Video screenshot: overlooking Hanon Systems factory

How Digital is Helping Hanon Systems Move Ahead

For more than 30 years, Hanon Systems has been manufacturing thermal and energy management solutions for some of the world’s largest automakers. Based in South Korea, Hanon Systems operates 40 manufacturing sites in 20 countries with more than 16,500 employees. In 2017, it reported nearly US$5 billion in revenue.

But the automotive industry is hyper-competitive. Min Sung, Hanon Systems Product groups vice president, said, “There is intense global competition in our industry, where technology and speed are critical to succeed.”

To standout against competitors, Hanon Systems believes that IT innovation will make the difference. Robert Oh is the company’s chief information officer, in charge of overseeing its IT strategy and digital transformation strategy. “A supplier’s ability to successfully compete in today’s automotive market is no longer measured by just its product offerings,” he says. “We believe that digital transformation can positively impact the company’s manufacturing productivity, increase overall efficiency and further strengthen customer relationships.”

Enter SAP Leonardo

Oh learned about SAP Leonardo, a set of new technologies and design thinking services that help companies with digital transformation, during last year’s SAPPHIRE NOW conference in Orlando. He found himself intrigued by SAP Leonardo’s approach to innovation, which features design thinking, a methodology for developing software solutions that puts customer requirements — rather than technology — first. Design thinking workshops, led by SAP consultants, help companies articulate precisely what problems they want to tackle and then rapidly iterate on solutions that meet business users’ needs, reducing the risk of failure.

Design-Led Innovation

Invited by Oh, SAP facilitated a workshop to help the company think through which issues to address. Hanon Systems identified solutions to two key areas the company wanted to address at its factory in Székesfehérvár, Hungary, commonly referred to as the “Alba” plant. First, the company wanted to be able to digitally evaluate equipment effectiveness to  get better insight into the plant’s performance. Second, Hanon Systems wanted a predictive machine maintenance solution to improve scheduling of maintenance activities, minimizing equipment downtime.

According to Oh, “The SAP design-led innovation workshop went beyond the technology to embrace the entire innovation process, which included a detailed discussion about the business and what we were looking to achieve.”

During the workshop, Hanon Systems and SAP also created and tested prototypes for the proposed solutions. These prototypes formed the basis of a pilot project that will help employees measure both overall manufacturing performance and the health of its factory equipment. Working together on a six-month project, Hanon Systems and SAP have been testing the pilot solutions for the plant, which are expected to be live in the second quarter of this year.

Digital to Improve Performance and Equipment Maintenance

Zsolt Karikó also participated in the workshop. Kariko is the managing director of European compressor operations for Hanon Systems and based at Alba plant in Hungary. With 428,000 square feet of manufacturing space, the Alba plant is one of the company’s largest factories and produces various automotive products including compressors, air conditioning lines, and heat pump valves and modules.

Kariko says going digital will provide important information to the team at Alba: “With better data about the health of our equipment, we can improve the way we schedule our maintenance activities and minimize equipment downtime.”

In a business where seconds count, the failure of any machine on the factory floor has the potential to slow down or idle an entire production line; a better understanding of maintenance cycles can have a direct impact on profitability.

“Automation is great, but insight into how well the machine is performing and knowing about potential issues in an automated way will improve overall productivity,” Kariko says.

The solution brings together SAP applications for manufacturing with Internet of Things (IoT), analytics, and cloud technologies. Predictive analytics solutions from SAP will help to spot performance and machine challenges before they impact the business. Kariko is optimistic that the project is an opportunity to help position Hanon Systems for continued success.

With Oh leading the digital transformation strategy for Hanon Systems, he says the company will continue to evaluate other business-critical use cases. The company is currently looking at how it might use technologies like IoT and predictive analytics to digitize quality assurance processes, which can provide valuable data points for product design.

Oh stresses that Hanon Systems is always looking for ways to boost efficiency. With SAP Leonardo, he says, “We’re harnessing the data generated by the plant and repurposing it into something useful. This will give us more insight at the factory level so we can identify areas of improvement and enhance how the company manages its manufacturing performance.”

Top image via video screenshot.