WHITE PAPER: ENTERPRISE OPERATIONS WITH AUGMENTED REALITYTHE WORKPLACE OF THE FUTURE

EMPIRICAL EVIDENCE GATHERED FROM COMPANIES IN THE U.S AND CANADA SHOWS THAT COMPANIES THAT REDUCE TOTAL MANUFACTURINGCYCLE TIME BY 75% WILL DOUBLE PRODUCTIVITY, REDUCE THE BREAK- EVEN POINT OF A FACILITY BY 20%, GROW AT THREE TIMES THE INDUSTRY AVERAGE, AND HAVE TWO TIMES THE INDUSTRY AVERAGE MARGINii.

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

92% of industry 4.0 suppliers and 74 percent of manufacturers expect

industry 4.0 to have an impact on their business modeli.

INDUSTRY

4.0

...companies that reduce total manufacturing cycle time by 75%

will double productivity...ii75%

“98% expect to increase efficiency with digital technologies like

integrated MES, predictive maintenance or augmented reality solutionsiii.

98%

A study by Forbes reveals that for 43% of the interviewed manufacturers

exploiting opportunities to grow their business has a high priorityiv.

43%

62% of automotive companies will make huge investments into IoTvi.62%

Manufacturers are looking to globalize best practices to improve quality,

increase productivity and control operational costsv.

WHITE PAPER: ENTERPRISE OPERATIONS WITH AR OPERATIONS FOR THE WORKPLACE OF THE FUTURE

ABSTRACT This white paper outlines the ‘how and why’ of industrial operations with Augmented and Mixed Reality. It will explain the environments and tasks AR operations can support as well as concise benefits of doing so. Finally, this paper will categorize the best devices and software that can be used to incorporate AR operations into business scenarios at a low cost with high impact.

BOX FACTS:

INTRODUCTION Industry 4.0 is no longer a catchy buzz word nor trend, it has become a do-or-die movement for automatizing and exchanging data throughout the modern industrial sector. Today 93% of companies identify challenges with implementing and maintaining information systems and operational infrastructuresviii . The IoT tools now readily available open the door for enterprise to easily collect operationaldata and optimise these processes. Augmented and Mixed Reality are the next generation technologies that allow employees and customers to visualize this collected data in daily tasks in working environments. Harnessing this data will be a key to user experience. Those manufacturers that are not able to make the leap will find themselves largely irrelevant in the next 5 to 7 years because people will increasingly look for the value beyond the productiii.

With ever growing mechanisms and technologies for IOT entering the enterprise market, 80% of companies already expect Industry 4.0 to impact their business modeli . In the German manufacturing sector alone, BCG estimates that Industry 4.0 can drive productivity gains of 5 to 8 percent on total manufacturing costs over ten years, totalling €90 billion to €150 billionxii.

While IoT tools collect all the precious operational data, Augmented and Mixed Reality are two of the key Industry 4.0 technologies for visualising the data at worker level at ground zeroxiii. Both Augmented and Mixed Reality are gaining swift traction amongst many business leaders. A 2016 survey not only discovered that 39% of respondents were already using AR in their organization, but a staggering 67% of those not using AR were considering its implementation.

There are countless cases of AR being used in manufacturing and Google even just re-released the Glass to meet the demand and to catch up with the popularity of the HoloLens for enterprise cases. A Goldman Sachs study estimated 6 million users of AR in the field of engineering at a value of $4.7 billionxiv.

Meanwhile, in 2016 IDC found that there are already around 111,000 AR headsets in operation in the commercial segment and projected more than 20 million by 2021 - that’s a 184% Compound Annual Growth Rate, giving an 83% AR headset market share in 2021 in commercial segmentxviii.

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

MANUFACTURING SECTOR

INDUSTRY 4.0 PRODUCTIVITY INCREASE

TOTAL GAIN €90 B - €150 B

(10 YEARS)

There’s one significant asset that manufacturers have not

yet optimized: their own data. Process industries generate enormous volumes of data,

but many have failed to make use of this mountain of potential

intelligence.McKinsey vii

Across industries, an average of 74 percent of a company’s information technology budget

is spent on operational expenses; that is, maintaining legacy applications and infra-structure (otherwise known as

“keeping the lights on”)RSMx

GOOGLE HAS RE-RELEASED THE GLASS TO MEET THE DEMAND AND TO CATCH UP WITH THE POPULARITY OF THE HOLOLENS FOR ENTERPRISE CASES.

