POSCO Pohang Works was selected as the ‘Lighthouse Factory’ for spearheading innovation in manufacturing by the World Economic Forum (WEF) in July last year, opening a new horizon for smart blast furnaces. The WEF consultant, who visited Pohang Works for site review, showed great interest in the live monitor-controlling of the blast furnace. This complex and huge furnace is controlled by pairing the expertise of POSCO workers with AI technology. On January 9, South Korea’s President Jae-in Moon visited the site and watched the world’s smartest furnace at work.

POSCO is also striving to strengthen its industrial ecosystem by sharing its Smart Factory platform with business partners — including SMEs. Let’s take a closer look at how POSCO is working on its Smart Factory and pursuing Corporate Citizenship.

l POSCO’s Blast Furnace — At the Forefront of the Fourth Industrial Revolution.

Since the term ‘Fourth Industrial Revolution’ was first used at the 2016 Davos Forum, it has become the mainstream of all industries. Companies started working on to quickly acquire the core technologies of the Fourth Industrial Revolution — like Big Data, Artificial Intelligence, and the Internet of Things. Twice a year, Davos has been designating factories that are leading innovation in manufacturing as ‘Lighthouse Factories’. Last July, POSCO became the first South Korean company to be announced as a lighthouse factory.

The No.2 blast furnace at Pohang Works could be called the core of the Fourth Industrial Revolution Technology. POSCO embarked on the ‘digitization’ of the blast furnace in 2016 when the term ‘Fourth Industrial Revolution’ came about. Since the blast furnace was originally dependent on field workers’ heuristic knowledge, by ‘digitization’, POSCO worked on standardizing all accumulated data.

The blast furnace is a gigantic facility with a height of 110 meters — equivalent to a 40-story building. Inside the blast furnace flows a mixture of solids and liquids whose temperature rises as high as 2300℃. All these factors make it impossible to ‘look’ inside the blast furnace, hence, digitizing the variables of this huge blast furnace was more complicated and difficult than expected. The seemingly impossible task of ‘standardizing data’ of human knowledge marked the start of the smart furnace.

The accumulated data became the base of big data. Since 2017, POSCO has been working on deep learning with big data. Through deep learning, the blast furnace can self learn from the numerous cases given. This process called, “Smartization” enables the system to predict and control the potential variables, and to derive optimal results. The IoT has also accelerated the establishment of smart furnaces. In the past, multiple factors such as molten iron temperature, the amount of fuel and raw materials, and so on were left to the manual labor of workers. However, through IoT, high-definition cameras and sensors can take care of the data automatically.

▲ The internal temperature of the furnace can go up to 2,300℃. In the inside, several materials like iron ore and coke are mixed, causing various chemical reactions. It’s like a huge pressure vessel that’s 40 stories high. POSCO succeeded in data standardizing and automating the blast furnace.

As a result, Pohang No.2 Blast Furnace has become capable of self-control and prediction to an artificial intelligence level, giving it the name, ‘AI blast furnace’. With the experience of experts who have worked for more than 30 years at ironmaking, the smart furnace boosted the daily production of molten iron by 240 tons. Annually this amounts to 85,000 tons with which automakers can produce 85,000 more cars.

There is always a concern that follows these kinds of changes, “Won’t AI make people lose jobs?” But the answer is “No.” Instead of looking into the furnace all day, workers can focus on more advanced work with their Domain Knowledge. This enhances the possibility of more creative performance.

l What Makes POSCO’s Smart Factory Special?

Currently, leading global companies are adopting the smart factory platform. Then what makes POSCO’s Smart Factory more special? The answer lies in the platform established for the ‘Continuous Processing’ — a special term of steelwork. POSCO doesn’t stop at applying this platform to just furnaces. It has gone on to extend these smart factories to the overall steelmaking process. PosFrame, the engine of POSCO’s Smart Factory, is its unique factory platform specified for continuous manufacturing processes.

The steelmaking process is continuous, running smoothly from production planning to delivering the final product to the customer. Therefore, applying the smart factory platform to steel works is quite challenging — with a much bigger scale — than applying to a single factory that produces a single item. Pohang Works is massive in size, with hundreds of factories manufacturing hundreds of different steel products. In such an environment, data from each site should be gathered, organized, and standardized so that anyone can process it. This is one of the main functions of PosFrame.

