I discuss the industry's trends and forecast for 2024 with Aegis Software CEO Jason Spera, live from Productronica 2023. We exchange thoughts on how the economic climate is shaping buying patterns and how software automation is becoming a new industry backbone, tackling talent scarcity and turnover.
The second half of this conversation shifts gears towards the world of AI and Industry 4.0, as they make their mark in manufacturing. Hear how AI can supercharge operational efficiency and how ESG performance need to play a role in our digital transformation journey. Drawing inspiration from other sectors like discrete manufacturing, Jason provides a broader perspective on digital transformation that extends beyond the electronics supply chain. This episode provides a deep-dive into the future of EMS efficiency, AI and digital transformation.
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
I discuss the industry's trends and forecast for 2024 with Aegis Software CEO Jason Spera, live from Productronica 2023. We exchange thoughts on how the economic climate is shaping buying patterns and how software automation is becoming a new industry backbone, tackling talent scarcity and turnover.
The second half of this conversation shifts gears towards the world of AI and Industry 4.0, as they make their mark in manufacturing. Hear how AI can supercharge operational efficiency and how ESG performance need to play a role in our digital transformation journey. Drawing inspiration from other sectors like discrete manufacturing, Jason provides a broader perspective on digital transformation that extends beyond the electronics supply chain. This episode provides a deep-dive into the future of EMS efficiency, AI and digital transformation.
Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com) and Adaptable Automation Specialist Launchpad.build (https://launchpad.build).
You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.
Hello, I'm Philip Stow and I'm here at Productronica 2023, and I'm on the Agus booth with Jason Spearer. Jason, always a pleasure to talk to you and find out what's going on in the industry. Let's talk a little bit about Europe, first of all, because we're here. What have you seen in terms of demand for your product and what's vexing your customers here at the moment?
Jason Spera:Well, I think that it's actually been a quite well. The show's been great and it's been a good year in Europe, because I think that the economic reticence and everything that gripped the United States in the first half of the year hasn't been as severe in Europe. But there are concerns because the uncertainty is definitely impacting the buying patterns that we see.
Philip Stoten:Yeah, it's interesting and you know I've spoken to a lot of EMS companies while I've been here this week and there is a sense that they've been waiting for a downturn and kind of expecting it. And as this big bubble of inventory has worked its way through the kind of back end of the bullwhip effect, it's starting to have an impact now. So they're concerned about next year. But one of the things they're telling me is it's kind of a chance to catch their breath and think about what they're doing operationally and think about operational excellence and think about efficiency. That's pretty good news for people like you.
Jason Spera:It is. We've been around for 25 years. We've always seen that when people are buying tons of machines, they take their eye off MES MOM systems, because you're trying to increase your capacity, it makes perfect sense and all your capital is going that way. When there's less of that, they then start turning to okay, well, let's put things in place that make us better when the market comes back, and that is something we're seeing right now. So, yes, it is good for us.
Philip Stoten:Yeah, and it's time for them to implement. What kind of features are they looking for that perhaps they haven't been concerned of in the past, now that they are perhaps being a little bit more introspective?
Jason Spera:That's a great question. I think we were talking about it at the company today. It seems like the industry 4.0, while it didn't manifest as fast or in the way people thought, it's clear that the issues of like IoT, gathering data from the machines, analytics, all those, the ability to do personalized manufacturing automatically all of that is starting to take shape. We're being asked for it. We're also looking at where people have the vertical integration and they want a single holistic platform from all the way up to the large scale assembly down to the board. So all of that automation is actually now becoming real, whereas I think we went through what maybe four or five, maybe more years where it was conceptual people, it wasn't well defined, but it is happening just more slowly than people thought.
Philip Stoten:Yeah, and there have been some, I think some fundamental building blocks that have contributed to that. Cfx is one of them. We got a big bog down with how do we connect the machines and gather the data then, rather than how do we turn that data into insight and value. That's more important. The other thing that we've seen a lot of in the MS industry is this desire to create their own systems, create their own software, and that's always been a bit of a barrier for the big MES guys. Have they realized that it's really, really hard to do?
Jason Spera:They have. It's an understandable cycle that goes on because in the past the only way you could accommodate this special requirements of one customer if you're in a 15 line plant and you have all the different customer dedicated lines was it would often lead to the conclusion we have to have IT develop something custom for each customer. But that was quite some time ago. With the configurability and the composability of modern platforms like ours, it can accommodate wildly different needs and configurations and production types on a single platform in one enterprise. So I think that when the organizations realize that's true and if they look to the shadow cost going on in the companies of maintaining these systems, it will become a better business, a more clear business situation that it's better to go to a commercial platform than doing it in-house. So in summary, it's an understandable road that led to that. But I think if people did real business analysis of the net cost of approaching it, it probably wouldn't work out terribly well.
Philip Stoten:No, it didn't make sense, does it? So we spoke earlier about Mark Zuckerberg referring to 2023 as the year of efficiency for Meta. I'm calling that as 2024 for the EMS industry the year of not just efficiency, for operational excellence, and there's a few dynamics involved in that. One of the dynamics I see, particularly in the US, is a reshoring dynamic that is, leaning companies to have a desire to grow but not being able to grow their workforce. So there's a talent issue. I'm curious, when you look at traditional automation, but more importantly perhaps, software automation, how you feel that that can support that and maybe mitigate some of that risk.
