Imagine an industrial plant in Mexico, where there have been a standstill and downtimes. A Mexican foreman and a colleague from tech support of the industrial group Kolektor in Idrija use virtual reality to look at what went wrong and fix it in real time. In another example, a business partner approaches you with an idea of a glass that should be able to handle a fall from the height of three meters. Alongside such a glass, you also have to create the entire technology for it and set up a factory that will be able to supply a global market. How to take these scenarios of the fourth industrial revolution and include new technologies, such as AI, robotics and sensors, virtual reality or predictive analytics? How to conceptually give meaning to them for smart factories of the future? We talked about all this with Valter Leban, board member of Kolektor, which is this year’s PODIM Challenge blue-chip partner for the field Materials & Manufacturing. With its corporate fund Kolektor Ventures, it is rapidly investing into startups, working in the fields of the industrial Internet of Things and solutions for Industry 4.0.
 

Mr. Leban, how are you preparing for the so-called fourth industrial revolution in a multinational corporation that is one of the leading global players in specialized industrial production? 

In the car industry, Kolektor is currently number one in commutators, magnetics, hybrid components … We are also at the top in electricity and energy, engineering and technological systems. When you are number one, two or three in the world, you quickly face the question of where and how to grow in the future. When you start looking for new programmes, it’s important to understand what will affect the future. Digitalization is a megatrend connected to all other megatrends, so we focused on searching for breakthrough solutions in the field of industrial digitalization, more exactly in the industrial Internet of Things and solutions for smart factories.
 
These are rather broad fields that allow for different interpretations … 

That’s true, even the Internet of Things is actually an entire universe and we asked ourselves what exactly we would do in it. I imagine digitalization as a transition that will help us move from the red ocean, where everything is bloody because of the sharp competitive fight, to the blue ocean. It’s logical for us to focus on fields where we have domain knowledge and competences, and develop new solutions there. But we can’t just buy digitalization. We were in such a situation approximately 30 years ago when we had to report the input and output quantities of material to the government accounting agency in the past political system, but there were no ERP systems on the market. We had to develop it ourselves. It’s similar with digitalization today – if we manage to solve our problems with it, we will be able to offer it to others. 
 
Which new technologies will be most important for you in this process? 

New technologies that revolutionize practically all areas of business, life and company functioning open new opportunities, but the key challenge is how to conceptually give meaning to them and transform them into successful business models. Kolektor sees its opportunity in building a platform for smart factories that would help existing companies in the transition to its digital equivalence. Of course we won’t start building from scratch, we will use what’s already present on the market, which includes technologies such as AI, robotics, sensors, advanced analytics, context and pattern recognition, pattern learning, virtual reality, 3D modelling and other technologies of the future.
 
If we put ourselves into the role of a startup developing VR for computer games … How can they now make a mental leap and start thinking about solutions that would be interesting for Kolektor? 

Such leaps, especially in collaboration with startups, can’t be learned. They have to be lived, built through experience, and this is actually true for every business. I think the problem lies in the asymmetry of information, because the person who comes up with the idea knows everything about it, but the problem occurs if they don’t know how to present the idea so that others could also imagine its usefulness. Additionally, startups need to be given a realistic problem. For example, if our buyer decides to set up the factory in Mexico due to a too high currency risk, we set it up there, educate the workers, guarantee the machines … If there are problems and delays in production, virtual reality can quickly and effectively help us, allowing a colleague in Idrija and worker in Mexico to look at it together and fix what went wrong.
 
Which other directions can we think in regarding the use of new technologies in an industrial environment? 

With help of the mentioned technologies we can more easily predict certain incidents in production, such as breakdown of machinery for example, decide or simulate business events, train employees at a distance, they can help with self-learning machines, a faster and more effective transmission and acquisition of data … So far, many technologies have developed most in computer gaming, creative and media industry … Now we wish to use them to solve concrete problems in the industry. Otherwise – all good products are created from a concrete need, enthusiasm and perseverance when developing a suitable solution.
 
So how do we turn to the concept of smart factories based on all that was said? What is the basis for us to start thinking about them? 

Existing developed models need to be pulled forward. The key novelty in the smart factory paradigm is that we aren’t only focusing on the product. For example, we have an idea for a glass that has to survive a fall from the height of three meters. The glass needs to be designed in such a way that it handles this force no matter the angle of the fall. In order to create such a glass, you also need to create the technology – that means machines, production line and a factory with the capacity to cover the global market. As far as I know, only Siemens is currently tackling things this way, by designing the product as well as the entire production that implements this product. And that is the basis for us to even start thinking about a smart factory.
 
