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As supply chains change, so must the companies

How will the proliferation of 3D printers change manufacturing? What must manufacturers consider when building their Industrial Internet ecosystems? Is there even a need to build one strictly for the company in question? Mikko Aro, Head of Industrial Internet Business at Solita, believes that the proper path in building the right solutions for companies can be found through collaboration and a bit of encouragement for all the parties involved.

Supply chains are changing due to the abundance of technology and the ability to localize production from large production plants to small workshops. According to Aro, the industrial sector might follow the example set in the consumer markets, where a company takes hold of one part of the manufacturers’ traditional business models by building a new digital service platform.

“We might see a shift, where the connection of suppliers and buyers in these settings becomes centralized. Data could be collected on a production plant’s excess capacity, for example. This data can then be provided for other companies in the market, thus reducing the need for middlemen in the transactions”, Aro says.

This development in the market place could also lead to a situation, where various stages in the production process disappear completely.

“Traditionally products have been produced in large facilities, where they have been both fabricated and assembled. Through the rapid developments in 3D printing technology, the companies’ core competencies might be in knowing how certain materials are produced. This will change the companies’ roles in supply chains.”

Companies could offer this knowledge as a digital asset. In the best-case scenario, the customers would pay for a service instead.

“What this could mean, for example, is offering certain schematics for various products, and then mixing ingredients, such as metal alloys for the customers. They can then print the final product themselves as they see fit”, Aro says.

The choice between building ecosystems and becoming a part of one

Aro has consulted several clients in taking the first steps towards the Industrial Internet. According to him, there are several topics to be tackled before the companies can start thinking about the implementation of these intelligent systems.

The challenge for the companies is that the value of the solution is not necessarily seen in the beginning, but comes evident through experiments, measurements and learning. The companies might even need to offer incentives for the partners involved in their operations, so that they will too adopt this new way of thinking. This is especially true, when a company wants to lure other players in the ecosystem to start experimenting with solutions.

“Many companies think that the right decision is to build a solution, into which others in their business process will join. But the problem is that if everyone builds their own ecosystems, everyone also remains isolated.”

The companies must also consider if they want to build their own ecosystem for services, or if they should adapt their products to be compliant with other systems. For some, the best model might be to “join” multiple different ecosystems, especially if their own area of expertise is narrow.

“Many companies think that the right decision is to build a solution, into which others in their business process will join. But the problem is that if everyone builds their own ecosystems, everyone also remains isolated. Therefore, companies should first think about their key competencies in producing value in the future”, Aro says.

Another thing worth considering, according to Aro, is the variety of questions regarding how this business intelligence is achieved.

“Who are to be included? What will their roles be? What will the user experience be like? How will each of the partners create and gather value from the ecosystem? A lot of these things are often not taken into sufficient consideration before organizations start to build the platform for the ecosystem.”

Nanomaterials connect production chain components and reduce downtime

On top of the existing sensor technology and the tools for analyzing big data, the production facilities are also facing changes due to other technological advances. Among the emergent technologies are, for example, the different types of wearables and advanced optical material scanners.

For Aro, a good example of one of the ways through which performance can be boosted is utilizing nanomaterials.

“Combining nanomaterials and electronics to various products and thus improving machine-to-machine communication will make work more efficient. When each part of the production process can communicate with all the other parts, the downtime and waiting in processes will decrease”.

Due to the proliferation of cheap sensors and components, everything in the factories will become connected. When they are adapted into the system, the position or condition of equipment, temperature, or any of the desired values can be monitored, and this provides large opportunities in the whole logistical chain.

One of the recently discussed advancements in technology is augmented reality. Although Aro believes it has a place in the consumer markets, he remains a bit skeptical of its utilization in an industrial environment.

“I haven’t yet encountered a proper case with quantitative business benefits in which augmented reality is utilized in an industrial context. Manufacturers weigh costs to benefits very strictly in their operations. The value in the new technologies is found more in the way we change our thinking about production processes and our roles in them”.

According to Aro, getting started with Industrial Internet ecosystems can very well be fast and experimental, but this requires a lot of will, co-operation and stamina. Both internal discussions and brainwork, as well as collaborating with other companies in the production process are required for the ecosystems to flourish.

“Typically the best way to start is solving one selected use case, nothing more. That way you can control the costs and keep all the players focused on the common goal. If you start too big, the focus will disappear”.

Mikko Aro is the Head of Industrial Internet Business at Solita.