Jason Spera:Absolutely. Our systems play a big role in that. Now we can't find them personnel to hire, but what we can do is the connected frontline worker concept where when you pull someone into the company, the time to get them viable in production is is radically reduced. When you have digital work instructions, you're guiding everything. They can basically become effective very, very rapidly and errors they would make that normally would have to be trained out are process interlocked when you have a digital system like ours. So you can. Unfortunately, if you have a lot of turnover, you can get those people into value add a lot faster when you have a digital system.
Philip Stoten:Yeah, I think that's really important and you know that, that that turnover of self is something that the people are suffering. You know you spend six months training someone and suddenly they're working at your competitor Exactly, and that money is just gone. So, yeah, absolutely, absolutely fundamental. What I also wanted to talk about a little bit and I know it's become the replacement buzzword for industry 4.0 is now AI.
Jason Spera:Oh, I was wondering which one you were going to choose. There you go.
Philip Stoten:Well there, absolutely so. How are you leveraging it, how are you using it practically, and how far are we away from being able to actually get a dividend from the use of AI?
Jason Spera:I think it's basically upon us now. Our vision is that there's a synergy between our platform and the AI systems that are that are out there, and some of them are getting quite good and, if you think about it as a bit of a loop, our system has a breadth of data that exceeds what you can get from just IoT connections. Because we have the frontline workers, they basically become a data source. We have material integration, we have the ERP bridges that we have, so there's this much greater mass of contextualized data that we can make available to an AI. So if you consider an AI engine that's seeking all this data, it becomes more powerful the more data it has access to. That's the nature of it and what we want from it and what our customers want is Agencies had analytics and dashboards and reports for I think it's 25 years and and, but it's valuable, of course, but it's.
Jason Spera:We present data in every conceivable way. The customer wants it to go to another level and it's really quite simple conceptually. They don't want to even have their engineers take that time to look at data, to draw conclusions and take action. They want that that span of time truncated to basically nothing. Is that the AI suggests? We just looked at all this data. This is where you should focus your attention, and possibly even to the level of this is where you should do something. And our customers are saying well, agencies has the ability to process, interlock, quarantine things, physically control the environment. So imagine it's a very nice loop where we're aggregating more data, we're passing it to an AI and the AI tells the system what to do and then the system executes it.
Philip Stoten:So that's what we think is really actually very exciting yeah, and it's exciting when I when I hear you talk about the way it's used. I I've played with AI and I've looked at it in various different environments and I think it's got this fantastic co-pilot potential. Another person I was speaking to said what you need is an AI sandwich. So you need humans at the front end to produce the data and make sure the learning sets are good. You need AI to do all the grunt work and do all the hard work, and then you need to make sure it hasn't come up with something insane at the end and it's applicable. So if you can use it to, as you say, process interlock, you can use it to hold lines, you can use it to highlight problems and suggest and recommend and then allow someone to make a final decision.
Jason Spera:You're cutting out a lot of labor and, again, that's going to help with the talent shortage and it's absolutely and it's that compression of the time that process engineers and all their skill, no matter how good they are, it does take time, and they also. Ai has the benefit of being able to look at much more vast data sets than we can, so we see it as creating this like a digitized, continuous improvement, because that's what normally your process people would be doing, and they still will be involved, of course, but just the velocity of it is much greater.
Philip Stoten:I think that's where it adds the huge amount of value. The other thing that I've always liked about AGE is you don't just supply MES to the EMS industry. You work in a whole lot of other industries and I'm always curious to know what you're learning from other industries and which industries are really pushing hard and perhaps informing what should be informing this industry.
Jason Spera:I think it does inform our designs, as you mentioned, because in the discrete world where, yes, I think every customer we have has circuit boards somewhere right, but if you're building car doors or an aircraft you look at that as a part number right the board and their perspective is usually broader. Smt tends to focus around the line. There's that line obsession, maybe going to test and find you know box built. But the discrete manufacturers want solutions that are spanning all the way from loading dock out and all the control of everything in there and it has. Obviously we're backflushing those improvements into the surface out world as well.
Philip Stoten:Yeah, I think that's essential and actually the good news is, when I talk to people and they talk about their digital transformation, they're now talking much more about their business processes, their supply chain, the whole ecosystem, and all the conversations I had maybe five years ago about the glass factory have been replaced by the glass pipeline. That's where they really want the data. They really want to understand the flow of the materials and how it impacts them, because they know they can build stuff once they've got everything there.
Jason Spera:It's absolutely true. It's that extension of the view that larger and not always larger, I mean many organizations are having a much broader view of what digitization is, because, you're right, it backs all the way into supply chain and it goes out into the field, like we have to control RMA and MRO operations as well. So the units are coming back over 20 years. So it's really kind of, I think, we lose track of. If we were talking about this 10 years, which we might have been 10 years ago, some of this stuff would have seemed very futuristic, but it is actually happening.
Philip Stoten:Yeah, no, it makes sense.
Jason Spera:And the last dimension that I've spoken to people about this week is the importance of the ESG elements, particularly here in Europe with legislation, and they see the digital transformation of that data as being equally essential as everything else in this Absolutely, and there's a device back here that integrates with the power consumption, and CFX is now supporting the transport of power data because, especially in Europe with the new regulations and so forth and our system handles that data as well, because in order to comply, you have to actually have the information. So that's a big thing.
Philip Stoten:And you want to be able to pass that data up and down the supply chain. Jason, always a pleasure to talk. I feel like we could talk all day, but we probably shouldn't Thank you for your time. Thank you.