Not by Zoom Alone

The country's economy is returning to life after the coronavirus pandemic. However, it is already clear that it will not be the same. During these months, businesses had to revise their operations and plans for further development, some of them having to completely rebuild the business model. One of the main conclusions made during the pandemic is that the future is shaped for those focused on digitalization. This applies to all sectors, from retail to industry. However, the latter is already well prepared for such a future.

Life Before

From day to day, digital technology gets deeper into all spheres of life. Digitalization, including production automation, e-document management, online stores, corporate instant messengers, affected business significantly, however, according to official data, it is quite slow to get deeper into its depths.

In 2019, the HSE Institute of Statistic Studies and Economics of Knowledge published a large-scale survey on this topic. According to them, Finland is the leader in the business implementation of computer information technologies, followed by Belgium and the Netherlands.

Finland became No. 1 due to the 100% broadband Internet coverage of organizations, and the highest rate of cloud service use making 65%.

Russia ranks #26 out of 31, between Latvia and Greece. She is 18 index points behind the leader.
the top three most digitalized industries in Russia include IT, communications, trade and manufacturing industry
If we carefully examine the indicators used to compile the ranking, we can see that we have the most favorable positions in terms of the cloud service implementation (leaving behind 19 countries out of 31), and our weak point is the introduction of RFID technologies. So far, Russian businesses have been hardly using modern contactless data transmission systems reading the RFID tag information using the radio frequency electromagnetic radiation (the functionality similar to a barcode, but for more complex processes).

Both in Europe and Russia, the top three most digitalized industries include IT, communications, and trade. But, interestingly, this group also includes the hotel business in the European Union and the manufacturing industry in Russia.

Among the most popular industrial technologies are production robotics and automation, as well as the production and management processes integration into a single information system and digital workstation.
70%
of the industrial company leaders reported that digital technologies had been introduced at their enterprises
Big data collecting and analyzing technologies, cloud technologies, and industrial goods sale via the Internet have been introduced to a lesser extent; and "green" industrial technologies, the Internet of things, open production and 3d printing to an absolutely minimal extent.

Among the main problems, respondents mentioned a budget lack, the low payback of such technologies, the poor willingness to integrate transformations and the lack of a digital strategy on the development agenda.

At the same time, no more than 10% of enterprises considered such technologies as a unified information system, RFID and robotics to be promising in 2020.
Aleksandr Yakovlev
CITO for EAEU countries, Servier:

"The working conditions during the pandemic once again confirmed the correctness of the strategy we had chosen, i. e. the systemic digitalization of production and business processes. We are further automating the Servier manufacturing complex in Moscow, introducing and improving the production line monitoring system, and focusing on the introduction of cloud technologies and e-document management. We believe that the phased introduction and adaptation of new technologies will make the pharmaceutical industry more flexible and effective in solving our key task, that is meeting the patients' needs by developing and producing high-quality and effective medicines. "
Minas Narazyan
CITO, PepsiCo:

"One of the most difficult challenges was continuing the production line deployment projects during the lockdown. Normally, at the site, equipment manufacturers are represented. We understood that consumers were waiting for new products, so we did not stop the equipment adjustment, this process involving our partners that controlled the lines installation and testing from home. The Lianozovo plant employees used smart glasses and video cameras, showing the workshop in real time, and received feedback from suppliers' experts. Thus, we were able to minimize the new products release backlog. "
Anton Artemyev
CEO, Shcherbinsky Lift Plant:
"Before the pandemic, we were at the mid-entry level of digitalization. We had already launched some digitalization processes at the plant, many large-scale projects had been started right before the pandemic; these are the ERP system, product life cycle automation system, and EDMS projects, etc. By the pandemic start, we had managed to increase the IT infrastructure capacities, which ensured a fairly painless transition to remote work for many employees during the first week of the lockdown. This is a good result for the industry; we were able to organize the operation of all the necessary services at the site and to ensure the production process continuity. The pandemic surely influenced the employees' attitude towards new ITs and general communication and operation technologies. In these conditions, the process change management was faster, as it became a necessity. The only difficulty was the large one-time transfer volume. Apart from this, we have worked out the technologies to provide the remote secure access to all the company's IT resources. The company used new online communication tools, to arrange all project work, meetings, training, etc."
10%
of enterprises considered such technologies as a unified information system, RFID and robotics to be promising in 2020

Future Is Present

There are still no large-scale surveys to study the changing attitude to digitalization in recent months.

As noted by Mikron, production and operation digitalization and automation are still a tool, but not a goal, and they are implemented, where economically required. However, during the pandemic, such a need arose sharply, for everyone.

For about two months, only half of the industrial enterprises were operating in Moscow; these were continuous-cycle production sites and those providing the city residents with the necessary goods during the lockdown: medicines, food, antiseptics, personal protective equipment.