Image credit: RomboStudio / Shutterstock.com

Interview w/ Mikko Aro

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Managing change in the connected workplace

The move to the digital world has allowed us to create new value inside the workplace, but adopting the IoT on a wider scale poses a few challenges. Alexander Reay, Chief Digital Officer at Sodash and President of the Nordic IT Association, explores the role an organization’s structure and culture play in maximizing IoT’s potential for businesses. He also talks about the leadership issues that need to be addressed during this transformation.

The Internet of Things (IoT) is very transformative and is reshaping business models. This disruption entails a huge amount of internal change that needs to be addressed in an organization. Alexander Reay, Chief Digital Officer at Sodash and President of the Nordic IT Association, believes that the issue is connected to neither technology nor technology maturity. “It’s a leadership one. It’s about understanding the digital economy – or if you prefer, the platform economy – we’re moving into.”

This transformation through technology, he adds, is a cultural matter. “It’s the impact of how the business and the people in it work. When you’re moving systems into the cloud, the major issue is to actually lead or inspire people who are very much used to the traditional way of doing things to adopt this new method.”

Since digital transformation is something that effects every single part of a business, a leader can’t be expected to do this on his or her own and needs to invest into change agents.

Culture of change

“An organization needs to have a culture of proactive change and the individual spearheading it needs to have a completely systematic and holistic view,” continues Reay. “Leadership in larger enterprises, however, isn’t as agile and usually can’t cope with quick, radical change. By far, that is the biggest barrier in adopting new and better ways of doing things along with rigid old hat organizational structures and governance”

As companies are recast as digital enterprises, and organizations continue to adapt to the IoT and the new demands of managing the physical and the digital, this convergence mandates not only new skills but also different ways of working.

The role of chief digital officer (CDO) involves looking for business opportunities that have been enabled by the digital revolution. It also entails focusing on customers and how their needs might change because of technological developments. It is quite different to that of the chief information officer, whose job — though similarly complex — is more about following procedures and keeping a company’s IT systems running. By contrast, the digital role is to head the transformation.

“This is really a leadership understanding of the technology – how to use it, how to drive new value as result – not the technology itself. So forget thinking of IoT and digitalization as just new technologies.”

As Reay stresses, “This is really a leadership understanding of the technology – how to use it, how to drive new value as result – not the technology itself. So forget thinking of IoT and digitalization as just new technologies. For those companies that get it, digital represents an entirely new way of doing business, moving from using technology as a catalyst for efficiency or effectiveness into driving new value or even changes to entire business models, but most important, they are in the process of changing their corporate culture”.

Difference between network and community

To begin the work of digital delivery, the companies recruiting chief digital officers must break down the walls between the independent vertical structures in their organizations. Reay notes that since we’re used to really siloed innovation, “we’re just about starting to realize the potential of open innovation techniques. What we’re talking about is a completely seamless network.”

It’s one thing to have the infrastructure to create a network and fluidity – those are the technical aspects, according to Reay.

“The real value lies in using that network to create and foster a community or to look at it another way expedite a digital culture, and for that people need to be empowered. Being connected to somebody doesn’t mean that that individual is empowered to be able to add value or even inspired to do so, and that’s the difference between a network and a community, it’s about adoption rate – a network informs, where as a community acts. In a community, people are actively contributing and they’re empowered to do so. That’s why change right now is such a headache for large businesses: they are simply too siloed, lacking the ability to adopt new ways of working quickly enough.”

Security and privacy issues

Another barrier, not just in terms of operability or interoperability, involves security issues. Reay brings up privacy, which to him is an area that is very disruptive in itself. “We’ve got the EU coming out with changes and directives very frequently and cyber-attacks increasing in frequency. The move into IoT requires a completely new set of skills that are needed rather urgently, if you fulfill some of the data regulations,” he adds.

These directives, as well as the cyber security issues that result from having these systems over the internet, have yet to be fully understood because IoT is such a new area.

“Since the EU is putting in these directives, when these new things emerge, they do so within the context of a rigid government system that’s been used for eternity. The key in trying to find new ways of mitigating some of these risks is understanding what leadership roles are really needed.”

Reay observes that large organizations are now rolling out compliance managers across their business units. “This is simply not going to do,” he counters. “There needs to be a Chief Privacy Officer, someone who can run the show at a very single level inside the organization on a strategic level, we are not just talking about technology here. These individuals should be rising through the ranks from a legal perspective, and with heavy sanctions and penalties for privacy breaches, this role should under no circumstances be left to the CISO, CSO, CIO, or CDO’s responsibility”.