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

6MILLION USERS $4.7 BILLION

AR ENGINEERING

FIELD

FIELDS OF APPLICATION: AUGMENTED REALITY IN OPERATIONS

INSPECTION & PREDICTIVE MAINTENANCE - The first step to effective operations and optimal outputs is to ensure a smoothly running ship is always in operation. Unexpected downtimes or breakages will ultimately stop the flow and in most cases have huge cost repercussions – a single minute of downtime in the automotive sector can cost OEMs up to $22,000xvi. Because of this, the need for eliminat-ing catastrophic breakdowns and unnecessary maintenance costs in production processes has and will continue to drive the adoption of condition monitoring solutions across several industriesxvi.

The ability to use exiting data to predict when maintenance will have to occur is a huge game changer. Using smart, connected technologies that merge the real working environment with digital information has the power to reduce the time required to plan maintenance by 20-50%, increase equipment uptime and availability by 10-20%, and reduce overall maintenance costs by 5- 10%xix. Augmented Reality in operations not only increases uptime, but provides unskilled workers with the knowledge to keep complex machinery in constant operation – this reduces the time needed for specialist technicians whilst increasing yearly output. The reduction to downtime and increase in output is so significant that recent analysis suggests that the market for predictive maintenance applications is poised to grow $10.9 billion by 2022, a 39% annual growth ratexviii.

50 % reduction in repair cycle time for defectsUsing Augmented Reality to visualize data, a company in a recent Deloitte study saw a 50 % reduction in repair cycle time for defects and estimated savings of $500,000 in a single product line thorough reduced downtimexvii.

27% reduced costs, 10% increase energy efficiency, increased uptime McKinsey monitored a company where maintenance costs accounted for 25 percent of operating expenses, using predictive maintenance reduced costs by up to 27 percent while increasing reliability and uptime. Advanced analytics for energy and yield also has the potential to increase energy efficiency by as much as 10 percentxx.

Rath & Strong, management consultant has proven that it is physically possible to reduce

cycle time by 75% in a manufacturing area or product line in as little as 3 month, and that it can routinely be done in 6 months. Two major categories

are: Predictability and Flow. Both of them can be improved

by AR.Rath & Strongii

Recent studies also show that unplanned downtime costs industrial manufacturers an

estimated $50 billion each year.

Deloittexvii

$10.9 B 39% ANNUAL

GROWTH

YEAR

2022

PREDICTIVE MAINTENANCE MARKET

3. Reduced inspection times from 3 weeks to 3 days Almost 1000 Airbus employees use SART (Smart Augmented Reality Tool) every day for various fields. In one daily use, technicians use Augmented Reality to inspect a bracket installation in fuselage assembly using a tablet’s camera to superimposes a virtual image of the correct fitting over the actual as-built product. According to Airbus, the introduction of AR has reduced inspection times in some cases from 3 weeks to 3 daysxxi.

PICKING & PACKING - Whether in logistics or throughout the supply chain, Augmented Reality is changing the way we work. With such rapid expansion in the logistics market, the demand for efficiency, speed and reduced errors increases. This means that pickers and packers now need to meet higher demands to achieve their delivery expectations.

Industry ready smart glasses such as Google Glass EE, ODG, Vuzix, HoloLens and more all allow pickers and packers to locate and identify correct products immediately using digital overlays in their environment – all with hands free to operate machinery and manage products. The technology is already in operation and has proven to improve operator efficiency by 25% and reduce errors by 40%xxii. Companies such as DHL are now scaling AR technology across the globe and use it to improve all parts of the supply chain.

25% increased efficiency, 40% reduction in errorsDHL successfully ran a set of experiments last year using smart glasses to improve its warehouse operator efficiency by 25% and a 40% reduction in errors in settings where it has been implementedxxii.

40% reduction in errorsLogistics company Knapp AG developed a picking technology using Augmented Reality. Pickers wear a headset that presents vital information on a see-through display, helping them locate items more quickly and precisely. With both hands free, they can build stronger and more efficient pallets, with fragile items safeguarded. An integrated camera captures serial and lot ID numbers for real-time stock tracking. Error rates are down by 40 percent, among many other benefitsxiii.

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

Market research analysts at Technavio predict that the global logistics market will

grow steadily during the forecast period and post a CAGR of

around 7% by 2021 xxiii.