However, even before the most stringent measures were introduced, industrial company managers had canceled all business trips and transferred their offices to a remote mode, as well as minimized the number of production personnel in a shift. According to the enterprises themselves, those, for which it is not the first year that they have been investing in technology, were able to quickly organize their work in the new conditions.
Dmitry Tregubov
CEO, Dymov:

"The pandemic did not affect the digitalization degree in our company: for us, this has been a priority project in the recent years, that has been implemented at a fast pace. In our case, this is not just a matter of convenience; digitalization allows us to constantly improve the business process efficiency, and ensure the high quality and safety of our products due to 100% traceability and control at all production stages. For us, the food production digitalization is no longer the future, but the present."
Sergey Shagalov
Development Manager, VDK:

"We are not only consumers, but also the suppliers of the relevant technologies. Our customers include the country's largest enterprises in various industries. Today, we can see that many large companies' interest in our products has grown significantly. Indeed, the introduction of appropriate processes is a real and quick way to increase the profitability of high-tech chemical industries. Currently, we are launching high-tech projects in the field of production digitalization using solutions that are implemented in our country for the first time. "
Vadim Tsygikalo
Deputy CEO IT, Ecopolis Corporation:

"Our employees are now using the MS Teams Company Communicator to hold meetings in virtual meeting rooms. I hope that our company will actively apply this technology in the future. This is especially important for us, since the Ecopolis Corporation processing complex consists of three enterprises, two of which are located in Moscow, and the third one is in Mtsensk, the Oryol region. And during the pandemic, we were able to improve remote communication, including between the two Moscow plants. "
Pharmaceutical and food industries turned out to be ones of the sectors most prepared for the pandemic, so to speak; they are historically highly automated, complying with serious quality requirements and international standards.

A similar situation is, for example, in the field of microelectronics. According to the Mikron press service, microelectronics is one of the most science-intensive and high-precision sub-sectors, the production cycle consisting of thousands of operations, which makes the cost of any error extremely high. Therefore, clean production facilities, protective suits, a high automation degree and, accordingly, a low concentration of personnel within the workspace allowed the company to continue normal operation without any problems, while avoiding the infection outbreaks at the enterprise.

In general, as many industrialists note, almost all industries already have a mandatory minimum level of digitalization, an unspoken standard, without which operation is impossible: this is the broadband Internet implementation, electronic document management, paperless design engineering, etc.
— APROPOS —
According to a survey conducted by the HSE before the pandemic, more than 70% of industrial company leaders reported that digital technologies had been introduced at their enterprises. About half (45.5%) of them are planning to expand the application of those, every fifth (21.2%) willing to do so already in 2020, and every third (36. 9%) within the next five years.

Pragmatic Approach

For many companies, it was difficult to transfer a large number of employees to a remote mode at once, but on the whole, the relevant technological base had already been there.

For example, it took Ecopolis a week to organize a "remote office", while the operation of IT was established quite fast: the company designed an architectural solution and tested it for stability.

Some enterprises literally moved workplaces to employees' homes, since a home PC would not have been able to handle most of the tasks. However, as noted by the enterprises themselves, this experience can also be used in the future. Companies have begun using new tools such as online communication services to arrange all project work, meetings, training and even equipment acceptance.
Companies have begun using new tools such as online communication services to arrange all project work, meetings, training and even equipment acceptance
PepsiCo has revised the project launch priorities. Some projects with a pay-back period of more than a year, as well as pilot initiatives had to be postponed. On the contrary, the projects helping to reduce the risk of infection, or to ensure employees' training and development in the new working conditions have come to the fore. Thus, for example, the launch of a global corporate personnel training platform, earlier planned for the third quarter, was implemented ahead of schedule, at the end of March.

In general, all this allowed enterprises to establish the better interaction between their production sites: those are often located at different ends of the country and communicate either remotely or during business trips.

Experts believe that in the future the advantage will be given to those companies and suppliers that will respond more quickly to the Industry 4.0 implementation challenges. This will significantly reduce costs and increase the profitability of even traditional processes.
As many industrialists note, almost all industries already have a mandatory minimum level of digitalization, an unspoken standard, without which operation is impossible
However, enterprises are still ready to introduce only those tools, the use of which will be economically reasonable in the near future. For example, Ecopolis believes that the trendy blockchain technology cannot be applied to their production, however, neural networks, on the contrary, can be economically effective. And one of the company's enterprises, the Aurus copper scrap and printed circuit board processing plant, is very suitable for introducing cyberphysical assistant systems that are based on machine learning and can help the operator make better decisions to achieve the required production goals.

The pandemic has shown that digitalization is not just a trend, but primarily an opportunity for business development. And the companies, which had started this process earlier, got a good head start as compared to their competitors: remote jobs, logistics system modifications, the faster employees' communication and approvals are becoming commonplace for many industrial companies in Moscow. Simply put, digital technologies not only saved many companies from shutting down during the crisis, but also gave them an advantage during the post-crisis recovery.
Corporate Issue, Moscow Department
of Investment and Industrial Policy
E-mail: pressprom@mos.ru
Audience: 16+