Let’s say that the steelmaking process starts from A and ends at Z. When PosFrame is applied completely to the steelworks, it is possible to trace the cause of an issue that occurred in Z to A.

▲ A Smart Factory operation concept in an integrated steelwork. The cause of an issue occurring at the later part of the process can be automatically tracked to the earlier part of the process, diagnosed, and resolved.

l POSCO’s Technology For All Business Partners to Share

How is Corporate Citizen POSCO dealing with this unique technology? POSCO isn’t planning on making this technology exclusive. Instead, POSCO is working on expanding the smart factory technology to business partners including SMEs.

Dongkuk Industries, which has factories in Pohang and Siheung, is a company that processes POSCO’s hot rolled steel into high-quality cold rolled steel. This product is then supplied to companies that produce automotive parts. At Dongkuk Industries, steel goes under the pickling process, where hydrochloric acid (HCl) is used to remove scale on the product surface. This takes a great deal of time since each customer demands different quality requirements. Since it is nearly impossible to match each requirement, Dongkuk Industries pickled all materials even though each POSCO hot rolled steel had different scales. Naturally, productivity decreased, and this is where POSCO’s Smart Factory technology stepped in.

First, through PosFrame, POSCO sends predicted data showing where and how much scale is on the supplied hot rolled steel. This predicted data is received at the “AI for optimal pickling” in Dongkuk Industries. In the past, the pickling conditions were calculated manually by workers, but now this AI automatically extracts the optimum value based on the data obtained from PosFrame. After pickling, the resulting data is passed back to PosFrame. As POSCO hot rolled steel is processed into high-quality cold rolled steel here, its data are accumulated in PosFrame as big data and advanced through repeated learning. The data on both sides are exchanged repetitively, enabling the production of an optimized product — as if produced in a connected plant. The application of the Smart Factory in Dongguk Industries minimized the time required for the pickling process while securing product quality required by the customer. This increased productivity by 60%, and high-quality material sales by 1.5 times.

▲ Dongkuk Industries established a Smart Factory with POSCO. (From the top left clockwise) the front view of the Pohang factory; the pickling line; the hydrogen furnace; and the wide shear line. (Photo credit: Dongkuk Industries)

POSCO is also concentrating on Smart Factory consulting for SMEs. This service isn’t limited to direct customers but expanded to other business partners, including secondary customers. POSCO has engaged in support service to build Smart Factory for shared growth with the Ministry of SMEs and Startups — establishing Smart Factory in 110 companies until last year. At the same time, POSCO also provides ‘Smartification Consulting’ to enhance competence, thus, delivering advanced field expertise through POSCO’s unique innovation technique QSS(Quick Six Sigma). By 2023, POSCO is to contribute 20 billion KRW to empower 1,000 companies.

POSCO is operating seven major programs for shared growth, and some of them are as follows — ‘Open Purchase’ offering fair trading opportunities; ‘Proper Payment On Time’ abolishing the lowest price bidding system and giving payment in cash on time; ‘Corporate Citizenship Job Matching’ training job seekers and arranging employment at partner companies. Additionally, POSCO has aided 1 trillion KRW, leading the way in establishing a Venture Fund of 2 trillion KRW, and a Venture Valley to support start-up activities for the youth.

POSCO has become the “lighthouse” of the global manufacturing industry with its Smart Factory. And in Korea, POSCO is actively working as a guide of Smart Factory for business partners.

l This Is Smart Steelworks

As addressed in the POSCO the Lighthouse Factory #1, a smart steelworks collects and standardizes all factory data via PosFrame; then, the PosFrame self-learns the data to provide optimal process conditions and controls the various operations at steelworks.

The smart process minimizes the occasions for heuristic decisions preventing human errors. Objective and accurate data can lead to a eureka moment where innovative solutions are discovered. Wait, does this mean human labors are now dispensable?

Such hasty assumption is a surefire way to creating unnecessary anxiety. What the smart technology does is to let the workers delegate simple repetitive tasks to the machine, instead channeling their sophisticated skills and mental energy into perfecting the steelworks operation. The workers feed the result back into the PosFrame fostering the ultimate synergy between technology and humans.