Collaboration between machine and human

With the usage or the ability to analyze such massive volumes of data, machine learning starts to play a role. Humans can’t analyze that amount of data, and to Reay, what’s interesting is the new value creation made possible by massive volumes of data collected from connected products and devices. This goes beyond efficiency, smart sensors or the ability to use the IoT to create more efficient productive manufacturing lines.

“For example, artificial intelligence (AI) could be used to process that data to provide insight, resulting in better informed rapid decision making. Doing so could organize a lot of these areas, from efficiency and uptime to the utilization of assets. The maintenance and management aspects are, right now, the areas where we’re going to see machine learning really utilized.”

Ultimately, Reay believes that everything comes down to a human-centric approach.

“What really stands out with the use of AI is that it makes us essentially more human. It’s the same as with digital transformations: it’s not the data we’re interested in. It’s how the data influences our decisions. The collaboration between machine and human is where the real innovations are going to start. The utilization of the interface between AI and humans is going to be where we will see how it is utilized to its full potential.”

Again, when we roll out the IoT, machine learning can be used to improve efficiency and uptime. But, as Reay concludes, “the real utilization is understanding how can we use machine learning to create a positive impact for humanity, the workplace and our customers.”

Alexander Reay works as a Chief Digital Officer at Sodash and is President of the Nordic IT Association

Image credit: Wichy / Shutterstock.com

Interview W/ Alexander Reay

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New insights from the Industry of Things World Survey Report 2016

From January to March 2016, the Industry of Things World team gathered the opinions of over 1,000 cross-industry IoT & Industry 4.0 managers to gain insight into investments and opportunities, and identify trends. Maria Relaki, Portfolio Director at we.CONECT Global Leaders, the organizer of Industry of Things World conference, talks about the survey results.

An online survey by Industry of Things World, conducted from January to March 2016, gathered responses from over 1,200 Internet of Things (IoT) and Industry 4.0 managers from industries such as information and communication technologies, automotive and transportation, and energy and power systems, among others. Its aim was to measure the actual impact of IoT on businesses today, gain insight into investment strategies, and determine industry trends.

“Over 67% of the respondents have IoT technologies in place or are planning to implement them in the next 12 months,” says Maria Relaki, Portfolio Director at we.CONECT Global Leaders. Relaki believes that a shift in thinking about these technologies is definitely taking place at the moment. “Companies have started to realize that IoT is something they need to do, otherwise they will be left behind by the competition.”

Shift in thinking

These numbers reveal a marked difference. Last year, the responses coming from Europe suggested conservative thinking. This time, 86% of those surveyed say IoT will offer new opportunities for their enterprises. “A lot of those companies were still waiting to see more implementation and more examples in industries that were relevant to themselves before they started taking steps in that direction,” she explains.

Relaki notes that these leading international groups have started to understand that IoT is not something that they will do on their own. “Collaboration is the key to getting IoT implemented in companies. This is what got that shift in thinking going,” she says. “It’s pretty difficult to agree to collaborate with a company you have considered your competitor up until recently. But realizing that it’s an ecosystem that needs to be built is the way forward.”

Furthermore, the most important value drivers for IoT technologies in an industrial setting are productivity increase, maintenance cost reduction, and the reduction of total machine downtime. Relaki says these findings make absolute sense. “Moving from hype to reality, we can now see that we’ve started getting away from answers like ‘My business model will change’ or ‘We will become a service-led company rather than a product-led company’. These groups have begun to realize that the technologies can actually help them connect to these drivers.”

“It’s pretty difficult to agree to collaborate with a company you have considered your competitor up until recently. But realizing that it’s an ecosystem that needs to be built is the way forward.”

Challenges and opportunities

In terms of implementation challenges, the three biggest issues for those who participated in the study are the impact on their business model (48%), how to capitalize on IoT (47%) and the lack of standardization (39%). “These factors are what keep the other 30% from saying ‘Yes, let’s go for it’ and implementing IoT technologies,” continues Relaki.

Gaining competitive advantage (66%), new revenue channels (54%) and operational efficiency (45%), meanwhile, are the three greatest implementation opportunities.

The results of the latest Industry of Things World Survey Report also shed light on the industries that have seen significant improvement given the aforementioned challenges.  “ICT (information and communication technology) is definitely now realizing that they need to play a huge role in this,” says Relaki. The manufacturing, mechanical engineering and chemical industries, which are viewed as traditional, are also looking into IoT because they are realizing its potential.

Buzzwords and trends

According to Relaki, one of the most significant buzzwords is security. “In this context, it can’t be an afterthought anymore. The moment you start connecting things with each other, security definitely needs to be part of the design.”

