A few weeks ago, Rainer Mueller invited us to the top of Uetliberg mountain in Zurich. A beautiful view of the city, blue skies and warm sun rays accompanied a conversation on digitizing internal and external processes at TE Connectivity and getting closer the customer.
innomaniacs: Rainer, we are sitting on the top of a beautiful Swiss mountain. Why did you bring me to this place?
Rainer Mueller: We are sitting on the top of the Uetliberg mountain, the local mountain of the Zurich people. I live close by, and I see it every day. I have also been here numerous times with my family. I thought that this would be an excellent location for our interview, as you can also see the surrounding landscape of Zurich perfectly.
A few years ago TE Connectivity Automotive moved its headquarters to Switzerland. Can you explain why?
Yes, in 2016 the new legal entity of TE Connectivity was founded here. Our company has a close relationship with Switzerland. We are a Swiss company that located our headquarters in Schaffhausen more than 10 years ago. The automotive BU moved its business activities to Switzerland as well, to better support our global operations.
Can you please explain the core business of TE Connectivity for our readers who do not know it?
Our core business is everything that has to do with connectivity technology. That means electronic connections that deal with the transportation of data, information, and currents. This can be something like a very small component for a smartphone, but also something very big for an electrical distribution center or for a connector of a train.
Can you give a specific example of a component that TE Connectivity produces?
We manufacture sensors and connectors. They can be very small connectors, such as those found in the cable harness of a car. We produce these components on a very large scale. However, we also produce other electronic components, such as high-voltage connections for batteries. In addition, we manufacture various kinds of sensors, such as proximity sensors that can be used for controlling the brake lights of various vehicles. The sensors that we produce have many different applications.
What are your responsibilities at TE Connectivity?
I am part of the automotive business unit, which is the largest business unit at TE Connectivity. The total revenue of TE Connectivity is 14 billion dollars and six billion dollars of this revenue come from the automotive business unit. In the automotive business unit I am heavily engaged with the topic of digitalization. This obviously involves everything that has to do with internal digitalization of the complete value chain. What data can be retrieved from product design, and how can this data be used in production? Subsequently, what data has to be collected in production, in order to achieve higher efficiency? This production data can also be used to inform product developers about the exact location and nature of any problems in the manufacturingprocess.
“we digitally transform everything that has to do with our day-to-day business operations…”
By digitizing processes, our engineers can more quickly and easily resolve problems and improve the design of components. This involves figuring out how we integrate our suppliers and how we ascertain what our customers want from our products. Therefore, we digitally transform everything that has to do with our day-to-day business operations.
When did you start this initiative?
For the past four years, this topic has been very relevant in engineering. However, until recently, the business units dealt with digitalization in a very isolated fashion, and only if it made sense. For instance, one area of concern was the production facilities. The significance of digital transformation at TE Connectivity has massively grown over the past four years. In the automotive unit, it has really started to catch up in the last one and half years. Our aim is to combine the business areas of engineering, quality, supply chain, and production, and to ultimately create a so-called digital narrative. That means, we wanted to formulate what we sought to achieve with more digitalization and how we can optimize across several business functions and not only within an individual function.
So, you actually try to bring digitalization to a higher level, to make this overall connection?
Yes, absolutely. This is my task and what is expected of my team and me. This means that we do not work in an isolated fashion, for instance according to regions such as Europe, America, or Asia. We do not just innovate something in engineering or in the production facilities. Our overall aim is to bring things together and to connect them with each other to become more efficient and effective. Our second goal is to get new products faster to our customers.
“Sometimes, you develop quick solutions for yourself, but they cannot be implemented on a larger scale…”
What difficulties have you faced in this process?
There are a lot of difficulties for my team and me. On the one hand, there is a very diverse understanding of digitalization and the need for its implementation. There are business units that are faster with digitalization and maybe even too fast, whereas others are lagging behind. Sometimes, you develop quick solutions for yourself, but they cannot be implemented on a larger scale, which makes them unavailable to a larger group of people or departments. Digitalization has not caught up with everybody yet, and some people have not really been involved with this topic. There is a German saying for this: When you have to carry the dog to the hunt, then things become difficult. The diversity in our perception of what digital means, what it is used for. and how one can benefit from it makes it difficult for our company to move forward sometimes.
What kind of solutions have you implemented, to get all the functions to work together and to view digitalization in a similar way?
