Transmashholding’s Breakthrough in Blockchain,Digital Locomotives

Next year, Transmashholding JSC will receive real-time information on the status of each of the newly produced locomotives. What difficulties did the company face on the path to a digital future, says its CEO ,Kirill Lipa.

Transmashholding is considered one of the pioneers of digitalization in Russian engineering. The projects “Digital Depot”, “Digital Plant”, “Digital Locomotive” became a breakthrough in the industry. How exactly did you come to the necessity of introducing these technologies, which served as the impetus – external or internal factors?

Transmashholding JSC: Both external and internal. The root cause is, of course, the global trend towards the transition to digital management methods. We see their implementation in a large number of world companies with which we have the opportunity to communicate, collaborate and implement joint projects. And since we are actively working not only in Russia, but also in other countries of the world, we are simply obliged to have all possible competitive advantages. We participate in competitions in Europe, Latin America, North Africa, South Africa, and the competition is very fierce.

So professional customers?

Transmashholding JSC: Customers are very professional. If they lack their own competencies, they attract the world’s leading technology partners, consultants who pose professional and deep questions to us. And the answers to these questions should correspond to a given level. The main condition for success is the possession of the most modern technologies, primarily digital.

– How do you take into account the experience of your competitors?

Transmashholding JSC: We, of course, investigated the whole world experience, watched how GE, Alstom, Siemens approached this issue, actively communicated with consulting companies. There were some advantages in our situation: we had the opportunity to avoid the mistakes of competitors who had already implemented local software products: SAB, IRP, PLM, and PDM systems, 3D design, additive technologies, etc. But, on the other hand, there is no ready-made comprehensive digital technology with lessons, conclusions, results in the world today. It is just being developed. And in this sense, we have a chance to become leaders in creating technology, or, as it is now fashionable to say, an ecosystem that will work throughout the entire product life cycle.

– What was the internal factor in the development of digital technology?

Transmashholding JSC: One specific case, which made us think about the need to switch to the “digit”. In 2012, TMX-Service became a shareholder of the Zheldorremmash company and for the first time encountered the difficulty of organizing repairs at factories. Previously, we only dealt with new locomotives produced at our plants. We found that the actual condition of the locomotive that gets into repair cannot be predicted until it is completely disassembled. Actual operations on each locomotive, even of one series, even of one year of manufacture, can be very different.

But are there regulatory documents?

Transmashholding JSC: All standards are calculated on average, per 100 locomotives. In fact, the wear of components and assemblies is different. For this reason, the downtime of each machine averaged almost a month. To change the situation, we developed the locomotion project, which was implemented at two sites at once – the Ulan-Ude locomotive-car-repair plant and at the Bratsk depot. The task was simple – to increase the number of locomotives that are being repaired at the plant, and to reduce downtime in the depot, respectively. We started working on this project in 2012 and successfully implemented it: if earlier the plant repaired 20–25 units monthly, then today it is stable over 80.

– With the same capacities?

Transmashholding JSC: Absolutely. We did not build a new plant, did not radically increase the number, we simply reorganized the whole process. But then we did it in many ways manually: we analyzed the condition of the locomotive, planned repairs, and assembled linear equipment for this repair plan. All these measures allowed us to reduce the downtime for repairs on average from 27 to 7-14 days. That is, from the moment a locomotive enters the plant to its exit in a state ready for operation, one or two weeks pass. And at this moment we thought about what opportunities associated with the development of production, and with a reduction in costs, and with an increase in efficiency, would open before us with the introduction of digital technologies.

– What was the solution?

Transmashholding JSC: We decided to start the construction of a “digital factory”.

– On the basis of Zheldorremmash?

