Enabling Automation Podcast: S2 E3

We’re excited to bring you our first-ever podcast series, Enabling Automation. This monthly podcast series will bring together industry leaders from across ATS Automation to discuss the latest industry trends, new innovations and more!

In our third episode of season 2, host Simon Drexler is joined by Udo Panenka to discuss How automation affects your supply chain.

What we discuss:

  • Partnerships in the Industrial Automation segment
  • The one company, one goal approach
  • Best practices for joint kaizen events

Host: Simon Drexler, ATS Corporation (ATS Products Group)

Simon has been in the automation industry for approximately 15 years in a variety of roles, ranging from application engineering to business leadership, as well as serving several different industries and phases of the automation lifecycle.

Guest: Udo Panenka, ATS Corporation (Industrial Automation)

Udo Panenka is the President of Industrial Automation at ATS Corporation. He has spent his whole career in the machine building industry in a lot of a lot around all different areas including automation and software.

——Full Transcript of Enabling Automation: S2, E3——

SD: Thank you for joining us today for our Enabling Automation podcast, where we bring experts from across the ATS group of companies to discuss our experience on interesting topics in the automation world. Seeking to provide guidance and information to those that are looking to drive change with technology inside of their operations. My name is Simon Drexler. I’m the host of the podcast. I’ve been in the automation industry for about 15 years, driving growth and innovation in a variety of companies, both large and small.

SD: We’re joined today by Udo Panenka, who’s one of the segment presidents inside of the business. And, Udo, could you give a short introduction to the listener base?

UP: Hey, Simon, and thanks for having me. So my name is Udo Panenka. I’m running the ATS Industrial Automation business. And super excited to be here today because basically I spent my whole life in the machine building industry, a lot around all different dimensions of automation, software, etc.. And I think today having that chat, combining three of my real passions, number one, passion for a customer. Number two, passion for continuous improvement. And number three, automation. So very excited to be here today, Simon.

SD: Udo, we’re very excited to have you. And those passions, I think, drove your segment to take a pretty unique path to driving value and driving a different approach to building partnerships. Can you elaborate a little bit on, you know, some of the interesting things or some of the unique things that happened inside of the IA segment?

UP: Yeah, happy, happy to do so. I think it all started with that understanding that today’s automation world is changing and some of the recipes and traditional ways we have driven custom automation might no longer be the ones that get us into the future. So what we see is we see that lead times of projects are going down dramatically. We see at the same time that we’re doing a lot of assembly equipment for our customers, assembly and test equipment that while they’re building that equipment, the customer product is still changing. And I think if you combine some of these aspects together, then you will realize that that the way how we traditionally have done automation is something that is limiting the potential. And I think that that led us to really moving towards a lean approach. Kaizen is one of the key tools and fundamentals of Lean. So that continuous improvement mindset, that really driving process improvements, doing something together in a in a week time that is absolute breakthrough. I think we have applied that lean principle to really help our customers to evolve in different areas of their business. And that has been a super exciting journey.

SD: So I’m on the outside looking in, but I’ve heard of all of the result of these joint Kaizen approaches. And so like you said, you spend a week, get the right team members in a room and drive towards a common goal. Is there one of those events that you could highlight as a as an example for those that are listening?

UP: Yea, let me possibly- And I come back to this in a second. Let me possibly tee up a little bit what we are applying that tool. So we have really chosen, I would say, three areas where we’re really leveraging Kaizen to build these partnerships with our customers and the first one is innovation. So we’re seeing a lot of transformative markets in which we’re playing doesn’t matter if it’s e-mobility, if it’s automated tools for nuclear applications, if it’s grid batteries, fuel cells, whatever it is, there is a lot of transformation happening. So and many of the solutions we’re building are first of a kind. So leveraging Kaizen to drive innovation roadmaps has become one key driver.

UP: The second thing is when we engage with customers in their projects and many of them are mission critical for our customers, we see, hear and their process challenges. Hey, there is a lot of change going on, but change orders take us 179 days to get through all systems. We basically have chosen with customers to get through some of these challenges and really we’re driving how do I get from 170 days to 29 or something like that?