How does Kolektor fit into these kinds of stories? 

Kolektor has, for example, domain knowledge of bulk production and montage in the car industry. We can already make a scenario of how the product will get to the customer. We get an order vertically and transform it into a factory. But this doesn’t have all the unknowns covered, we don’t know what will happen if, for example, there are extreme weather conditions, a flu epidemic or purchase of materials of unsuitable quality? In this area, we are trying to develop solutions that combine the existing and the new into a whole. That is Kolektor’s role, because we are well-aware of the pain that is created in these unwanted scenarios.
 
You also probably know them very well from your own experience? 

I was an operations manager for 30 years and faced such problems all the time. I wished to have someone who could inform me of the resulting problems immediately. When a truck driver told me on a Friday afternoon that only 70 percent of the order will go out today, I could do nothing else but call the buyer and repent. It quickly happens that you become a machine, constantly checking what’s going on. And we are leaning on these experiences now and wish to build them into a set of tools that include big data, cloud computing, machine learning … We wish to give meaning to these technologies and get them into practical solutions that will enable a systematic verification of processes. We are trying to build on artificial intelligence; that is the core. It is also important to realize that everything is data, the question is what we do with it.
 
Which technologies of the future personally excite you most? 

I am most fascinated by the reach of artificial intelligence. It used to be science fiction, but in the past four years it has made an incredible leap and can be found virtually everywhere. The next element is machine or deep learning based on neural networks, where everything that’s possible is truly incredible. But again – in all this, the context of how you succeed in giving meaning to the technology is important.
 
In your opinion and experience, what will factories look like in 20, 30 years?

Pilots of smart factories already exist in Siemens, Tesla, GE and Bosch, this is not the technology of today. Roles will change significantly. A lot of manual labour, as we know it today, will be gone. But there will be more mental work because people will lead robotic systems. I myself doubt that we could experience something from the Matrix, where everything is only visualized. Existing business will go on, but we will have to be stronger in development and create new products based on all these new technologies.
 
Finally, let us ask you what kind of startups you wish to collaborate with. What convinces you most in teams, what is the X factor you are looking for? 

Kolektor Ventures is a strategic investor, investing into promising ideas in its own value chain. We are not interested in teams that are only looking for money. We are looking for excited young experts and business talents who honestly believe in their idea and are also prepared to invest in it themselves at the beginning. Personally, I am attracted by energy. In a conversation, I always try to detect whether the team has actually been overtaken by the idea that they are trying to sell. Whether there is fire, that genuine excitement. That’s hard to describe in words, but you can feel sincerity and excitement. Or as a good saying goes: “I may forget what you said, I may forget what you did, but I will never forget how you made me feel.”
 
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To billion-dollar sales in the next 5 years!

The industrial group Kolektor is a multinational corporation based in Slovenia with a highly branched network of companies and subsidiaries in Europe, USA and Asia, working in the field of highly specialized industrial production. As one of the leading players in the global niches of components and systems for the car industry, electricity and energy, engineering, and technological systems, they wish to establish themselves as a leading global provider of solutions for smart factories in the era of the digital industrial revolution. They made a good 500 million EUR profit from sales with 3,200 employees in 2016. Kolektor, which doubled its sales in the past ten years, is planning on achieving the same feat in the next five years and thus surpass a billion euros in sales.

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Successful innovation for continued growth! 

Kolektor ensures its continued growth by intensely investing into research, development, and innovation, annually dedicating more than 3.5% of generated revenue to it. Alongside strategically collaborating and connecting with startups that develop industry 4.0 solutions, they are themselves developing projects for smart factories, currently mostly in the field of machine vision and learning. They are also actively collaborating with universities and institutes. In collaboration with the Jožef Stefan institute, they recently launched a smart factory project based mostly on using sensors, robotics, self-adaptation, machine learning, artificial intelligence, and predictive models.

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Get in touch with Kolektor Ventures representatives!

If you wish to meet the team that stands behind Kolektor’s startup activities and meet with them at this year’s PODIM Conference, get in contact with Mateja Lavrič (mateja.lavric@kolektor.com) and Andrej Čušin (andrej.cusin@kolektor.com) or write to them via the contact form on their website.