How did smart technology transform the steelmaking operations at steelworks? Let’s find out.

[Order process] Small Lot Orders Go Smart

POSCO’s Order Management Group handles the planning for the entire steel production. One of their crucial tasks includes processing small lot orders — the order quantity for these small lot orders is too small that they typically do not meet a steelworks’ minimum production volume requirements.

Before smarticization, workers manually analyzed and processed the small lot orders — from checking the small lot order standards to figuring out whether and how to bulk-process chunks of small lot orders. The workers manually set the standards and modified them every half-year, the worst-case scenario being small orders sometimes ended up buried and left out. Some urgent orders were constantly classified as ‘small lot’ orders never receiving greenlight for production. In such cases, the order setting had to be reset so it can be incorporated with other orders. This used to take almost six hours or more. The average time for processing the entire small lot order is about 12 hours.

With ‘Smart Task,’ AI automatically organizes small lot orders — based on the analysis of all previous data, the system derives 12 factors impacting small lot orders. The AI also self-learns, so it can self-evaluate the orders. The processing accuracy is currently at 97%. To minimize production costs, the system also predicts the planning volumes so that small lot orders can be integrated with other orders — the production accuracy for which is at 99.99%. Compared to the previous 12 hours, the new procedure takes only an hour.

[Ironmaking] POSCO’s Smart Ironmaking Becomes the National Core Technology

The Smart Task comprehensively controls multiple factors such as furnace ventilation, combustibility, molten iron temperature, etc.; whereas, in the past, all of these were left to manual labor.
For the smooth operation of the Smart Task, the ironmaking department at Pohang Steelworks first defined variables that impact the furnace condition and subsequently integrated various information. In technical terms, this process is called ‘standardizing data.’

Under the Smart Task system, various indicators that were previously subject to the workers’ heuristic knowledge have been organized automating the manual processes. Now, the temperature of molten iron becomes data through IoT, and high-definition cameras conduct regular check-ups on raw materials and fuels.

POSCO started accelerating the establishment of an auto-control system in 2017. Through deep learning, AI self-learns, predicts and manages the data. Beyond simple automation of the current tasks, the system predicts and controls the potential variables and derives optimal results.

Even if the current furnace condition is satisfactory, the smart system goes above and beyond to make sure the furnace maintains its optimal condition. The Pohang No.2 blast furnace became a testing ground for the automated smart technology for the first time in Korea upping the daily molten iron production by 240 tons. The smart technology applied to the Pohang No.2 blast furnace received the government designation as the National Core Technology in July this year.

[Steelmaking] POSCO Goes PTX: Posco sTeelmaking eXpress!

The extremely high temperature required for steelmaking operation makes it difficult to measure temperature in real-time, which was why the daily operation was entirely dependent on field workers’ heuristic knowledge. Variations and human errors were inevitable in this system. Abnormalities at stages required not only a full-stop of the procedure directly involved — but also the procedures before and after.

The steelmaking Plant 2 at Pohang Steelworks has developed an integrated control system — it controls the timing, temperature, and the ingredients from the converter to the continuous casting process. There are potentially 125,000 probable procedures involved in the production for any given steel product.

POSCO digitized and standardized these procedures completing the PTX system by July 2018. With PTX, continuous processing became a reality — from converter through continuous casting without temporary halts or delays. Live-assessment of estimated arrival time, temperature, and product components also became available.

Before PTX, the temperature accuracy was at 80%, but now the system predicts the temperature with 90% accuracy. The use of raw materials also became more efficient.

[Continuous Casting] Prediction Made Simpler and Faster, Saves 600 million

Quality control is absolutely crucial, but it’s impossible to go through each and every material with a fine-tooth comb. So the typical inspection involved a through, 100% surface inspection of sample materials. If and when any abnormalities were detected in the particular sample, all other materials produced in the same batch had to be retrieved, subsequently undergoing thorough inspections.

The Pohang Steelworks No.2 and No.4 continuous casting plants annually inspected 340,000 tons of sample materials — only 30,000 tons found to be defective.

