Predictive Asset Optimization - Advanced Analytics

2014 IBM Proprietary
Predictive Asset Optimization
11

2
Agenda
Part 1: Introduction to Predictive Asset Optimization (PAO)
!  Smart Products Defined
!  What is Predictive Asset Optimization?
Part 2: The Value of Predictive Asset Optimization
!  Value Proposition & Benefit Cases
!  Case Studies
Part 3: The PAO Solution
!  Solution Architecture
!  IBM’s PAO-enabling Products & Capabilities

3
Predictive Analytics SMEs
Paul Brody
VP & Partner - Electronics
Global Industry Leader
Leonard Lee
Associate Partner
Electronics CoC

4

Smart Products – What are they?
Internet of Things Internet of People
Intelligent
Instrumented
Interconnected
Usage &
Interaction
The devices and people
are directly talking now…
…generating massive
amounts of data.
!  Warranty information
!  Purchasing history
!  User preferences
!  Content viewing and
listening histories
!  Usage history
!  Demographics and
psychographic data
!  Point-of-event feedback
!  Product and service
feedback via social
networking sites
Insight
5

Market Trends
6
Smart Products – They are changing the world as we know it!
213 549
1,042
1,659
2,444
3,440
275
600
978
1,402
1,839
2,288
0
1000
2000
3000
4000
5000
6000
7000
2010 2011 2012 2013 2014 2015
Non-Entertainment Install Base (MMs)
Entertainment Install Base (MMs)
Annual Sales
Install Base
0
500
1000
1500
2000
2500
3000
3500
4000
2010 2011 2012 2013 2014 2015
Worldwide IP-Connected Devices –
Sales & Install Base
IP-Connected Device Install Base –
Devices and Beyond
Source: Gartner, IBM analysis
488M in
2010
5.7Bn in 2015
213M devices
in 2010
3.4BN devices
in 2015
MMsofdevices
By 2015 - over 5 billion
Internet connected consumer
products to be sold!
IP-connected products will proliferate
worldwide
Products will become increasingly
self-aware
IP-connected products will generate
massive amounts of condition data
Business analytics will provide
companies with deep customer insight

7
As the number of smart products grows, companies are under increasing pressure to
evolve their business focus from being product-centric to product + service minded.
Business Strategy
& Model
Smart Devices
Connected
Devices
Analytics
Big Data
Competitive Opportunities
Trends & Technologies

8
The combination of condition data gathered from connected, smart products and
predictive analytics is creating new opportunities for electronics companies to drive
product and service innovations.
Big data: unstructured, semi-structured
and structured
Review & rating Click-through Feedbacks via pads/
phones
Sales records Consumer
master data
Product
master data
Monitoring &
maintenance
logs
Big data: unstructured, semi-structured
and structured
Online data Offline data Connected data
Data
Types
Social media
Call center records
B2C$
e&commerce$
Forum,$
Microblog,$
Facebook…$
ERP$ CRM$
Connected$
devices$
Data
sourcesSensors$
User 360 Product 360
• Demographic
• Geographic
• Socialgraphic
• Behavioral
• Psychological
• R&D
• Production
• Transactional
• In-use
• Maintenance
Indexed
information
Voice of
Customer
(VoC)
Targeted
Marketing &
Sales
Optimization
Preventive
Maintenance
R&D Marketing and Sales After Sales Service
Front Office
Applications

9
Predictive Asset Optimization (PAO) finds synergy between Product Engineering and
Predictive Analytics that enables companies to create new services around their
products.
9
What if you could accurately
predict which characteristics
tend to lead to a greater amount
or frequency of failures?
What if, when an asset is
scheduled for maintenance,
you could predict what
parts are likely to fail in the
near future?
What if you could identify the characteristics
that tend to increase ownership cost and
downtime over the life of a system?
What if you could replace
those parts that have not
yet failed and avoid further
unscheduled downtime?
What if you could quickly mine the
thousands of logs that describe the
maintenance performed on a system and
determine what important observations are
being logged by the maintenance team?

