our customers.”
