Podcast: Are manufacturers achieving real transformation, or are they just covering up existing inefficiencies?

Scott Achelpohl, Smart Industry’s managing editor, was joined for this episode by Francisco Almada Lobo, who is CEO and co-founder of Critical Manufacturing, which provides automation and manufacturing software for high-tech industries, such as semiconductor, electronics, medical devices and industrial equipment. The company has offices in Portugal, China, Germany, Malaysia, Mexico, and the U.S.

A major product of Critical Manufacturing’s is its MES, or Manufacturing Execution System, a software system designed to manage and optimize manufacturing processes and provide real-time visibility and control over production activities from raw materials to finished goods. And Francisco will talk a little today with us about how AI is incorporated into Critical Manufacturing’s offerings.

Francisco Lobo is recognized as a top strategic thought leader and evangelist on digital transformation, specifically Industry 4.0, manufacturing operations and the factories of the future.

He holds an MBA and an electrical engineering degree from the University of Porto. He started his career in a CIM R&D Institute and joined Siemens Semiconductor in 1997. Throughout his tenures at Siemens, Infineon and Qimonda, he specialized in optimizing complex, discrete manufacturing operations. In 2004, he led the first migration of an MES system in a running high-volume facility.

He also holds various positions within the smart manufacturing and venture capital industries, including as a member of the 200M Fund's Investment Committee, executive committee member of SEMI Smart Manufacturing Technology, member of the Forbes Technology Council and adviser to many Industry 4.0 startups. He co-founded Critical Manufacturing in 2009 and has been the company’s CEO since 2010.

He's also an author of discrete manufacturing articles, including:

“Industry Pi.0-How Mature is your Manufacturing Data Analytics Strategy?”
“Breaking Silos, Boosting Efficiency: The Transformative Power of MES Centers of Excellence”
“Digital twin: It’s a concept not an application”

Below is an excerpt from this podcast:

Scott Achelpohl: At Smart Industry, we cover Industry 4.0 a lot—saying that is an understatement. Digital transformation is one of our hallmark topics. I’ll mention that our (R)Evolutionizing Manufacturing video series with industry enthusiast Jeff Winter—who also happens to be an employee of Critical Manufacturing—is our primary platform for this. So, we’re happy to have Francisco’s voice today.

For our audience, the many companies we serve, digital transformation can sometimes feel like a culture shock, and the process can be quite involved and expensive. These companies want it done correctly so resources and personnel aren’t wasted. So, we want to advise them on how to get it right.

I’m hoping Francisco will help us answer the questions: Are manufacturers achieving real transformation, or are they simply layering more technology on top of existing inefficiencies? It's an important question we posed.

So Francisco, let me ask you a few questions to get our chat started. We spoke in our run-up to this program about how a lot of companies take a gradual, staged, or step-by-step approach to digital transformation.

What’s your advice on this? What should be the starting point? What are some middle steps, and what are the end goals? Where can companies get off track during this process?

Francisco Almada Lobo: Great question! So, let me start by saying something that is often overlooked: companies should begin by reviewing and streamlining their processes. One of the most expensive mistakes companies can make is to start by simply digitizing their current processes—what we call “paper on glass.”

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We’ve had customers who started an MES or AMES project and began by streamlining their processes. Interestingly, they immediately gained a significant portion of the project’s ROI even before the system was fully operational. So this is very important.

Then, the second aspect, which is more closely related to your question, is that there’s nothing wrong with the step-by-step approach to digitalization—quite the contrary, as long as there is a global vision of what you want to achieve, and the basic infrastructure is in place. The issue is that today, digitalization infrastructure isn’t just about computers or networks; it includes back-office systems that support step-by-step implementation.

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To use an analogy, it’s like building a house. You first need strong foundations, solid framing, and essential infrastructure like plumbing and electricity. Only once these elements are securely in place can you confidently add smart home technology, advanced automation, and sophisticated gadgets.

If you don’t, and you start with just the gadgets for a specific use case or pilot, you’ll end up in "pilot purgatory"—where solutions don’t scale, can’t evolve, or can’t adapt to ever-changing requirements. This is definitely not the way to go.

SA: Francisco, how does Critical Manufacturing recommend companies go about digital transformation, and how do its products specifically tie into this process?

FAL: Great point. In industrial operations, there’s always been talk about the “Holy Grail” of solutions: ERP for managing production orders, PLM systems for managing products, and MES for managing execution. How these three elements connect has been a longstanding challenge.

But today, with increasing levels of automation and more data coming from machines on the shop floor, there are added solutions—like equipment integration platforms or IoT platforms—that must be fully integrated with the MES. These are now part of the basic infrastructure I mentioned earlier.

We strongly believe that it’s the combination of these three backbones—equipment connectivity, data platforms, and MES—that creates the foundational technology for digital transformation and Industry 4.0.

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The idea is that when you have equipment connectivity and data, we can enable bidirectional communication to support interlocking scenarios or download programs for more sophisticated equipment. This connectivity, combined with the data platform, allows for large amounts of data to be ingested, analyzed, and used to generate insights that help optimize production.

When all these systems work together—efficiently and harmoniously—that’s when the magic happens. If systems are open and composable, you can plug in technologies like virtual reality, augmented reality, digital twins, bots, and advanced AI to enhance functionality.

At Critical Manufacturing, we call our solution an “MES on steroids,” as it goes beyond execution and includes advanced equipment connectivity and data platform elements.