UP: And last not least, in that business in which we are in a lot of cases, there is so much at stake. So if you think a battery about a battery assembly line, for example, some of these lines produce batteries worth 1,000,000,000 USD a year. How do you really drive together with your customer that continuous improvement mindset? How do you improve the efficiency of such a line by 5% every single year? How do you really unlock that potential? And I think that gets us all into one theme, and that is what we have written on many of our obeya room, Kaizen rooms, etc. and that theme is around what would we do if we were one company and really drive that partnership approach and drive a spirit of treat us just like your in-house automation company, and unlock that real value that we can provide sort of work that we do.

SD: Definitely a unique approach and one that’s provided a lot of value to our key partners. And coming back to that scaling, that scaling of transformation and how there’s just change going on in a variety of parallel paths. That mindset of one company, one company, one goal, it starts to unlock communication channels, collaboration models that wouldn’t have historically existed. Is that a fair statement?


UP: Yeah, I think that’s a that’s an absolute fair statement. And I think what it really does and that was to me one of that aha moments when we did the first one and the first one was really innovation Kaizen we did with a large customer in the nuclear arena where they had that challenge of they need to do refurbishments of a number of reactors. And every time they do a refurbishment it has to be faster and it has to be cheaper.  And at the same time they’re in an area where access to skilled labor is getting more and more challenging. Also in that industry, the workforce is aging a little bit. So that means that real talent and that expertise are becoming challenges. And I think the biggest aha moment to me was when we had this kaizen event that our understanding of the customers business model of the decision making criteria, etc., that got dramatically different. And I really saw our team moving from applying their creativity to words, Hey, how can we make a positive payback for this customer? What are the critical hurdles? What are these key drivers that define their business model and what would we do if we would own that PNL? I think that was such an aha moment that this understanding of the business case changed a lot to thinking of what I would describe as more of a technical team of totally clear automation heroes. So that was very impressive to see.

SD: Would that have happened both ways? Because I would imagine the partners team got a much better understanding of our process as well and our decision criteria.

UP: Absolutely. I think clearly you saw that that these two teams were embracing that. What would we do if we were one company? And at the same time,  it requires a lot of trust and confidence. So that whole thing of, hey, if that automation company understands my business model so well, what will they do with this? Will they really leverage this to come up with the best solutions for me or to maximize the sales price? And that is really you can only do this in a real partnership where you drive that real value for the customer. Where you have a win-win solution. Where you get through breakthroughs and really get to a totally different level. Where the customer very quickly sees that benefit and that value that helps to overcome some of the concerns and aspects to really form that partnership. And that is working in a lot of cases extremely well.

SD: Udo, that’s a that’s an interesting line of thinking because in order to execute on these unique events that drive a substantial amount of value, there’s a lot of pre-work that goes into that. And trust is that nearly intangible or immeasurable piece. So do you have any recommendations or best practices that that we took or steps that we took to build up to an event like this?

UP: Well, I would say it’s suddenly there is there is a level of managing a relationship with a customer, and there is a real level of understanding the business environment and of a customer. So what I love for our tools and lean like the concept of an obeya room and that is a concept were basically our people try and our technicians, they try to get a much, much deeper understanding of the working environment, for example, at a customer looks like. So we are sometimes stuck in our workshop or on the factory floor. We look at a connector, for example, and we believe this is super simple. If you watch a customer and that customer might be an operator that has a plastic suit and limited sight and three pairs of gloves on and now they need to operate the same connector that your people in our workshop environment can easily operate. And all of a sudden they realize, Oh, that’s not user friendly. So that that real developing that real deep interest in the customer business, understanding the customer struggle, getting into processes that help us to consistently learn from customers, to VOC (voice of customer) and really create in such obeya room, an environment where we very, very deeply understand what’s on the mind of our customer. I think some tools like this make us a credible partner for our customers, and I think if they realize that there is that deep interest, but there is also that deep understanding and the value we can provide, I think that helps to open the doors and unlock that that trust component and that creativity of the teams coming together. And if you then apply a structured process of, Hey, if there we have innovation presents where all of a sudden there were 50, 80 different ideas developed. So then we are applying again lean and, and use a 4×4 matrix to understand effort and impact of all these things, rate them, classify them, and really then get to something tangible. Where senior leadership can look at this and say, Wow, here I have that payback. And that’s this aspect. And there is that risk. These are the top five opportunities that we might want to go after. So bringing all this together is a little bit what we have done, especially with the innovation Kaizens.