• Use a predefined lifetime for
replacement
• Frequent unexpected failures
leading to customers’ frustration
• Adaptively raise alert based on
the actual condition of the product
• Precise condition monitoring is
technically challenging in general
PREDICTIVE ASSET OPTIMIZATION
1.  Anomaly detection: How to classify the
present condition into good and bad
2.  Change-point detection: How to recognize
change-points of the system
Predictive Asset Optimization enables the transition from static maintenance models to
dynamic, condition-based maintenance models.
Time-Based
Maintenance
Condition-Based
Maintenance
10

Sense and
Measure Quality
Metrics
Monitor &
Track Critical
Information
Identify and
Share Critical
Issues
Measure &
Decide on
Actions
Propose
Corrective Action
& Collaborate
Implement
Corrective
Action
Models, Metrics,
Algorithms
& Techniques
1
2
3
4
5
6
Reducing maintenance &
warranty costs while improving
product quality starts with a
streamlined approach
"  Integration of business data sources
"  Sensing of abnormal behavior
"  Providing visibility on dashboards
"  Analysis of leading and lagging
indicators
"  Correlation/Clustering of failure
information
"  Prediction models on emerging issues
"  Collaborative decision-making
"  Delivery of corrective measures
Predictive Asset Optimization analyzes data from multiple sources and provides
recommended actions, enabling informed decisions.
11

Group cases that exhibit
similar characteristics.
Which parts tend to fail most
often? At what rate do they
fail?
Predict or Classify
behavior & characteristics.
What are the
characteristics of parts that
perform well versus parts
that fail often?
What events occur
together?
Given a series of part
failures, which parts are
likely to fail in the future?
Associate Classify
Cluster
Data
Mining
Data Mining & Predictive Modeling are the core of PAO.
Modelling unearths
insights not visible
to the naked eye &
helps dispel myths
that may have
settled in over time.
12

Optimization is the final piece to the Predictive Asset Optimization process.
•  Once the issue is
identified, what is the next
best course of action?
•  Optimization helps the
business make complex
decisions and trade-offs.
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UK Utility Company
In Production Line
• Pro-active detection rate
increased by 90-100%
• Sustained 41% reduction
in production incidents
and unscheduled
downtime
• Reduced liability damage
by 30.23% in 2 years
PAO has delivered value to companies that have invested in developing
preventative maintenance capabilities for their products and operations.
Japanese Manufacturer
In Field Services
• Save $1 million in repair
costs in under 2 weeks
• 12-14 times return on
investment in just 4
months
German Auto Manufacturer
In Warranty Services
• Proactive identification of
systematic error patterns
and their dependencies
• Reduced warranty cases
from 1.1 to 0.85 per
vehicle
• 5% reduction in warranty
cases
• Annual savings of €30m
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!  Utilize predictive analytics to
identify when equipment or
complex engineering assets
installed at customer sites
are likely to fail
!  To predict maintenance
needs in order to maximize
uptime/in-service time for
equipment sold to customers
!  Tie to product development
to improve designs and
overall product quality
identify when internally used
production machinery,
equipment, and assets are
likely to fail or need service
!  Perform preventive
maintenance in order to
maximize production uptime
and minimize disruptive,
costly unscheduled
downtime
identify when goods and
is likely to fail in order to
identify root cause for
problem correction
!  To proactively address
issues to reduce warranty
cost and improve customer
satisfaction
Predictive Asset Optimization Solution can address business needs of electronics
product manufacturers at different points in the lifecycle.
Operation & Maintenance of
Complex Engineering Assets
Asset Optimization of
Production Lines
Asset Optimization for Field
and Service Warranty
16

