Sandvik increases focus on digital solutions in business reorganisation
November 16, 2020
Sweden’s Sandvik AB is reorganising its tool business to further strengthen its position within future digital solutions, also known as Industry 4.0, explains Stefan Widing, CEO of Sandvik.
According to Widing, the smart factory is the heart of Industry 4.0., therefore Sandvik is carrying out a reorganisation with the aim of expanding digital technology to help make customers more productive and sustainable. With this in mind, Sandvik Machining Solutions, the business area for metal-cutting processing, has changed its name to Sandvik Manufacturing and Machining Solutions, and has been divided into two separate business area segments: Sandvik Machining Solutions and Sandvik Manufacturing Solutions.
The Sandvik Machining Solutions business segment includes the traditional tool business and brands such as Sandvik Coromant, Walter, Wolfram, Seco and Dormer Pramet. Sandvik Manufacturing Solutions will reportedly focus on related technologies and digital solutions, including the divisions for Metrology, Additive Manufacturing and Design and Planning Automation. These technology areas are expected to grow strongly, with the current providers of these services often not being Sandvik’s existing competitors, states the group.
“One of the purposes of the reorganisation is to create new business opportunities,” commented Widing. “The new Sandvik Manufacturing Solutions segment strengthens our position within digital manufacturing and contributes to our market-leading position. These areas need a dedicated focus and to some extent a different direction. They are often smaller, with characteristics of software companies, rather than the manufacturing industry. To run them successfully, a different governance model is required.”
In order to emphasise its strategic importance, Widing will lead Sandvik Manufacturing Solutions for a year, starting on January 1, 2021, in parallel with his role as CEO. He added, “This is because it is a very important area for the future. It is broad and complex and will require investments through acquisitions in areas such as metrology, planning tools, tool data management and 3D printing. If and when we find the right company, we must be able to act quickly.”
Additionally, digitisation continues to be a focus area for the core business as well. Widing further added, “Our core business in metal cutting is on a journey from only providing tools to providing complete solutions, including everything from sensors and connected tools that exchange data via the cloud to digitised planning tools.”
“We have long had a business model where we are a world leader in helping customers choose tools and process components efficiently,” he continued. “That knowledge is in the heads of employees. Now we need to capture that knowledge and build it into digital tools in an information loop that can constantly improve processing in real time.”
High growth ambitions
Digitisation means that experiences and knowledge from manufacturing are shared in real-time, both internally and externally and between people and machines. The growth ambitions in the digital area are said to be high, within both Sandvik Manufacturing Solutions and Sandvik Machining Solutions. The 2025 target for the business area segments is to have total sales of SEK 5 billion connected to digital solutions and services.
“It is not a big number for Sandvik as a group, but it is an important area for the future and partly a new position for us. We have a history of innovation, so this is a natural extension of our heritage in engineering.”
The digital solutions linked to smart factories and Industry 4.0. have great potential to change industries other than manufacturing, notes Widing. The mining industry, for example which is said to be of great importance to Sandvik, is undergoing major changes with the automation of mines, self-driving autonomous machines, electrification and connected equipment. This results in a significant productivity boost that also benefits the surrounding environment and employees’ situation.
“We have also come far with digitisation in many areas and are at the forefront of the digitisation of mines. Another example of how we use new digital technology to become even more efficient and more flexible is our facility in Gimo, which has been named a pioneer in Industry 4.0. by the World Economic Forum,” concluded Widing.