With a relatively small amount of defective materials, POSCO strove to minimize the time wasted, and to maximize the company’s resources. By applying artificial intelligence, POSCO collected a vast amount of data on steelmaking and continuous casting processes thereby establishing a model to predict defects. This was done by creating criteria of what constitutes as abnormalities in quality. Since the adoption of the new system in March 2018, the system now only screens defective materials, eliminating unnecessary testings. Furthermore, it pinpoints the reasons for the defect — the new system is expected to save over 600 million KRW every year.

[Rolling] AI Analyzes and Auto-controls Flatness Factors

Thick plate products first undergo the slab-heating process subsequently going through two rolling procedures. After that, according to the customer’s requirements, it undergoes an accelerated cooling process called Thermo-Mechanical Control Process (TMCP). TMCP involves spraying high-speed water on a steel plate rapidly cooling it to a designated temperature to improve the strength and the welding capacity of steel products. The process requires special equipment — and the water-spraying technology is highly advanced. Without accurate maneuver, the flatness of a steel product can be compromised.

In the past, the flatness of thick plates was manually analyzed, twice — once when the plate was hot (hot flatness) after TMCP treatment; and again, when the plate cooled down (cold flatness) during the shearing process. Measuring flatness in such a manner was extremely time-consuming, and it often caused a functional overload — it was challenging for the factory engineers to control the TMCP by manually inputting the results one at a time.

The plate plant at Gwangyang Steelworks created a learning model by analyzing the influential factors for hot and cold flatness — ultimately the company figured out the conditions that can achieve the most optimal flatness. Now, the engineers can simply monitor the optimal working condition values produced by AI supervising the smooth operations of each process. The correction needs for the products during the post-TMCP process are now reduced to 50% which saves about 1.3 billion KRW annually.

[Surface Treatment] Another National Core Technology, POSCO Surface Treatment Goes AI.

Continuous Galvanizing Line (CGL) involves processing cold-rolled coils with continuous heat treatment, putting them in zinc pot, ultimately producing galvanized iron plates. POSCO’s Giga Steel is also produced through CGL process.

After plates are taken out the zinc pot, an air knife controls the coating amount by cutting out zinc before it solidifies on the surface. The target coating weight varies for each product, and the coating weight could be measured only after the air knife procedure and solidification completed. This is why the live-control of coating weight remained challenging.

To address the challenge, POSCO developed AI-based control model for coating weight — it uses deep learning for precise management of such factors as steel grade, plate thickness, width, operating conditions, and target coating weight. Previously, the accuracy rate for predicting coating weight was projected at 89% — now, with 99% accuracy, the technology has been applied to all surface treatment plants at both Pohang and Gwangyang Steelworks. Just as POSCO’s smart ironmaking technology, POSCO’s smart surface treatment technology also received government designation as National Core Technology.

l Smart Steelworks Enhances Safety

A truly smart steelworks operation prioritizes workers’ safety as well as the environment. POSCO is no exception. What makes POSCO exceptional in this domain, especially when it comes to its application of smart technology, is the way the company utilizes smart CCTVs. POSCO developed a smart CCTV system — unlike general CCTVs which simply record video footage, POSCO’s smart CCTV auto-detects patterns and movements at production facilities. When the system recognizes any abnormalities, it promptly alerts the administrator in charge.

POSCO developed an optimized smart CCTV system that meets various demands of steelworks operations by integrating previously accumulated footages. From last year, POSCO began installing the smart CCTVs at Gwangyang No. 3 surface treatment plant, No.2 steelmaking plant, No.1 coke plant, and Pohang No. 2 plate plant.

Smart CCTVs automatically recognizes and analyzes various information such as the product quality and safety information, reducing the amount of time workers merely ‘stand by’ just to check all the information manually. At a steelmaking plant, for example, smart cameras can measure the temperature of molten iron. At a surface treatment plant, the smart camera detects the subtle color difference of coil-ends allowing prompt response for potential quality defects.

Furthermore, multiple imaging devices, such as thermal imaging cameras, can proactively detect and prevent fire hazards. At all corners of POSCO steelworks, smart CCTVs gather information and identify potential hazards before anybody does.

POSCO’s smart steelworks is an ongoing project. With the establishment of smart technology, POSCO will continue to address the challenges remain unsolved — POSCO aspires to complete the smartization process to ensure production efficiency, top quality products and improved safety.