In functions such as engineering, the topic of digitalization was already present, and small teams were strongly engaged with it. We have brought the small teams together and have created one big team. This approach has helped to establish an understanding for the pain points of each party involved. Moreover, this has raised the question: What can I do in my department and how can I optimize my digitalization efforts, so that other parties can also benefit? The formation of a big team helps to bring people together and this is a vital step. We have also partnered with an external partner, an experienced consulting firm, which is a relatively large player in its industry. Together we have launched a transformation project with the aim of connecting all our business functions. We then analyzed what is not working well in our business processes, what we still have to improve, and how digital solutions can help here.
Are there any plans to also apply the topic of digitalization to external processes?
We have taken external digitalization into consideration, but we have not really focused on it because of one particular reason: We are a B2B business, and our customers are other industrial companies. They are automotive suppliers and sometimes even OEMs. Our customer contact takes place through already established channels. That means that we have a relatively large supply chain network. There are also very strong 1:1 relationships between engineers and customer procurement, and between the engineers and the customers’ sales force. At the time it was not apparent to us that we could tackle the topic of digitalization in a different way.
Obviously, we are involved in digital activities such as updating our online presence, tracking leads, conducting social media analytics, and establishing new connections. Nevertheless, I would say that many companies with our size and in our sector are doing something similar. Until now, we have not yet taken the next big step when it comes to establishing a new business model or creating value through digitalization. However, TE Connectivity is now starting to search for potential opportunities with external partners in this area.
“Would it not be amazing if our customer would not have to order anymore?”
Do you have any specific ideas how TE Connectivity can develop in this area over the next two or three years?
There are a lot of areas in which digitalization can help enormously. If you take an external perspective, I think that there are many opportunities to get closer to our customers, especially when it comes to the topic of the supply chain. Currently, we send a product to a customer after having received an order. Would it not be amazing if our customer would not have to order anymore? Instead, they could just receive the needed products at the right spot and time.
I think that there is a lot of untapped potential that could be gained by TE Connectivity. On the other hand, we are a mass producer that receives a lot of small-quantity orders, which are mostly prototypes for customer tests. I think that digitalization in this area would help support our customers better in their development phase. It would also enable us to deliver the needed products and prototypes in a much faster and easier fashion than it is possible today.
I have my origins in mechanical engineering, and I have worked in automotive and operations for over 30 years. So, I have had contact with a very broad spectrum of topics over the last 30 years. Obviously, with the topic of Industry 4.0, digitalization has played an increasingly important role in operations and in production for quite some time now. This is a topic that I have identified as very interesting for me, and I have a lot of fun working in this area. I decided to undertake more responsibility in this field about four years ago, and I have coordinated the digital transformation of our business unit and the production facilities. I then came in contact with our transformation project, and this gave me the excellent opportunity to embed engineering, supply chain, quality, purchasing and everything else associated into a digital organization. I am definitely not a digital native, and you can probably not expect this from a 51-year old person. However, you can still get yourself involved with these new topics and learn a lot. This is where the future of industry is headed.
Are there advantages of seeing the topic of digital transformation from your perspective?
It is definitely a big advantage to have previously worked in production. It is vital to have extensive experience in this field because digital solutions should not just look pretty. More importantly, they should help solve problems. The questions we ask ourselves are: What problems do we have, what problems can be solved with a digital approach, and how can digital solutions help to improve something? When you put new solutions together you need to have both professional knowledge and an understanding of the new concepts. This is especially essential when it comes to advanced topics such as AI or blockchain. This combination enables you to really pick out something useful from these topics. In addition, it also helps when you develop concepts with your own people or when you try to select vendors and opportunities from a very large pool of options. When you intelligently combine domain knowledge with pure digital skills, then something very useful can be developed.
You have just mentioned AI and Industry 4.0 is a hot topic in the area of production. Are there any specific trends that are interesting to you?
When you hear about AI in production, two things come to mind. One of them is using AI to detect errors. The other is prediction in all its different forms, which is mostly prediction of interfering fields and malfunctions of machines and plants. Error detection is relatively well-advanced, and there are many applications with out-of-the-boxsolutions. Many camera vendors offer systems that are used to detect errors or to photograph and analyze products. Many systems already use AI options very efficiently to screen products. Also picture recognition can be applied relatively well, and we have had very good experiences with this technology in a variety of different areas. Predictive maintenance, on the contrary, is a completely different story. Systems with this technology can get complex very quickly, and you need to invest a lot of time and money, to gain true insights from the massive amounts of data.
“Through the use of AI we were able to significantly reduce the percentage of loss from 10% to only 2% or 3%.”