Technavio

40% LESS

25% MORE

THE TECHNOLOGY IS ALREADY IN OPERATION AND HAS PROVEN TO IMPROVE OPERATOR EFFICIENCY BY 25% AND REDUCE ERRORS BY 40%

REDUCED INSPECTION TIMES FROM 3 WEEKS TO 3 DAYS

WEEK 1 WEEK 2 WEEK 3

AR

INSTALLATION & ASSEMBLY - Many industrial companies are faced with the challenges of installing and assembling diverse prod-uct lines on the factory floor or out in the field. Whether on a daily basis with multiple products or less frequently, the risk remains of incorrectly installing or assembling a product to eventually cause fail-ure or damages. Safety, durability and efficiency are key to the heavy industry environments where installation and assembly are common - including Agriculture, Construction, Mining, Oil & Gas, Manufacturing & Production and more. Technological solutions in these environments need to be scalable/survivable for rugged tests of wear and tear. Smart glasses such as the Epson Moverio, ODG R8 & R9 and Google Glass EE have been designed specifically to meet the needs of industry (not to mention specialist protective cases that can be added to any AR ready Smartphone or Tablet).

Skipping a single step or applying the wrong procedure to the wrong machine during installation and assembly of complex machinery can be potentially hazardous. AR intuitively solves these problems without the need for complex handbooks with complicated 2D instructions. The technology can identify machinery to place installation or assembly material exactly where it needs to be in 3D – so exactly how we see in real life. Safety instructions can appear at every step needed without fail. No unnecessary accidents for safely training in the field. When using one of the many smart glasses options, operators can efficiently work on complex technical operations with smart visual guidance – all hands free.

95% cost and schedule cuts Newport News Shipbuilding, who built lead ship of US Navy supercarrier, said that Implementing AR on their work means promised project. NNS also said that they conducted 36 hours of inspection in 90 minutes which is about 95% cost and schedule cutsxi.

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

THE TECHNOLOGY CAN IDENTIFY MACHINERY TO PLACE INSTALLATION OR ASSEMBLY MATERIAL EXACTLY WHERE IT NEEDS TO BE IN 3D – SO EXACTLY HOW WE SEE IN REAL LIFE.

CHALLENGES, SOLUTION AND BENEFITS OF AR OPERATIONS

With the AR market on the rise and plenty of industrial companies already implementing AR technology to their operational processes – the natural question to ask is… why? Why are companies investing their operational budgets into AR technology and rolling out to the workforce?

For business owners aiming to achieve a maximum yield, efficiency is essential. Yet, as identified, operational costs are also unavoidably high. AR allows enterprises to streamline operational costs and increase worker and machine efficiency through more effective processes. Expensive skilled technicians can be reduced and unskilled workers are given the knowledge to work on items previously outside of their jurisdiction. For many manufacturers, the wage bill is the biggest contributor to cost in the goods they make; it’s also one of the most difficult to control and optimizeix, yet with AR this is now possible.

IMPROVING HUMAN EFFICIENCY WITH AUTOMATIONMcKinsey conducted a study that says: “Our data and analysis show that as of 2015, 478 billion of the 749 billion working hours (64 percent) spent on manufacturing-related activities globally were automatable with currently demonstrated technology. These 478 billion working hours represent the labor equivalent of 236 million out of 372 million full-time employees — $2.7 trillion out of $5.1 trillion of labor - that could be eliminated or repurposed, assuming that demonstrated technologies are adapted for use in individual cases and then adopted. These figures suggest that, even though manufacturing is one of the most highly automated industries globally, there is still significant automation potential within the four walls of manufacturing sitesvi.”

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

AR READY DEVICES

VUZIX BLADE

EPSON MOVERIO BT-200

VUZIX M300

META 2 AR HEADSET

MICROSOFT HOLOLENS

APPLE iPhone

Asus ZenPad 80

SAMSUNG Galaxy S8

AUGMENTED REALITY BENEFITSCURRENT CHALLENGES FOR OPERATIONS IN INDUSTRY

AUGMENTED REALITY AS AN INDUSTRY OPERATIONS SOLUTION

ENTERPRISE OPERATIONS WITH AR RE‘FLEKT, JANUARY 2018

UNRELIABLE EQUIPMENTDowntimes are the highest cost for most industrial companies and occurtoo often because of outdated, infrequent and long inspection processes.

EFFICIENT INSPECTIONAviation style checklists guide technicians through inspection procedures with 3D visualizations. Completed inspectionprotocols are sent directly from the device to the central administration to ensure all machinery is constantly monitored.

20% REDUCED MAINTENANCE, 20% MORE UPTIMEReducing downtimes with predictivemaintenance processes not only avoids expensive downtime and maintenance costs, but increases uptimes by up to 20%.

LOST OR MISPLACED INVENTORYOutdated paper based catalogues of stock often lead to misplaced or lost inventory.

KEEP IT ORGANIZEDIndustry 4.0 processes enhanced with AR ensure inventory never gets misplaced or lost. AR guides workersthrough the workplace to show exactly where items are and logs item movement.