POSCO is the first South Korean company to receive such recognition. Through its smart-factory platform, the company demonstrated its ability to leverage artificial intelligence to drive productivity and quality improvements in the steel industry.

How does POSCO drive impact by applying Fourth Industrial Revolution technologies? POSCO Newsroom reports.

l POSCO the Lighthouse Factory Shines Light on Manufacturing Industry

Lighthouse factories represent a range of industries that demonstrate leadership in applying Fourth Industrial Revolution technologies like IoT, cloud computing, Big Data, and AI, to drive financial and operational impact.
For the last five years, POSCO has laid the groundwork for the smart factory to boost its competitiveness in steelmaking. POSCO’s selection signifies global recognition of the company’s such effort.
From the submission of the application, due diligence, to documentation review by WEF consultant, the lighthouse factory selection is an arduous process. From the initial application submission, it took POSCO about one year until its final selection as the lighthouse factory.

One of POSCO’s esteemed contributions was its establishment of a sound ecosystem where SMEs and start-ups can thrive through active collaboration. Additionally, POSCO’s smart factory platform was customized to meet the needs of the steel industry. One of the WEF consultants at POSCO’s steelworks was especially impressed with the way in which years of human skills paired superbly with the new AI technology in monitor-controlling the massive furnace operations live, 24/7.

There are altogether 26 lighthouse factories around the world including POSCO, Siemens, BMW, Johnson & Jonson, and Haier. The lighthouse designation effectively gives the companies the Global Lighthouse Network membership among which the members share their knowledge and experiences enhancing their ability to better-adopt smart-factory platform. POSCO plans to utilize the benefits the Network offers to boost its ability to establish and advance smart factories that meet ever-changing industry demands.

l Sophisticated Steelmaking Goes ‘Smart’

Heavy pole and massive chimneys are some of the things that people associate with typical steelworks operation. What’s so complicated about steelmaking? — isn’t it all about stuffing everything in the blast furnace where molten iron comes out? Then molding the molten iron, baking it, pressing it, and cutting it up?

Maybe so, but in actuality, each process is extremely sophisticated especially when combined with varying customer requests. The smooth operation of POSCO’s 24/7 steelworks can be attributed to the company’s 51 years of experience as well as to the field engineers whose meticulous monitoring and management of the steelworks operation propel the steelworks operation forward.

Even with their expertise, however, each engineer’s experience varies. In the immense intricacy of steelworks operation, POSCO must deal with the inevitable at all times. What are some of the inevitable situations that can occur during the steelmaking process?

Production Planning: POSCO’s ‘Order Management Group’ is the brain of all steelworks operation — not only does it take orders, but it also manages production schedules, locations, and production methods. The Group is also in charge of figuring out precise production timing as per special customer requirements. Some customer requests involve a unique mixture of ingredients, so there are always many variables to consider. There are at least 10 ‘standard’ procedures the Order Processing Group must consider. Only after these minimum standards have been met, the steelworks operation of that specific order can receive greenlight.

Ironmaking: POSCO Newsroom previously covered the basic concept of managing ‘blast furnace condition’ in the ‘Blast Furnace Anatomy #1 — To the Heart of Steelworks Operation’ (LINK). There are countless tasks involved in 24/7 blast furnace operation — from maintaining temperature, placing in fuels and raw materials with precision, to predicting the amount of by-product gas generation.

Steelmaking & Continuous Casting: The steelmaking department removes impurities from the molten iron produced in the previous ironmaking stage, by way of converter — the molten iron becomes ‘steel’ in this process. During the casting process, the ‘steel’ is molded into intermediary materials like slab, bloom, and billet.

Molten iron can be made into countless different products to meet diverse customer needs, each requiring different portion and mixture of ingredients. To achieve this goal, the molten iron undergoes four different stages of ‘blowing process’ where oxygen is pressured through molten iron to lower the carbon content of the alloy, changing it into low-carbon steel.

At this point, the molten ‘steel’ goes through continuous casting, after of which is cooled down and cut. Temperature and ingredient management with precision is crucial for maximized use of limited resources.