SD: Well, that’s such a great example of deep understanding where you can look at something on a shop floor that might be operated a certain way, but in reality it’s not. And the investment of time and resources to create that understanding is starts to build up that that trust.

UP: And I think what it also does it’s I sometimes sense it changes the whole way how you interact with a customer. I think we all have been there and we would lie, we would say no, that sometimes things can turn a little bit sour and then a customer reminds us about our obligations and we then go back and tell them what their obligations are. And we have all these different battles. I think what I have seen with these Kaizen events you’re bringing these teams together in a much better way and you’re getting more towards an environment, let’s attack that problem together. Some of these transformative programs, they’re challenging. They will not work smooth. They will not work without some friction. But if you have set up a team such that they come to work with that common view of this is ours, this is our baby. How do we unlock this or how do we make it work? How do we make it pretty? How do we make it successful? This is when you create an environment where the whole thing is in the end, what’s the best solution and how can we achieve it together versus whom can I blame today?

SD: Oh absolutely, because if you start to play the blame game, then we’ve both been there. Things get very challenging very quickly. But you’re right where, you know, the uniqueness of this building partnership through a Kaizen approach, through a joint approach where the objective is to apply technology or automation in a challenging environment and find ways to do it effectively. That list of ideas that creation of the two by two and really sitting down and tangibly understanding what the best and most impactful ideas are to drive the partnership forward. I think that’s the that’s the crux of why these events are so valuable is there’s lots of ideas. How do we work together to put a comprehensive list together and then work through the process again together on what’s going to help us the most?

UP: Yeah, no, that’s absolutely I couldn’t have set this any better. And I think the powerful cocktail starts to get really impressive when you bring that business model thinking there. So when you see, hey, one day on a program, when it comes to the critical path of this program, one day of being faster or being not so fast will cost a customer amount X. This drives the entire discussion between the customer and our team. And I think that that brings such a difference into this because many of these transformative markets, many of these aspects we’re at the moment finding solutions and embracing opportunities that have never been done in this industry. And I think you wouldn’t get there without that partnership, without that deep understanding, without a facilitated process, without really areas of where the people involved, don’t only think about how do I overcome this technical challenge, but start a little bit. How meaningful is this innovation for the customer? What payback will it have? What will it drive? So you’re really adding to your team a totally different perspective, how they look at it. And I think that changes that whole environment, that changes this whole thing. When I think about good partnerships, good partnerships is no longer where we just offered to the customer what they ask us for, but what we develop together with the customer concept to say is what you’re asking us for the truth. Would there be much different solutions? Can we think about automation as a value driver in a much different way? If we just understand your business case, your payback calculations and all that things and we have to date customers, but in the end we already know if we have a payback within the next phase of the project, this will be a go because they have instantaneous savings and for them this is unlocking that creativity and this program ideas which in a normal environment would have taken us two years to ever get started to talk about this.

SD: Right. And the uniqueness there is a bit of a shift in thinking because if you can align on the business model and align on a mutual objective to make sure this project moves forward now all the time energy and effort goes into, let’s find the best ideas, let’s get this done in the most effective way possible together.

UP: Yes. And I think you get that when you do this, that joint commitment of the customer and your team, that they have real skin in the game and that they want to make it work, become some of this breakthrough innovations, they’re not easy. There will always be challenges and hurdles in such a program. If you set up that team from the beginning in the right way, the chance that they get their heads down and simply look at how can we overcome these hurdles and how can we really drive this to get to what we thought we want to get that such a paradigm shift in this whole way of working together that yea you can tell I’m pretty fascinated about it.

