Industrial Digital Transformation in the Post-COVID World

During a business trip to the U.S. in February, the coronavirus disease took over Korea, causing my colleagues and I to hurry back home. Soon, the fear of the coronavirus began to rise around the world. Every day we check the number of confirmed cases and the locations they visited. As a society, we implement measures such as working from home,line meetings and classes, and social distancing; as individuals, we are required to wear masks and wash our hands for personal hygiene. Our day-to-day lives have been transformed drastically. In February 2020, worldwide oil demand and commodity exchanges decreased down by 16.2% and 18.5% respectively compared to last year’s in the same period. As a result, the World Bank announced in June that the global economic growth of this year is expected to be at -5.2%, which is the worst growth rate since World War II. Governments around the world are offering emergency disaster relief to minimize the impact of the coronavirus its domestic economy, while carrying out nationwide disease prevention efforts to contain the spread of the virus. However, these arely emergency measures and not a fundamental solution. Currently, the Korean government’s response to the virus has been lauded for its preemptive approach: the ‘K-prevention’ model of testing, contact tracing, and managing with the basis of ICT.

Most disease prevention experts assert that the current pandemic requires long-term measures. If economic depression persists for a long time, no company or country will be able to survive. The coronavirus is the biggest danger of this time. But within danger lies opportunity. For a successful post-corona world, we must analyze the risks and opportunities. The important keywords are ‘untact’ and ‘digitalization.’ Untact is a risk, digitalization is an opportunity. This is where our answer is for the post-corona world.

The basis of Korean economy is manufacturing, which has taken a large hit since the pandemic began. Demand went down, overseas market decreased, import of core parts became more difficult and stock levels excessive. Business loans were withdrawn. This has led to a spike in unemployment rate, threatening our national economy. Recently, the social distancing measures have become less severe, but the industry is still 2-30% less active. Work efficiency is going down due to remote or limited-contact work. One solution can be ‘digitalization,’ a shift towards digital age. We can already find it in the ‘K-prevention’ model,’ which applies ICT to existing medical knowledge. In order to survive the current pandemic and its uncertainty, the manufacturing industry must be digitalized.

Since even before the coronavirus, the Korean manufacturing industry already had been at a crossroads. Digitalization can increase operation efficiency of manufacturing machinery, maximize quality, and reduce the number of accidents. However, it also requires a lot of investment and experience; it was an option not a necessity before the pandemic. Of course, investment was not thely problem. Changing the thinking of professionals in the field was another major issue. It is the human factor that stands in the way of digitalization – which has happened in history before. Changes during the Industrial Revolution, shifting towards electronic cars and new renewable energy have always faced opponents. They were a matter of time, not choice. So the remote or limited-contact work issue canly be solved by shifting towards industrial digitalization (4^th Industrial Revolution). Therefore, we must get rid of our traditional ways of thinking, and decrease the human resistance to it. This will be a way of seizing the opportunity that is the post-corona world.

Digitalization in each industry cannot be identical. The major industries in Korea are automobile, semi-conductor, petrochemistry, power, transport, and national defense. The unique characteristics of each industry must be taken into account in order for a successful digitalization. To summarize the important issues in each industry would be as follows: mobility and quality in automobiles, operational rate and quality in semi-conductors, efficiency and industrial accidents in both petrochemistry and power, passenger safety and industrial accidents in transport, new technology and durability in national defense. These issues are performance indicators for each industry. With digitalization, we can optimize them. Collection and management of industrial data regarding the indicators, data analysis system, diagnostics and management system of indicators can all be carried out remotely or with limited contact. In addition, acquiring and managing industrial data of each field requires strategic and systematic thinking. Many companies already possess sufficient amount of industrial data, but the actual utilization of it remains less than 1%. Industrial data in the digital age is a fundamental resource. The low usage level of industrial data means low resource utility. So acquiring industrial data of high utility is our first step, which requires a strategic and systematic approach. For instance, in the mobility age, cars are just a mode of transportation. Shared cars and self-driving vehicles will be the norm—which makes Integrated Vehicle Health Management (IVHM) a highly significant digital technology. Drivers of shared vehicles are not owners of those vehicles, so they pay little attention to vehicle condition. This poses a big challenge to management. Seoul’s bike sharing program, Ddareunggi, suffered similar problems. According to city council member Seung-woo Ju, 32% of Ddareunggi bikes are not in operation due to technical failure. Self-management of users is difficult in the sharing economy. Digital technology is crucial in solving this problem. The IVHM technology systematically defines data measurement points and can be used to optimize the maintenance of car-sharing systems. Petrochemical and power industries harbor digitalization possibilities as well. Until now, a majority of industrial data was acquired and managed a local, episodic level. But now we are seeing that change into something more integrated and connected. Digital twin technology [Figure 1] makes it possible. Digital twin allows for the systematic measurement, learning, diagnosis, prognosis, and management of industrial data anywhere, without accessing the industrial equipment, by anyone, and about any equipment. We can check the running functions and integrity of any industrial equipment and remotely employ necessary measures. Digital twin technology and power and petrochemical industries can optimize the maintenance of ageing equipment, improving productivity; it can also decrease industrial accidents, since all the work can be done remotely or with limited contact. In other words, digital twin technology can help us understand, analyze, and manage the operation and maintenance of equipment in a digitalized setting, without the help of professionals. Industrial data is an important resource for Korea, and Korean industries must utilize it in the post-corona world.

Digital twin industry is rapidly growing at a compound annual growth rate (CAGR) of 32%. Korea has perhaps the best environment for digital twin technology, with its manufacturing industry with ICT and human capital. Digital twin will be a new industry trend during the pandemic. Just as K-prevention model succeeded, we must develop the digital twin model as a new standard in each field. In order for digital twin to be implemented in various industries, many different technological and business ventures must be tried, such as IoT, industrial AI, prognostics, AR, financial management services and others. Digital twin can be used in a variety of digital business models. In addition, ensuring the establishment of relevant infrastructure and industry ecosystem is important, which is closely related to the digital new deal recently announced by the Korean government. One hand, an industry ecosystem must be established between businesses in industry data measurement, communications, cloud computing, and big data management, constructing a dam of industrial data. On the other hand, a similar ecosystem should be built between businesses in industrial AI, industry domain technology, and machine integrity prognostics and management. In addition to such efforts in the private sector, the government must support training of human resources and carry out legal measures. A shift towards ‘Digital Korea’ is inevitable in the untact age.