SAVE TIME AND MONEYWell managed inventory ensures that time is not wasted searching for items and ensures that unnecessary costs are avoided for replacing lost inventory.

SAFTEY DURING OPERATIONSSafety instructions often only appear in paper based manuals - long disregarded after first use. Injuries often occur to employees and customers unaware or ignoring safety regulations.

CREATE A SAFE ENVIRONMENTInclude safety instructions into AR procedures to ensure that they are not forgotten or ignored - ensuring that all processes are completed without any risks.

INCREASED SAFTEY AR enables employees or customers to safely preform interactive, hands-on operations in environments and scenarios where safety was previously a concern.

DEMAND FOR EXPERT TECHNICIANSDuring downtimes or specialized processes, companies often require either external experts or time taken from experienced colleagues.

SELF GUIDED OPERATIONS AR empowers employees and customers with self-guided procedures and enables ubiquitous, collaborative and situated operations.

REDUCED EXPERT TECHNICIAN COSTS Reduce or eliminated the costs for expensive specialist technician callouts by empowering workers to avoid downtimes and complete operations themselves.

QUALITY ASSURANCE Picking and packing as well as installation and assembly lines often lack the capability to accurately check and compare their processes with optimal-state guidelines.

REAL TIME COMPARISON CHECKS No need to find a manual or check a photo, AR places real time 3D visualisations of optimal conditions onto machinery and products to ensure that employees and customers always work within the necessary guidelines.

MAXIMUM YIELD Always seeing the correct product or machinery conditions reduces the risk of errors by up to 90% and ensures optimal conditions are always achieved to save time, money and efforts in other areas.

THE OPERATIONAL DATA JUNGLEHuge handbooks, lost information, outdated versions or simply information too difficult to find and apply to operational processes. Not to mention wasted costs on printing, materials and waste.

ORGANISED DATA WHERE IT NEEDS TO BEOperational data appears exactly where it needs to be on real objects without having to search.

SAVE TIME – BY 50%Operational data appears exactly where it needs to be on real objects without having to search. AR operational processes can be picked up and used immediately at any time in the field.

OUTDATED 2D DIAGRAMSFor complex processes, 2D diagrams are unable to effectively display core tasks or be practically applied.

3D INSTRUCTIONAL DATA 3D AR visualizations on real world objects allow employees and customers to understand processes by being able to see the information as we see it in the real world… in 3D.

REDUCE ERRORS – BY 90% Precise visualizations of 3D data exactly in the correct position on real objects as well as procedures in any language ensures that employees and customers always understand their tasks.

OUR PRODUCTS:

REFERENCES:i McKinsey Digital.Industry 4.0. How to navigate digitization of the manufacturing sector 2015. Last check: February 9,2018 https://www.mckinsey.de/files/mck_industry_40_report.pdf ii Rath & Strong management consultant company: Cycle time reduction in manufacturing. Last check: June 9,2018. http://www.rathstrong.com/reducing-any-and-all-cycle-timeby-75/ iii Digital Factories 2020 Shaping the future of manufacturing. Last check: February 9,2018 http://www.pwc.de/de/digitale-transfor-mation/digital-factories-2020-shaping-the-future-of-manufacturing.pdf iv Global Manufacturing Outlook: Competing for growth: How to be a growth leader in industrial manufacturing. Last check: February 9,2018https://home.kpmg.com/content/dam/kpmg/pdf/2016/05/glob-al-manufacturing-outlook-competing-for-growth.pdf v Manufacturing Trends: PwC takes an in depth look at the top 40 manufacturing companies and their outlook on the future. Last check: February 9,2018 https://www.pwc.com/gx/en/indus-tries/industrial-manufacturing/publications/assets/top-40-client-re-search-summary.pdfvi V. Dilda, L. Mori, O. Noterdaeme, and C. Schmitz: Manufacturing: Analytics unleashes productivity and profitability. McKinsey&-Company. August 2017. Last check: February 9,2018http://www.mckinsey.com/business-functions/operations/ our-in-sights/manufacturing-analytics-unleashes-productivity-and-profitabilityvii M. Chiu, K .George, J .Manyika and M. Miremadi: Human + Machine: A new era of automation in manufacturing. McK-insey&Company. September 2017. Last check: February 9,2018 http://www.mckinsey.com/business-functions/operations/ our-insights/human-plus-machine-a-new-era-of-automation-in-manufacturingviii 2017 BDO Manufacturing Riskfactor Report. BDO .Last check: February 9,2018 https://www.bdo.com/getattachment/07362692-3d80-4640-ac0a-d310bc60b946/attachment.as-px?2017-Manufacturing-Riskfactor-Report-Brochure_WEB.pdfix Key Strategies to reduce manufacturing costs-without invest-ing capital. Mestec. February 9,2017. Last check: February 9,2018http://www.mestec.net/2017/02/reduce-manufacturing-costs-with-out-investing-capital/ x B.Bell: The high cost of maintaining the tech status quo in manufacturing. RSM. Last check: February 9,2018http://rsmus.com/what-we-do/industries/industrial-products/the-high-cost-of-maintaining-the-tech-status-quo-in-manufacturin.htmlxi H. Lessig: Newport News shipyard captures “Pokemon Go” tech-nology. Daily Press. July 16,2016. Last check: February 9,2018 http://www.dailypress.com/business/newport-news-shipyard/dp-nws-shipyard-pokemon-20160717-story.html xii M. Rüßmann,M.Lorenz, P.Gerbert,M.Waldner,J.Justus,P.Engel, M.Harnisch: Industry 4.0: The future of Productivity and Growth in Manufacturing Industries. The Boston Consulting Group. April 2015. Last check: February 9,2018 https://www.zvw.de/media.media.72e472fb-1698-4a15-8858-344351c8902f.original.pdfxiii C. Baur and D.Wee: Manufacturing’s next act. McKinsey&-Company. June 2015. Last check: February 9,2018 http://www.mckinsey.com/business-functions/operations/our-insights/man-ufacturings-next-act xiv H. Bellini, W. Chan, M. Sugiyama, M. Shin, S. Alam, D. Takayama: Profiles in innovation Virtual & Augmented Reality: Understanding the race for the next computing platform. January 13,2016. Last check: February 9,2018 http://www.goldmansachs.com/our-think-ing/pages/technology-driving-innovation-folder/virtual-and-aug-mented-reality/report.pdf xv L. Dignan: AR to be key to business, as VR lands with consumers, says IDC. ZDNet. June 19,2017. Last check: February 9,2018 http://www.zdnet.com/article/ar-to-be-key-to-business-as-vr-lands-with-consumers-says-idc/ xvi J.Zegers: Six Key Predictions for Manufacturing in 2015 http://www.industryweek.com/competitiveness/six-key-predic-tions-manufacturing-2015 xvii C. Coleman, S. Damodaran, M. Chandramouli, E. Deuel: Making maintenance smarter. Deloitte insights. May 9,2017. Last check: February 9,2018 https://www2.deloitte.com/insights/us/en/focus/industry-4-0/using-predictive-technologies-for-asset-maintenance.htmlxviii Z. D. Williams:The Top 20 Companies Enabling Predictive Maintenance. IOT Analytics. April 6, 2017. Last check: February 9,2018 https://iot-analytics.com/top-20-companies-enabling-pre-dictive-maintenance/ xix N. Kunkel, S. Soechtig, J. Miniman and C. Stauch: Augmented and virtual reality go to work https://www2.deloitte.com/insights/us/en/focus/tech-trends/2016/augmented-and-virtual-reality.html xx H.Choudhry, A. Mohammad and K. T. Tan: The next frontier for digital technologies in oil and gas. McKiney&Company. August, 2016. Last check: February 9, 2018 https://www.mckinsey.com/industries/oil-and-gas/our-insights/the-next-frontier-for-digital-technologies-in-oil-and-gas xxi R. Guillot: The assembly of the future is already a reality with TESTIA’s SART system. Aviation World News. August 3, 2016. Last check: February 9, 2018 http://www.aviationworldnews.com/news/the-assembly-of-thefuture-is-already-a-reality-with-testia-s-sart-system-40174 xxii Ludwig: How Augmented Reality improves supply chain man-agement for DHL. Harvard Business School. November 17,2016. Last check: February 9, 2018 https://rctom.hbs.org/submission/how-augmented-reality-improves-supply-chain-manage-ment-for-dhl/ xxiii Global Logistics Market 2017-2021. Technavio. April 2017. Last check: February 9, 2018 https://www.technavio.com/report/glob-al-logistics-market-2017-2021

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RE’FLEKT is an Augmented Reality ecosystem for enterprises, providing a powerful content creation platform and a remote expert solution to empower workers with flexible and customizable smart instructions on mobile devices and smart glasses - for increased efficiency and reduced errors. The content creation platform integrates into existing enterprise software and enables companies to easily convert existing CAD data and media content into Mixed Reality applications for maintenance, training and operations. The Remote Expert tool connects workers to immediate Augmented Reality support with dedicated experts in one simple click. RE’FLEKT creates the workplace of the future for global players such as Atlas Copco/Leybold, Bosch, Hyperloop and Mercedes Benz and is recommended by leading analysts including ABI Research and Gartner.