SD: It’s a fascinating approach and I wanted to touch specifically on that that commitment and doing these types of events trying to drive a bit of a change in how you build the partnership. It requires an investment of time and resources. I would expect that there was maybe some hesitation on at least the first one that we’ve done, and now that we’ve done a few more, we’ve kind of built up that that knowledge base to say we’ve done this and it’s gone well. Do you remember back to the first one and what some of the hurdles were, some of the hesitations were and could you could you speak to them about what the best practices are or how you approach getting buy in or commitment to an event like this?

UD: Yeah, I would say there wasn’t a big hurdle with the first one. The first one was really a customer who didn’t realize the benefit of our cooperation so much and was already at a point where it is that I’m not sure if this makes a lot of sense. And then we brought that idea in so for us it was clear we need to bring that commitment to the table. So there was a very quick and a very easy decision. I think what we realized is building diverse teams from experts from that field, but also other experts around different automation tasks and exposing people that have nothing to do with this brings in additional creativity and thinking. So to be a little bit more specific, what I’m after, I think in the old days, nuclear applications have been supported by nuclear automation experts and we desperately need these nuclear automation experts because that’s a very specific part of the business. But we then added robotic specialists, we added machine vision specialists, we added test experts, partly from my business, but also partly from other parts of ATS as a big family where we have really a lot of the some of the world’s most experienced automation experts in that group. So really pulling that right team together and pulling a team together with diverse experiences and specialist areas, that’s where we felt it’s all of a sudden coming up with solutions that without these diverse teams we wouldn’t have got to. And then the whole thing is around facilitation. So we have built ABM. The ATS Business Model is a lean business model pretty close to our heart. We’re continuously building talent and getting great, great facilitators, great leaders into that that part of the business. So having a really good facilitator in such an event, that’s something important. I think the other element is senior leadership involvement on both sides. So in some of these mission critical kaizen events, we have a daily report out during that one Kaizen week, a daily report out to leadership on both sides. That’s not just a report out, but that’s also for the team, an opportunity to say, hey, in order to answer that question, we might need to invest that amount of money for an experiment. For some, try storming from going deeper in certain areas so the teams are not coming only back and say that’s what we have done, but they also come back and say, that’s what we need, that’s what you need to unlock. And I felt like sometimes the way how these events evolve for decisions that otherwise people would take weeks to get to, they can get them in hours. And that’s a little bit also that that paradigm shift that comes along with such events.

SD: It’s incredible to hear that as that the outcome of these events where there’s a long history of how these types of projects are normally approached and they’re complicated and they involve lots of people. So you’re right, the response time can take a while, but to be in the same room and have the right expertise in one place and be able to turn those types of things around in an hour or hours across the course of a week. It’s just an incredibly different approach. It’s very refreshing.

UP: Yeah, no, it’s and at the same time, I think it’s one of these building blocks that in today’s world are becoming mission critical. Because when I think back and the old days of custom automation, hey, you’re built, for example, a gearbox assembly line. So first of all, the customer had a number of alternative lines already in operation. Secondly, the product was pretty stable for five years in a row and has been automated and worked well. And then you had for such a program 18 months time, our world has changed. Our world really got to hey, even six months sometimes are too long despite all the supply chain challenges that we’re experiencing. When you start, I have a product, but is this the right product? Is it really suitable for automation? Has it been designed for manufacturing? Build a change are not a three times before start of production and possibly another five times after the start of production. That whole world has been turned a little bit upside down, at least in the markets where we’re playing, because it’s still you know, Mobility is evolving. Still a lot of developments are done, a lot of evolution is happening. Grid batteries, fuel cells, nuclear. There is a whole nuclear renaissance happening with new builds, mainly small modular reactors, decommissioning of existing nuclear power plants, refurbishment. There’s some countries are extending the lifetime of nuclear power plants. So, so much is changing and that’s a little bit I would say there is appreciation from our side at least if we are not changing the way how we drive such projects and how we interact with our customers, we will never be successful. In the old days, between preparing a request for quotation, getting a quote and comparing things and selecting automation house, might have been taking six months, eight months, whatever, we’re living in a different world now, this is no longer good enough and I think that way of partnerships, creating that stable partnership through applying lean tools and especially joint events, that’s such an important driver. That really is one of the fundamentals to overcome these challenges and really be much faster, be much more change, agile and drive to solutions that have the right benefit and the right return for your customer.

