Risk Insider: Dan Holden

The Internet of Things: Industry 4.0 and the Massive Manufacturing Paradigm Shift

By: | March 1, 2018 • 3 min read
Dan Holden is Manager of Corporate Risk & Insurance for Daimler Trucks North America (formerly “Freightliner”). He manages the risk management program in the U.S., Canada and Mexico. He can be reached at [email protected]

Imagine a manufacturing process that governs itself via interconnected methodology and connects formerly distinct production and business domains all with very limited human intervention. It’s mind-boggling … and yet it shouldn’t be.

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According to Kevin Davenport, Cisco Systems, Inc., “The internet arguably is the most transformative and pervasive driver of change and improvement in our history.” The internet revolution — in just a short amount of time — has transformed civilization and is now making its way into the manufacturing process.

Such technologies already exist and many industry leaders believe “The Internet of Things”(IoT) is the fourth industrial revolution following the steam engine, the conveyor belt and the first phase of IT and automation technology.

2018 is purported to be an historic year in manufacturing for many reasons, one of which is advances in industrial technology via co-bots and IoT. This is especially concerning for risk managers as they know that no system is without fault. There are glitches in the internet that occur daily.

In IoT, the physical world is an information system via sensors and actuators embedded in physical objects, and linked through wired and wireless networks via the Internet Protocol. Factories and plants that are connected to the internet have already proven to be more efficient than competitors who are not.

From the moment an order is placed, the manufacturing control system engages and pulls the parts and material needed for assembly thus eliminating potential time lags between supply, orders, product design, operations and customer management. Imagine the time saved.

According to John Nesi, vice president of market development at Rockwell Automation, King’s Hawaiian, was able to put out an additional 180,000 pounds of bread every day, doubling their previous production amount, after installing 11 new connected machines in a new factory.

As a result of the upgraded technology, King’s Hawaiian was able to get their product to the market faster and lower their overall costs, gaining a huge advantage over their competition.

However, this massive paradigm shift in manufacturing won’t come without risk. When innovation is tied to a complex system — and we become over-reliant on technology — there are ample opportunities for failure. With the Internet of Things, those failures could amplify.

The risk of losing privacy increases, so how well encrypted will be the data that is transmitted and stored, and who is ultimately responsible for a data breach?

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There are compatibility issues as well, as there are no international standards, so it could be a challenge for one machine to speak to another. This is particularly disconcerting in the manufacturing process where a failure in the software or hardware could compromise the assembly process.

There is also the human element. The interconnection of manufacturing devices to the Internet could result in the loss of jobs as less humans are needed, especially those without formal education or technical training.

2018 is purported to be an historic year in manufacturing for many reasons, one of which is advances in industrial technology via co-bots and IoT. This is especially concerning for risk managers as they know that no system is without fault. There are glitches in the internet that occur daily.

Over-dependence on the internet — and the data supplied — could be detrimental if the whole thing comes crashing down one day.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]