Transmashholding JSC: No, on the basis of Transmashholding, more precisely – Novocherkassk Electric Locomotive Plant. As part of the Digital Factory project, more than 40 activities are being implemented aimed at obtaining digital evidence from virtually all segments of the enterprise. Further, these data go to a single information center, where the entire technological process is automatically calculated, including production, shift tasks, equipment load monitoring, preventive maintenance of this equipment, organization of inter-factory cooperation, logistics, labor resources control, that is, all that concerns the organization of production. In fact, a digital double of our factory is being created, with which we can, if necessary, flexibly reconfigure the production process in a very short time.

– How will it practically work?

Transmashholding JSC: Take, for example, the real situation that happens with us every year. Information on the Russian Railways investment program for the next year is brought to us in July. Usually this document looks like a breakdown by the number of models and modifications that the company plans to purchase next year.

– Do these figures change every year or remain unchanged?

Transmashholding JSC: Usually there is always volatility, that is, every year we get a new figure, with which our planners begin to work in August: economists, financiers, technologists. The information collected is uploaded to the head office – Transmashholding – around September. Having received the entire array of data, we begin to prepare a draft business plan, which appears around October. At this stage, more or less substantive negotiations begin with suppliers, the customer and adjustments are made.

– What kind of?

Transmashholding JSC: For example, the customer understands that it will be more profitable for him, it will be economically justified to purchase locomotives with axial traction control. This is the same “Ermak”, but with additional features and a longer production time. But I want to emphasize that the adjustments do not necessarily depend on the customer, this may depend on the external environment, suppliers, and ourselves.

Thus, from the moment of obtaining primary information about the investment plans of Russian Railways until the signing of the contract, usually takes about six months. Thanks to the introduction of the “digital plant”, all these manipulations can be carried out electronically, in the mode of software calculation in a very short time. What we used to take two months, we can do in a week. And if you connect suppliers to the system, it will recount the entire business plan within one to two weeks. Once a base becomes digital, its possibilities become endless. All this, of course, lays the foundation for an incredible technological breakthrough. Moreover, we are talking about an industry breakthrough, not only about the local digitalization of Transmashholding.

– At what stage of the Digital Factory project are you currently in?

Transmashholding JSC: We walked about half the way with our pilot project – Novocherkassk Electric Locomotive Plant. Digitalization projects are also being implemented at the Tver Carriage Building and Demikhovsky Engineering Works.

– Is it planned to extend digitalization projects to other plants?

Transmashholding JSC: Yes, but in their case there will be a scaling up of the solutions tested and proven to be effective, and it will be easier with them. When implementing a pilot project, we experiment a lot. However, as soon as we understood which systems interact with each other, with what speed the implementation is proceeding, as soon as we are convinced that the information comes without obstacles and distortions, as soon as we trained our employees, everything became simpler.

I will give a simple example. We had to install sensors on the nodes, which indicate their operational state. When we started the project in February last year, the rate of installation of sensors on the equipment was extremely low. We cannot just “turn off” the plant and start equipping it with sensors. I have to work in an existing enterprise. Accordingly, first you need to understand how to approach the equipment, how to equip it with measuring equipment, you need to install it, test it, etc. This is all experience and time. But after you have filled the cones in one plant, you do not need to fill them in the second and subsequent ones.

Do you trust me, or Blockchain Opportunities

What is the “Trusted Environment” project and at what stage of implementation is it now?

Transmashholding JSC: As I have already said, at the start of the digital transformation program, the level of automation and informatization in our enterprises had clear potential for growth. First of all, it concerned the creation, updating and analysis of databases. Today we already have current systems for collecting and processing data, we even have recommendation systems for making decisions. But we believe that there must be much more evidence to work effectively. And in this sense, we have high hopes for the Trust Environment joint project with Russian Railways.

This project and its roadmap were approved last year. For us, the “Trusted Environment” is an opportunity to get the missing information about the condition of nodes and assemblies on the equipment in use: not normative, defined by GOSTs, but obtained as a result of actual operation. We already have a clear understanding that they are significantly different from everything that was previously used. And all this information should be taken into account in the process of designing and developing documentation.