SD: I couldn’t agree with you more, Udo, and it’s so exciting to hear you talk through how we’re adapting to a changing world. The rate of change, the rate of technology implementation, the introduction of AI being an example of that and how much change that even drives. And that’s only one aspect of our business being closely coupled with our partners to better and deeply understand them makes us both better.

UP: Yeah, and I think that also to not only talk about these innovation kaizens, what we see here in that transformation  that there is always a little bit of, of a change between senior leadership of a customer saying, Hey, the world has changed. And in the old world we had product cycles of five years, whatever, and now we need to do it in two years, etc. And you understand all these reasons, but yet not all processes in a company are typically aligned with that vision. Yet as these big companies are transforming and then you all of a sudden realize, hey, a certain process that worked in the old world where there was very little change in a project and where you had pretty generous lead times, that process might have worked well, but today no longer works well and you need to cut down the cycle time of certain processes, transactional processes, I touched on changed all the processes that was one kaizen event which we have driven with a customer together. But you realize that all the people want to do their very best, but simply that process is no longer aligned to today’s business needs and requirements and that’s a little bit of an enabler and something to unlock these things. And it’s I can tell you it’s so much more fun to build a strong kaizen teams and have these groups, customer and us working together on, Hey, how do we cut down the cycle time of this process dramatically rather than everybody realizing that things don’t work and everybody waking up in the morning and finger pointing on the other one because you’re not doing that right or you’re not doing that right, that’s not how you cut cycle time of a certain process by factor five, and that has been super refreshing. So that’s something I really love.

SD: Wow. It’s honestly it’s amazing. Udo coming back to sort of the first kaizen event, I would imagine coming out of the first one. There was probably some key lessons and some key takeaways. Is that something that you could share with those listening today?

UP: I would say to the first experience to me was really we need to make sure we’re leveraging these lean tools not just internally, which makes us a better player and follows this continuous improvement mindset. We really need to leverage these tools together with our customers. I would say it’s really that impact of the Lean tools by driving them together with customers rather than only internally, but also that power of aligning the customer and us around common goals and driving them together rather than each of us stepping back and pointing out what the other doesn’t do right.

SD: Thank you very much, Udo. And just to come back to a final thought before we close off on our conversation for today, you had mentioned that we work with a customer on $1,000,000,000 worth of product every year, and that’s just such a significant scale. Is there a key takeaway to the SMEs that are listening today that they could take from working at that scale down to a smaller scale?

UP: Yeah, I would say that that $1 billion a year of product produced on one line is an impressive number, but the story is the same. Doesn’t matter if it’s a large or a small program. I think the story is not about the number itself. The story is purely about do we align our two teams such that they care of what really matters or do we align them around discussing about things that don’t really matter? And aligning also means taking on responsibility. And I would say especially around customers KPIs. What does success look like? How do you really define success and how do you make sure both teams are going after this success together? And success does not only mean, hey, we deliver deadline on time and that’s it, we’re gone. But how do we really established that partnership around, hey, there are certain key KPIs that drive success of the customer and we’re able to align our both teams. And that to me is independent of value and it’s one of the key drivers that we’re really attacking with this philosophy.

SD: And, Udo, I think that circles back to one of the very first things that you said during our conversation today is success in the New World is acting like one company by aligning around KPIs that both companies care about is how you align the teams to operate like one company. Udo, thank you very much for joining us today, it has been a pleasure to have you on the Enabling Automation podcast and learn about how you have taken a transformational approach to building partnerships in the automation world.

UP: Thank you, Simon. I really enjoyed our conversation, thanks.

SD: Thanks again to those listening today. I hope you found the conversation between Udo and myself helpful in taking an innovative approach to building partnerships through automation. This closes off the third episode of our second season and I look forward to joining you next time with episode four, which is about influencing the next generation of automation professionals, where we take some of the topics that we’ve built up in our Enabling Automation podcast and talk about how that can be applied to those coming into the workforce and into the business. I look forward to having you join then.