Rolling: The next step is ‘tempering,’ a process of heat treating, which is used to increase the toughness of iron-based alloys. In ‘Game of Thrones’, blacksmiths constantly bang on the iron as a way of hardening the material. In steelworks, the process of rolling achieves the same goal.

In rolling, materials are passed through the rotating rolls to produce steel products that meet customer demands: in thickness, width, strength, durability, etc. Imagine baking bread, each with a different requirement for textures, tastes as well as shapes.

Surface Treatment: Automotive steel plates and home appliances are galvanized so that they become more corrosion-resistant, more suitable for various manufacturing purposes. Precise surface treatment suited to each purpose is the key to an advanced coating technology.

Notwithstanding the 100% effort aimed for perfection, complex steelmaking process overflows with information. Variation — be it human or mechanic — is inevitable in each and every step of the process. To address such variation, POSCO is opting for the smart factory, identifying it as the next-generation of its growth engine.

The establishment of smart factories must be preceded by the digitization of factories. Through Process Innovation Project (PI Project) in the 2000s, POSCO successfully achieved digitization of its factories. What set POSCO apart from the various similar endeavor is that the company has been working this digitization muscle for a while now. Smart factory, which is being built on the digital factory, is at the center of POSCO’s unique smart factory platform called PosFrame.

l PosFrame, the Foundation of POSCO’s Smart Factory

What is the origin of POSCO’s smart factory? It can be traced back to the year 2015 when the hype of smart industry hasn’t quite caught on the flame. Even back then, POSCO introduced new technologies like Big Data, specifically at the Plate Plant at Gwangyang Steelworks. At this point, Gwangyang became a testing ground for POSCO’s smart factory. During this process, the foundation for ‘PosFrame,’ POSCO’s unique smart platform, was created.

With PosFrame, POSCO could establish a system in which the company’s countless data and skills accumulated through the 51 years of its operation can be integrated and stored in one place.

How is this different from conventional digitization?

PosFrame is the world’s first smart factory platform specified for continuous manufacturing processes. The reason why ‘PosFrame’ is identified as a ‘platform’ is this: think of railway platforms. Railway platforms are where different types of trains pass through — be it bullet trains, express trains, or slower all-stop trains. A platform manages information about different types of trains — in this case, data — coming and going all the time. It’s a perfect system for 24/7 steelworks operation. The goal of PosFrame is to pinpoint the reason behind a product defect, if and when, by meticulously back-tracing the steelmaking process to figure out exactly where a variation might have occurred.

Furthermore, PosFrame goes beyond simple digitization. Whereas digitization simply stores information as data, PosFrame analyzes the data, enabling the development of automation models.
Here, a question might arise: isn’t automation something only reserved for experts? PosFrame’s ‘Workbench’ feature says no. Workbench is accessible to everyone. For example, field engineers can apply their expert knowledge and use the data to develop automation models so that the models can be utilized in various steelmaking processes. Thanks to the data collected and standardized by PosFrame, engineers can analyze information not only for the process they’re directly involved but also the processes that come before and after. PosFrame makes it easier for the engineers to tackle difficult issues that previously remained as random occurrences.

The incredibly accessible PosFrame accelerated POSCO’s advance into smart factories. Through PosFrame, all POSCO employees are turning into semi-AI experts.

To further its smartizaton process, POSCO has been providing smart tech training to all employees since 2017. The training is helping the employees take their skills to the next level towards establishing a more data-driven working environment.

Through the ‘POSCO the Lighthouse Factory #1,’ we introduced the core concepts behind POSCO’s smart factory. In the next episode, ‘POSCO the Lighthouse Factory #2: POSCO’s Smart Factory Transforms the Industry (The Cases),’ we will provide more concrete pictures on how POSCO’s smart factories operate. Stay tuned.

Both companies hope to further “strengthen technical and business cooperation domestically and abroad to apply Smart Factory platforms.”

From the left, POSCO CEO Ohjoon Kwon, President of POSCO ICT, Doo-hwan Choi, Matthias L. Heilmann BHGE CDO, Wouter Van Wersch GE APAC CEO.

Therefore, POSCO and GE combined PosFrame, POSCO’s Smart Factory platform, and APM (Asset Performance Management)*, GE’s representative Smart Factory solution, to develop and commercialize PosFrame+, a hybrid Smart Factory platform optimized for steel facilities.