My own experience and my exchange with colleagues from other companies show that the success stories in the field of predictive maintenance are still quite limited. However, AI makes sense here because you can bring overall equipment effectiveness to the next level. We have had very good experiences with implementing picture recognition technology and use it for our stamping machines that produce up to 2000 parts per minute. A picture of every part is taken, and it is rated as good or bad. However, a bad picture does not always mean that the part is of inferior quality. Therefore, we usually need a colleague who stops the machine from time to time and also rates the parts. Then, the colleague needs to restart the machine. This whole process can lead to 10% production loss. Through the use of AI we were able to significantly reduce the percentage of loss from 10% to only 2% or 3%. The application of AI has proven to be very helpful and not too difficult, even though this technology is not yet plug and play.
What are other trends should TE address in the future?
IoT interconnections of plants and machines is definitely a key emerging trend. Our aim is to connect all plants and machines via IoT so that at any given moment we can understand what our plants and machines are doing. We not only want to understand their activities, but we also want to be able to forecast what they will do in the future. Everything that we are currently doing in this field revolves around efficiency on the shop floor, but this is by far not the only thing to consider. Nowadays, if you look into IoT interconnections then you will quickly see that there are applications in completely different areas, namely in administration, engineering, preparatory work, and planning. Such areas can be tackled with digitalization, AI and blockchain after taking the first step in another field. The untapped potential in those areas is at least the same and maybe even higher. However, much more effort is required. The technology is often not available as plug and play, which hinders rapid digitization. Nevertheless, IoT interconnections will be a huge trend in the not-too-distant future.
How would you define innovation?
Innovation, as you have correctly stated runs in the blood of every engineer. When an engineer does not like innovation, then he probably did not choose the right job. The question is: what really is innovation nowadays and what are incremental improvements? As an engineer, I am interested in incremental improvements through innovation. For me, innovation is something completely new, meaning that there was no previous concept for a solution or the technology for it was non-existent. If I now have this new technology at hand and I do things that were not possible before, then this is real innovation for me. When such things come together, then something overwhelming can happen and this must ultimately result in fun for everybody involved.
How long have you lived in Switzerland?
For three years.
Can you compare living in Switzerland and Germany for our audience? What developments in the Swiss start-up scene attracted your attention?
Switzerland is known for innovation. The country is one of the top players when it comes to things traditionally associated with mechanical engineering and automation. Switzerland also has a very strong start-up scene, and Zurich is known for being a strong start-up hub. The start-up scene in Zurich is strengthened and supported by the excellent infrastructure provided by innovative companies such as Google and IBM with its Watson data center and universities like the ETH, which is a global leading force in AI and many other areas. Zurich is known for its internationality and is a hip environment by Swiss standards. This start-up scene can definitely go head to head with cities like Berlin and Zurich is certainly not far behind when compared to Tel Aviv.
How does this affect your daily routine and your quality of life?
The quality of life in Switzerland is excellent. I am an avowed Palatinate because you can live very well in Palatinate, but this is also the case for Switzerland. The distances in Switzerland are short, and there are a lot of things happening in the area of mobile phones and apps. It is very easy and convenient to work with your bank in Switzerland, which I do not really experience in Germany. It is also very easy to book a ticket for the train or to quickly find a taxi here. Switzerland is a very pleasant country with very friendly people.
Nevertheless, you are coming back soon to Germany. What plans do you have for the future?
TE Connectivity sent me to Switzerland, and I have lived here for three years. However, this will come to an end in the summer of 2019. My family and I will move back to Germany, and I will continue to focus my efforts on digitalization.
What else impressed you in Switzerland?
There is one very exciting thing that is possible in Switzerland, which is homeschooling or education without school. In Germany it is not possible at all or at least very difficult to realize. In Switzerland, homeschooling is a very common thing. We did not come to Switzerland because of homeschooling, but we have found this system here, and we happily made use of it. That means, our children are not going to school, and this enables our family to have a very different lifestyle. Homeschooling gives our children different, and we think much better, opportunities to learn than would be possible in an ordinary school environment. This is definitely something that we will miss when moving back to Germany.
So, what does this look like in your daily life? Do your children not go to school at all or do they have to pass some tests from time to time?
Children that do not go to school are subject to governmental supervision. In the canton of Aargau, which is where we live, a school inspector and a representative of the local school visit our home once a year. They check if our children are on the education level that is established by the curriculum of this year. We had two appointments with them, and everything went well. This is good and certainly sufficient proof that there are also other ways to educate children.
INTERVIEW/PHOTOS: Marvin Kleinemeier