identify when equipment or
complex engineering assets
installed at customer sites
are likely to fail
!  To predict maintenance
needs in order to maximize
uptime/in-service time for
!  Tie to product development
to improve designs and
overall product quality
Operations and Maintenance of Complex Engineering Assets
Operation & Maintenance of
Complex Engineering Assets
!  Customers complain
because of downtime due to
unscheduled maintenance
!  Waste of resources and
downtime due to
unnecessary maintenance
!  High collateral damage
expenses due to failures
!  Customer complaints due to
product failures
!  High pressure on SLAs with
customers
Challenges Addressed Benefits Delivered
!  Reduce machine/appliance/
asset downtime due to failure
in complex engineering assets
!  Improved productivity of
maintenance resources
!  Avoid costs of machine/
appliance/asset failure
!  Improved customer satisfaction
due to improved service levels
!  Improved and more efficient
root-cause analysis leading to
better designs
17

Asset Optimization of Production Lines
!  Supporting Manufacturing
operations within a
Manufacturing Framework
!  High costs due to downtime for
unscheduled maintenance.
!  Waste of resources and
downtime due to unnecessary
maintenance.
!  High collateral damage costs
due to failures.
!  High levels of MRO inventory.
!  Unreliable Maintenance Cost
forecasts
!  Reduce machine/appliance/asset
downtime due to (parts) failure
resulting in increased yields and
through-puts.
!  Higher quality finished goods due
to reduced production variability.
!  Reduced MRO Inventories.
!  Reduce cost of machine/
appliance/asset failure.
!  Reduce the environmental impact
of production failures resulting in
lower potential regulatory fees.
!  Improved cost forecasting
!  Improved supply chain
predictability through increased
reliability
identify when internally used
production machinery,
equipment, and assets are
likely to fail or need service
!  Perform preventive
maintenance in order to
maximize production uptime
and minimize disruptive,
costly unscheduled
downtime
Asset Optimization of
Production Lines
18

Asset Optimization for Field Service and Warranty
!  High services costs due to late
product issue identification
!  Customer complaints due to
product failures
!  Product recalls due to late
product issue identification
!  Bad press because of product
issues
!  Lost sales because of bad image
!  Supply Chain issues because of
product issues
!  Financial estimates of potential
warranty claims
!  Structuring warranty terms for the
appropriate time frame
!  Improved customer satisfaction
due to improved service levels
!  Reduced services costs
!  Greater levels of financial
transparency
!  Understanding part failure timing
to set bounds for warranty terms
!  Identifying and resolving issues
earlier in the product lifecycle
process resulting in fewer
warranty claims
!  Create a continuous feedback
loop of previous learning from the
reliability modeling process that
improves quality and reduces
warranty costs
identify when goods and
is likely to fail in order to
identify root cause for
problem correction
!  To proactively address
issues to reduce warranty
cost and improve customer
satisfaction
Asset Optimization for Field
And Service Warranty
19

20

Business Value
• Reduce the occurrence of device failure under the scope
of six-sigma standard by preventive maintenance.
• Greatly lift customer satisfaction, intimacy and loyalty with
good after-sales service.
• Help R&D track operation status of launched products,
and avoid the next-generation of products from falling into
the same problem.
Failure Mode Analysis Maintenance Strategy Optimization Anomaly Detection
Technologies:
1. Survival curve analysis
2. Cox Model
3. Gaussian distribution estimation
Technologies:
1. Non-linear mathematical optimization
model
2. Gradient decent algorithm
3. Branch-and-Cut algorithm
Technologies:
1. Sparse structure learning technique
2. Graphical Gaussian Model
3. IoT-based tech
21
Predictive Asset Optimization provides proactive inspection, detection, and correction
of incipient failures before they actually occur.