POSCO’s PosFrame is specialized for the steel industry, capable of collecting all information from the production process for analysis and visualization. GE’s APM can increase the operation speed and stability with early warnings and failure predictions based on collected data.

POSCO and GE will apply GE’s APM solution to POSCO’s power generator No. 5 at Pohang Steelworks to test APM’s compatibility with the existing PosFrame, and to develop modules and verify the system’s adaptability. Once the companies finish developing the hybrid platform, PosFrame+, which predicts failures in steel facilities by combining PosFrame and APM, it will be a groundbreaking turning point for smart factory platforms.

During the signing ceremony, CEO Kwon said, “The development of smart technology for steel facilities will give momentum to the commercialization of smart solutions in the global market.”

Chief Digital Officer of BHGE, Matthias L. Heilmann stated, “Both companies will create opportunities in all areas by sharing visions and cooperating closely for the acceleration of digital transition of the steel industry.”  

Both companies plan to develop PosFrame+ for steel facilities and related industries, and will also create cooperative models for the global commercialization of PosFrame+ by sharing research cases and primary technologies for smart factories.\

※GE APM

All information collected from the production process can be analyzed automatically to increase the operation rate and stability. Facilities with APM will be equipped with early warnings through malfunction predictions and will be able to minimize maintenance costs and failure risks. A classic example of a successful application case is the “Lazarus project” which revived a combined power plant in Chivasso, Italy. Its operations stopped in 2013 due to the facility’s inefficiency, but after applying APM, the facility was able to revive its efficiency and the restarted operations after two years.

Since last February, CEO Kwon has visited Siemens, GE and other businesses in Silicon Valley to explore new technologies and expand POSCO Group’s smartization plan. At CES 2018, CEO Kwon saw first-hand the latest smart technologies and plans to implement them to all of POSCO’s core businesses including steel, construction, IT and energy. He also met officials from leading smart companies such as GE and DPR Construction, and examined possibilities for cooperation over commercializing POSCO’s smart solutions.

POSCO Kwon met Heilmann Matthias, President and CEO of Digital Solutions at Baker Hughes General Electric (BHGE). Matthias oversees the digital solution business of GE Group, and the two discussed the development of PosFrame, POSCO’s proprietary smart platform, its compatibility with Predix, GE’s smart platform, as well as the possibility for joint commercialization.

In particular, POSCO ICT is planning to sign an MOU with DPR Construction, the world leader in Smart Construction, to collaborate on smart projects and find opportunities to apply new ICT technologies to construction. Through this MOU, the two companies will cooperate on projects such as constructing and operating highly-efficient, low-cost data centers and smart factories controlled by PosFrame.

CEO Kwon also visited the automobiles, home appliances, smart city and smart home exhibition booths. He examined the latest tech trends of IT utilization in steel-consuming industries to develop compatible materials and steel solutions.

He also made sure to explore electric vehicle (EV) batteries and new IT technologies surrounding EVs, as lithium materials are the new growth engine of the company. CEO Kwon also evaluated the possibility of securing new markets for the group’s construction business at home and abroad.

POSCO Group plans to continue searching for new, innovative solutions to apply to its smartization efforts and actively develop domestic and overseas data centers and smart factory markets.

Cover photo courtesy of BGR.

What’s more, manufacturing is no longer a rigid industry that produces uniform, one-sided goods. There is constant communication between customers and businesses for hyper-customization. Not only that, machines and products communicate within a smart factory, and factories exchange data with other factories. Manufacturing is no longer limited to production plants. Moreover, the data generated in the manufacturing process is combined with customer information, and a new service can be created. This combination of manufacturing and services is resulting in creation of added value. In the midst of such drastic change, how can companies stay competitive?

Staying Competitive Through Connection and Convergence

Global manufacturing companies are at the forefront of the 4th Industrial Revolution, as evident in their smart factories. A smart factory collects data generated from the production process using ICT technology, and the system controls all processes from material input to the final product. This has led to flexible production systems with the ability to make various products in one factory or to expand the range of products on the basis of connectivity. Typically, when a company builds a smart factory, it can improve productivity by 20 to 30 percent. A 20 percent improvement in efficiency in the manufacturing sector is a significant, outright increase in global competitiveness.

