2016 marks a major milestone in the history of Philip Morris International (PMI), the year when we publicly announced our commitment to delivering a smoke-free future. Over the last five years, we have made significant progress towards realizing this goal, building a new smoke-free product portfolio, which as of September 30, 2021 represented almost 30 percent of our total net revenues and counted nearly15 million users around the world who switched to these products and stopped smoking. But our aspiration for achieving smoke-free world goes beyond that. By 2025, we are aiming to reach at least 40 million adult smokers who have switched entirely to our smoke-free products and stopped smoking.
Building and growing a product portfolio to realize our smoke-free vision requires operational change. In the past, a new product launch involved two Stock Keeping Units (SKUs), with around four months lead time for the first market introduction and with the total global deployment taking up to two years. Now, with the introduction of smoke-free products portfolio, we are launching hundreds of SKUs worldwide simultaneously. Our smoke-free products are currently available in 70 markets, and our aspiration is to reach 100 markets by 2025. With a more complex product portfolio, multiple markets with simultaneous launches and shifting consumer preferences, the need for flexibility, agility across the end-to-end value chain, and high speed to market has never been greater. PMI Operations is rising to this challenge in multiple ways to support PMI’s business transformation.
Designing the Manufacturing of the Future Program
To ensure full integration of manufacturing into operations ecosystem as a part of the end-to-end supply chain, we have developed the Manufacturing of the Future program. Its goal is to increase speed & efficiency, strengthen consumer & people-centricity, and lead in long-term sustainability. This five-year journey is supported by a set of 10 design guidelines that will help steer the transformation and support decision-making along the way, driving the Manufacturing towards its zero-loss goal – standardized, lean, and cost-efficient processes. From these, we created a vision of the factory of the future and defined a specific roadmap to get there.
The Manufacturing of the Future roadmap, supported by an Integrated Work System (IWS) defines four key phases: foundation capabilities set-up; site stability with the focus on the manufacturing performance reliability; site agility; and supply chain agility. The latter represents the last phase in a Manufacturing 4.0 scenario, where end-to-end operations are digitally connected and synchronized.
Deploying an IWS to ensure focus is directed at the right area, at the right time
In each phase of the Manufacturing of the Future Program roadmap, the IWS places emphasis on different focus areas, setting up specific capabilities and targets for each maturity phase. For example, the key focus for the first phase is on growing the capabilities of our people – what we refer to as the “pen & paper” phase, and only once this is achieved can the benefits of introducing and investing in more innovative digital and technical solutions be truly maximized. As the program matures, the emphasis on capabilities relating to digital maturity and technology increases.
Getting it right from the start: People capabilities and competencies as the key elements for sustainable performance
The Manufacturing of the Future program is strictly connected to people capability building. We are rolling out digital competencies at all levels of manufacturing organization - leaders, solutions designers, end users, and investing more than 100 hours per year per person to develop capabilities using the Learn-Do-Teach approach. With around 33,000 people working across our 36 factories, this is no small undertaking. But we know that without the full involvement of our people globally, we can’t move to the manufacturing of the future in a sustainable way.
A global manufacturing transformation requires a solid Internet of Things (IoT) Infrastructure
To support our manufacturing transformation and harness the power of data both now and in the future, we installed a cloud-based global IoT infrastructure that enables us to design and deploy global solutions across all our factories simultaneously. Using state-of-the-art technology, the IoT infrastructure is built up of four layers: an enterprise and corporate layer with global systems, data science and visualization; an operational layer with intelligent products and services which communicates with the process control layer where the industrial cloud foundation is laid; and finally, the factory floor level with IoT, smart devices, machines, laboratory equipment, and intelligent things and technologies.
Putting it into practice: Self-learning algorithm for the Heating, Ventilation, Air Conditioning (HVAC) system
So far, we have undertaken more than 20 Manufacturing of the Future use cases focusing on some standard elements including predictive maintenance, augmented reality, etc. The following example stands out as it focuses on an area with typically longer ROI and showcases a seamless integration of people capabilities, sustainability, technology, and digital elements.
“After investigating different opportunities and approaches, we developed a self-learning algorithm that optimizes the energy consumption and integrated it in the process of climatic control across all connected factories”
Some of our manufacturing processes require the environment temperature control to ensure that our products maintain their quality and humidity. This is achieved through HVAC system. However, 800+ HVAC units spread across our 36 factories use different kinds of temperature-moisture-humidity control technologies and represent up to 21 percent of the annual global utilities cost.
After investigating different opportunities and approaches, we developed a self-learning algorithm that optimizes the energy consumption and integrated it in the process of climatic control across all connected factories. By connecting sensors for all data sources within the HVAC process (750 tags, from 5 sources), real-time info is collected, analyzed, and used to inform the algorithm. From there, we defined a standard deployment package to be installed in all our factories worldwide.
The solution to date has achieved a 24 percent cost reduction and an 18 percent reduction in CO2 emissions vs. the initial base - all within an ROI window below 6 months. We achieved this by maximizing the efficiency of existing HVAC units without making big investments. All HVAC units are now centrally connected so that we can deploy any future improvements or upgrades faster.
After few months of our Manufacturing of the Future program roll-out, we saw that both the vision and the reason for change are critical for the organization’s adoption of change, new solutions, and new capabilities. We are also reassured that the right approach is to focus on long term vision while creating the momentum with use cases’ pilots.