The Predictive Asset Optimization Solution Framework
Financial
Data
Performance
Log Data
Capture Predict Next Best Action
Analytics
Prescribe
Predictive Analytics Engine
Event Rules Work FlowsModels
Data Consolidation
Structured & Unstructured
Dashboards
Alerts
Reports &
Analysis
Advanced
Visual
Features
Visualization & Messaging
In-Store
Mobile
Email
Call-Center
Social Networks
Web Portals
Social
Networks
Monitor
Statistical Analytics Decision Management
Business Analytics
Condition/
Sensor Data
Incident Log
Data
Environmental
Data
Maintenance
Log Data
Customer
Data
Devices
Business Systems
Data
Sources
Analytical
Data Store
22

Predictive Analytics – The Core of Predictive Asset Management
Statistical Analytics Decision Management Business Analytics
Analytic Data Store
Service Bus/Message Broker
Product Info/
Sensor
Warranty
History
Incident
Data
Financial
Data
Maintenance
Logs
Environmental
Data
Performance
Logs
23

IBM offers a comprehensive suite of products and services that can help our clients
realize the benefits of Predictive Asset Optimization.
24
Predictive Analytics System
Analytics for ‘through the windscreen’
view . Predictive insights improve
Management and refine business rules
BI System
For dashboarding
from Maintenance
Mgt system and for
distribution of
predictive analytics
results
IBM SPSS
IBM Cognos
IBM Maximo
Actionable
Insights
Actionable
Insights
IBM GBS
Enablement
ServicesAsset Management System
A powerful ‘rear view mirror’ view for
Monitoring, Reporting & Managing
based on past and very recent events

Business Intelligence Predictive Analytics OptimizationData Consolidation
IBM Research has collaborated with our clients to integrate our products in delivering
robust Predictive Asset Optimization capabilities.
Business Analytics Services
25

Algorithms
Frameworks
ADAM
(Analytics Driven Asset Mgmt.)
Anaconda Change Point Logic
IBM Research has also developed a portfolio of analytics and logical frameworks that
address a wide range of PAO scenarios.
IBM Compute and Storage Cloud
Water
Utilities
Solution
ADAM Solutions
Common Cloud Management Platform
Maximo Integration Framework / SAFE / IIF / Infosphere Information Server
Analytics Solution Engines
Web Services APIs
Maximo Metering Sensors CMMS
Rail
Operations
Solution
Oil
Platform
Solution
Electric
Utilities
Solution
Building
Energy
Solution
Maintenance
Planning
Maintenance
Scheduling
Failure
Analysis
Usage
Analysis
Condition
Monitoring
Custom Analytics Engine
ADAM
Repository
Anomaly Detection
feature 1
feature 3
feature2
Outlier
Normal
Sensor'data'
Change.points'
0'0'0'0'0'0'0'0'0'0'1'0'0'0'0'0'0'0'0'1'0'0'0''...'
Label!
0'0'0'0'0'0'1'1'1'1'1'0'0'0'1'1'1'1'1'0'0'0'0''...' ...'
k! k!
Predic9on'intervals'
...'
Label'
Replicate'the'original'data'by'modifying'the'labels'
sensor A
sensor B
sensor C
.
.
.
Noise
Reduction
Predictive Asset
Optimization
Customer Detected Issue
26

The predicted model
identified 85 percent of
failure states correctly.
Predictive Asset Optimization has delivered results.
27

Talent'
A"resource"pool"of"highly"talented"analy4c"Subject"Ma9er"
Experts"and"Industry"experts"with"predic4ve"asset"
op4miza4on"experience"
"
Industry'Exper1se'
Predic4ve"models"for"a"number"of"speciﬁc"industry"use"
cases"
Accelerators''
• PreCconﬁgured"dashboard"and"visualiza4on"templates"
• PreCintegrated"soDware"tools,"with"connectors"to"a"
variety"of"asset"management"solu4ons"
Predic1ve'and'Advanced'Analy1cs'
An"enhanced"advanced"analy4cs"methodology,"tailored"to"
the"needs"of"the"predic4ve"asset/maintenance"space"
Why IBM for Predictive Asset Optimization?
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Predictive Asset Optimization - Advanced Analytics

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