– What is the role of Russian Railways in this process?

Transmashholding JSC: Russian Railways, as an integrator of the entire transportation process, is certainly interested in introducing digital technologies. The information obtained in digital form gives great prospects and opportunities for improving this process.

– Why is the project called “Trusted Environment”?

Transmashholding JSC: First of all, because this environment completely excludes human intervention. The data come from different sources: from our side – from the design and production process, from the railways – from the operation process. All information comes in blockchain mode, transaction block, that is, no one touches it in the process of receiving, transmitting and analyzing. All participants in the process are included in it later when they start working with the analyzed data.

– Do you have any other projects that use blockchain mode?

Transmashholding JSC: Together with Russian Railways, we are implementing another project – smart contract (smart contract). Again, in blockchain mode, we want to pack all our commercial, financial and production relationships with Russian Railways into a single contract that will take into account the actual state of things: assess the condition of the locomotive fleet, recalculate the cost of our services, and, if necessary, keep fines. This will allow us, for example, not to prepare and not send monthly invoices, everything will be done by the machine.

We want to see what happens from this, because with our volumes of production, services and, therefore, with financial volumes, this will be a flagship story. Success will be of great importance not only for the settlement process, but also for business planning of both Russian Railways and our holding.

– Can the experience of this implementation be transferred to other industries? How advanced is it?

Transmashholding JSC: Certainly advanced. This is nowhere to be found. A huge number of companies that work with large customers suffer from excessive workflow. The larger the corporation with which you deal, the more it is regulated for objective reasons, the longer you have to wait for revenue. This means that you have cash gaps that require additional funding. The financial costs associated with this can reach up to a quarter of the turnover of supplier companies! And you also have to support work in progress, keep inventory in warehouses, and pay advances to your suppliers. The introduction of such smart contracts will free up at least half of the working capital. If we with Russian Railways manage to successfully implement it, this experience can be scaled throughout the country. This will be a national project.

Hype as an idea of ​​Transmashholding

– Could rampant digitalization lead to the fact that many people find themselves unclaimed in the labor market?

Transmashholding JSC: I think that the end of the world due to the transition to digital technological structures and processes will not come. In my opinion, soon we will see the integration of human work, machines and intelligent systems, which will open up the most incredible options that we don’t even know about today. There will be new professions, people with unique opportunities, new opportunities for employees to use their abilities. With the development of “numbers” it is easier to come up with new ideas and implement them. Just imagine that some student came up with an idea, for example, on modeling a digital plant. Using a cloud solution, he can send his idea, for example, to the general director of Transmashholding.

– But will there be time for the CEO of Transmashholding to get acquainted with this idea?

Transmashholding JSC: He will also have software installed on his computer, a filter that will give a signal at the end of the working day: but this is an idea that deserves attention!

– But while there is no such filter, how, for example, Transmashholding employees can realize their creative potential?

Transmashholding JSC: Just two weeks ago, we completed the first four-month corporate training program “Transmashholding Digital Transformation Leaders”, organized by 2050-Integrator with the support of Skolkovo LNA. The program participants were about 60 managers of the holding. People of different ages were invited to the training – from 28 to 55 years old, most came from the regions – Rostov, Bryansk, Tver regions, Moscow region. And now I can say that this experience was successful.

– What did your employees learn?

Transmashholding JSC: In addition to diving into the world of digital transformation, getting acquainted with international experience, they got the opportunity to participate in the development of projects for the holding. All participants were divided into six groups according to their chosen areas, including “Digital Plant”, “Digital Locomotive”, etc. Each of the groups proposed rationalization ideas, practical solutions of varying degrees of sophistication. Now we are discussing which of these ideas can be implemented as part of the holding’s development strategy. But even outside the framework of this program, we want to attract young people, we want to create a reputation of Transmashholding as a company where it is fashionable, promising and, I would even say, people interested in digital technologies work hyipo.

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