Another trend she has noted involves machine learning, robotics and autonomous systems. Relaki observes that more and more companies are coming up with ways to use technologies that are not necessarily connected to manufacturing and incorporate the knowledge built into those areas to make the tools of their respective industries smarter.

A third phenomenon concerns the impact of startup culture. “We hear from an increasing number of startups being incorporated into industry giants. You end up having a cool, innovative team of four to five people with great ideas working with groups such as Trumpf or Hilti on how to manage their innovations and how to harness the power that these big companies have but in an innovative, startup way,” she says.

Industry of Things World 2016

Organized by we.CONECT Global Leaders, Industry of Things World 2016 is a strategic conference that brings together stakeholders from a variety of industries, all with the goal of defining the future of the industrial IoT. Scheduled to take place in Berlin from September 19 to 20, 2016, this year’s two-day program is set to feature the latest strategies on how companies can monetize and capitalize on the industrial IoT as well as real-life case studies.

Among the conference’s 80-plus keynote speakers are Prof. Wolfgang Wahlster, Director & CEO, German Research Center for Artificial Intelligence (DFKI) and one of the inventors of the term Industrie 4.0; Frithjof Netzer, Senior Vice President, BASF 4.0; Dr Rodney Brooks, Founder, Chairman & CTO, Rethink Robotics; Colin I’Anson, HPE Fellow, Hewlett Packard Enterprise; and Rolf Riemenschneider, Head of Sector IoT, European Commission, among others.

To find out more about the agenda and speakers of Industry of Things World 2016, visit www.industryofthingsworld.com/en/ .

Download the full survey report here

Maria Relaki works as Portfolio Director at we.CONECT Global Leaders and is responsible for the Industry of Things World global event series.

Image credit: Industry of Things World

Interview w/ Maria Relaki

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Future manufacturing moves from global to hyperlocal

Economies of scale are diminishing and the threshold for manufacturing products are getting lower. In the future we might end up with small production facilities producing limited batches of products for highly specified markets. These are some of the thoughts of Risto Linturi, Executive Catalyst and Chairman of the Board at Sovelto, who believes that the ways in which we manufacture will change drastically in the future.

How to come up with new ideas on serving the customer better and developing your business? For Risto Linturi it is of utmost importance to be creative. It is also key to find the right metrics to help you focus on the right things. In the 1990’s Linturi lead a company specializing in IT-coaching where this approach was implemented in practice.

“Back then we felt we didn’t need a process-based quality handbook on how the business should be run. Instead, we based our metrics on customer satisfaction. Through applying a satisfaction guarantee, the instructors became increasingly motivated. This was because the end result of their hard work depended ultimately on the customer’s experience and not on superimposed quality indicators”, Linturi says.

This, Linturi says, is a prime example of gaining value through seeing things from a different perspective.

Automotive industry’s leap towards services

According to Linturi, one of the industries, which is facing the need for these kinds of perspective shifts is the automotive industry. Uber announced in 2016 that they were planning on purchasing a total of 100.000 S-Class cars from the automotive company Mercedes-Benz in 2020.

“When Uber is ordering cars from a manufacturer in the range of hundreds of thousands of cars, the market situation for the manufacturer changes radically”, Linturi says. “The total number of clients the manufacturers have might decrease radically, and it may end up being just a couple in the end. This is a very challenging market position to be in.”

“In the context of car manufacturers, instead of building their business solely around their traditional product, they must now begin viewing themselves as companies that offer transportation services.”

Some companies have decided to move more into the direction of cooperation with the companies disrupting the traditional manufacturing model. Instead of jeopardizing their business, the manufacturer must see the disruptors as an opportunity to find new ways to create value. According to Linturi, companies must change the way they see themselves. In the context of car manufacturers, instead of building their business solely around their traditional product, they must now begin viewing themselves as companies that offer transportation services.

“This has a notable effect on how the industry works. On top of the vehicle manufacturing, the companies now have to think about insurance policies, for example”, Linturi says.

3D printing allows customization for customers

The change in the types of services companies offer can also be seen in how they are starting to utilize emerging technologies, such as 3D printing. Manufacturers can simplify their actual deliverables to include just the bare necessities, such as electronics, motors and maintenance services.

“The rest is up to the customer. The companies can deliver kits, which also include a set of instructions for customizing the product to the parameters that the customer sees fit”, Linturi says.

Linturi mentions that car bodies are a good example of the things that anyone can print for themselves in the future. The more the customers are left with the final customization of products, the more the manufacturing ends up moving to local manufacturing sites. The global material flows will also begin to consist increasingly of raw materials instead of semi-manufactured products.