SEE ALSO: How Smart Factories are Changing the Manufacturing Industry

Siemens Electronics Manufacturing Plant incorporates robotics, AI and IoT to its production processes. (Source: Zawya)

If the productivity of a plant can be improved through smartization, it is important to also think about connectivity with the ecosystem that exists outside of the plant. Once a smart factory is built, all the data from customer orders to production and delivery are collected in a system via sensors. The customer, product and production data create meaningful connections with each other and provide extensive insight. Examples of added value creation through meaningful connections include hyper-customized goods, data-driven after-sales services to customers and collaboration among companies connected within the smart factory’s external ecosystem. Such advancements will lead greater product quality, production stability as well as shortened delivery times between value chain suppliers.

The Adidas Speed Factory and GE Brilliant Factory are examples of successful smart factories. Adidas customers choose the materials, colors and design of their sneakers, and have them manufactured and shipped within 24 hours in an automated factory.

GE has built a system that can produce all of their widely-diverse products in one factory. When the factory receives customer orders, it operates in a flexible production system which starts with the necessary raw materials, inputted by the automated scheduling system that controls the entire production process, including the final distribution system.

The Future of Manufacturing

Overall, the adoption of innovative changes in the manufacturing sector is likely to progress from lighter industries to the heavy industries, from B2C to B2B sectors. Small plants, quick manufacturing and B2C companies can more readily adapt to rapid technological and market changes. On the other hand, heavy industries like steel and B2B companies with continuous and heavy manufacturing, large production volume and numerous linked companies are likely to be slower to adapt to changes.

It is much more difficult for traditional, heavy industries to adapt to changes. (Source: Live Mint)

For example, adapting to the changes of the 4th Industrial Revolution in the steel industry may be slow, but it is inevitable. What’s more, the long-term adaptation process is more likely to be systematic and deliberate.

As a leading company in the global steel industry, POSCO is pursuing a long-term, systematic “Grand Design” to reinvent its systems to align with the changes of the 4th Industrial Revolution.

First, POSCO built a pilot smart factory in their steel mill, Gwangyang Steelworks, in 2015 that is currently in operation. The company used IoT to collect big data on site, analyze it in real time and build a smart factory that enables optimal control through AI and self-learning. As a result, the Gwangyang Steelworks is reaping the benefits of a smart factory not only in cost reduction but also in improved steel quality, minimized malfunctions and a safe and stable production environment. This year, POSCO plans to expand and apply smart factories to all of its production processes.

POSCO built a smart factory in Gwangyang Steel Mill.

Smart factory application throughout the entire steel mill will improve overall efficiency through a flexible production system. In addition, the factory will be able to respond directly to various customers in real time based on platform construction with customers within the connected ecosystem. The customized characteristics and design of the steel grade for each customer can be applied to production in real time.

SEE ALSO: How Factories Produce Steel – the Smart Way

Ultimately, a smart ecosystem that links manufacturing, processing and distribution with customer input will lead to a new, innovative ecosystem within the steel industry. In Europe, some companies are experimenting with material libraries and steel distribution platforms. The material library displays a variety of materials for customers to see, touch and test the workability and performance of the materials, and get information about the characteristics, design and delivery times through the order platform. Customers can designate the shipment date on the spot. This will be one of the new promising business models that steel and other material companies will strive towards in the coming future.

POSCO’s Grand Design includes a step-by-step approach to smart factories to expand the use of IoT, AI and Big Data in its production systems. To this end, POSCO ICT has developed PosFrame, a standard software platform that collects basic data of production processes and collectively manages, controls and analyzes the information.

POSCO uses its software platform, PosFrame, for data collection and analysis.

When the software becomes standardized and reliable enough to extend to other sectors, it will be applied to other business areas such as energy and construction, as well as to POSCO’s affiliates.

Manufacturers will have to take into account the heavy production environment, the slow industrial change cycle and the complexity of related industries and affiliates to implement the most effective, long-term, systematic upgrades to its production systems. This will result in a brand-new production and business model for manufacturing companies that will align with the new environment of the 4th Industrial Revolution.

Cover photo courtesy of Sputnik International.