“What it also means is that these small manufacturing plants can begin making small batches of custom-made products for highly specified markets instead of utilizing huge production plants, where millions of identical products are manufactured and then shipped all over the world.”

Scanners and improved ways to operate

The lowered costs and the mobility of the solutions present manufacturers with new sources of revenue and brand new opportunities for outside-of-the-box thinking. But to be able to reap the benefits from them, you have to be able to see things differently. Linturi brings up one more example of upcoming technology, which has the potential to change the way we see things – material scanners.

“If you were to clean a storage room in the days before these tools, you’d have a certain set of procedures that you would follow, after which the room would be deemed clean. But in the future with these new scanners, you’re able to see exactly where the room is dirty, clean it there and thus save time”, Linturi says.

The other benefit of utilizing these scanners is that the number of sensors needed decreases.

“When we can measure the straightness of a pipeline optically, there’s no need to place sensors along the whole length of the pipe. Eventually almost all of the previously chemically or mechanically performed quality control can be done optically.”

According to Linturi, even with the data we gather with these devices and the opportunities they give us to improve efficiency, the change is still a slow process, and it will take time until we start to fully realize the effects. But even if the change takes time, it will nonetheless be game changing.

“Competition becomes easier, potentially landing us in a situation where everything is manufactured on the spot. Through the advances in manufacturing, the smaller units needed for fabrication and the dropping prices the threshold for people to become manufacturers themselves will lower, making the world a more equal place.”

Risto Linturi is a Finnish futurologist, who works as Executive Catalyst and Chairman of the Board at Sovelto.

Image credit: Nataliya Hora/Shutterstock.com

Interview w/ Risto Linturi

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(Updated: post chat) #IINChat: Edging Industrial Innovation

Thanks to all who participated in our #IINChat with a topic ‘’Edging Industrial Innovation’’ held on the 9th September, 2016. The insightful discussion lasted approximately one hour and provided some notable interesting ideas and clarifications about the use and potential of edge computing and edge networks.

The selected questions were:

  • What are the core benefits of Network Edge for industrial companies?
  • Are there barriers to adapting Network Edge for industrial companies?
  • For those who want to build on already-implemented ideas, what are the best examples of Network Edge that can be applied to heavy industry?
  • What are the biggest problems Network Edge solves in the factory?
  • Which industries are going to be the fastest to implement Network Edge and why?

Notable tweets/contributions to the chat:

Question 1: What are the core benefits of Network Edge for industrial companies?

Question 2: Are there barriers to adapting Network Edge for industrial companies?

Question 4: What are the biggest problems Network Edge solves in the factory?

Question 5: Which industries are going to be the fastest to implement Network Edge and why?

Original Post

The latest #IINChat has been announced for 9 September, 2016 15:00 EET. We wanted to open up the discussion on Network Edge for industry, a subject which has been trending recently in online conversations. Because of the popularity and active participation during the last chat, we have extended the discussion to one hour this time. Join us and submit your discussion ideas using #IINChat or as a comment to this post.

Date: 9 September, 2016 15:00 (EET) – 16:00

Helsinki (Finland)                                                  15:00:00 EEST UTC+3 hours
London (United Kingdom – England)               13:00:00 BST  UTC+1 hour
New York (USA – New York)                               08:00:00 EDT  UTC-4 hours
Shanghai (China – Shanghai Municipality)     20:00:00 CST  UTC+8 hours
Corresponding UTC (GMT)                                 12:00:00

Topic: Edging Industrial Innovation #IINChat.

Example Questions:

  • What are the core benefits of Network Edge for industrial companies?
  • Are there barriers to adapting Network Edge for industrial companies?
  • For those who want to build on already-implemented ideas, what are the best examples of Network Edge that can be applied to heavy industry?
  • What are the biggest problems Network Edge solves in the factory?
  • Which industries are going to be the fastest to implement Network Edge and why?

About #IINChat

Industrial Internet Now’s #IINChat is focused on creating public discussion around Industrial Internet topics for heavy industry and material handling. As always, we are looking for experts and interested specialists to participate in the chat and share knowledge on the possibilities and challenges facing industries, including but not limited to: steel, shipping & ports, pulp & paper, manufacturing, waste-to-energy and automotive. We are also looking for questions and comments from the people who live with the realities of the new, emerging world of the Industrial Internet. As a public chat held on Twitter, anyone is invited to share their thoughts. Welcome!

At the end of the chat session, respondents can see a summary of conversations as an updated version of this post, and can continue the conversation in the comments section. Please also feel free to suggest topics for the next #IINChat.

Here you can find out how the previous #IINChat session went

Industrial Internet Now

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