Top 10 ways integration will transform manufacturing in 2017
“Enabling a faster pace of innovation in manufacturing starts by using systems and process integration as a growth catalyst to profitably grow,” writes Louis Columbus, Vice President of Marketing at iBASEt.
In Columbus’ article for Enterprise Irregulars, he highlights the importance of real-time data for both manufacturers and customers. He also mentions how the integration of traditional IT and manufacturing systems are vital in order for the potential advantages of Industry 4.0 to be fully realized.
“The key to revitalizing existing production centers and getting them started on the journey to becoming smart factories depends on the real-time integration of IT and manufacturing systems,” Columbus continues. Manufacturers should also expect the importance of IoT generated sensor data, combined with advanced analytics, to keeping increasing in 2017.
Read more about how integration powers manufacturing innovation at:
Mass customization in manufacturing – enabling customer-centric value creation
Traditionally, manufacturing has been defined by supply chains geared towards maintaining production costs as low as possible, with ultimate emphasis placed on output and distribution. These supply chains have largely been both enabled and limited by the hardware systems at their core. As companies are beginning to introduce data-driven, software enabled supply chains, manufacturing will increase in efficiency and mass customization will follow suit. In terms of distribution, platforms and apps are becoming the preferred medium and should be grabbing the attention of material handling industry as well.
Frank Piller, Professor of Management and Scholar of Mass Customization & Open Innovation, shares his thoughts on the intersection of the Industrial Internet and mass customization.
“Manufacturing will really begin to drive business models,” says Piller, who has been leading the Technology and Innovation Management Group at RWTH Aachen University for a decade. Rather than regarding the Industrial Internet solely as an enabler of new business models, Piller sees the technological developments made possible by IIN and IIoT as “drivers of business models.” According to Piller, mass customization plays a pivotal role making this paradigm shift that manufacturing industries are already experiencing, more customer-centric.
“I see the question of manufacturing and the Industrial Internet being defined by two stems of debate; enabling operational excellence on a larger scale on one hand, and using Industrial Internet technologies to drive new business models on the other.” What mass customization makes possible via these two defining principals, is for manufacturing, supply chains and the business model inherent to them, to become more customer oriented. “The ultimate goal of mass customization is for manufacturers not only to become customer-centric, but more so customer-driven, to exploit the heterogeneity of customer demand,” says Piller.
According to Piller, manufacturers will often see the high variety of demand as a challenge, a cost driver and ultimately as a hindrance to maintaining a truly customer-centric manufacturing process. However, what mass customization does, notes Piller, is turns this assumption on its head.
“We should instead see high variety of demand as a profit driver, and do so by allowing for the input of each individual customer at the beginning of the value and supply chains. This doesn’t entail reinventing engineering to order process or craft customization, but doing this with an industrial efficiency that the latest Industrial Internet technologies make possible.”
For material handling, the integration of automated and semi-automated robots into production lines is a big driver for coping with higher degrees of variety, says Piller, who also sees mass customization as something already being utilized in material handling equipment. “A lot of material handling equipment is already engineered to order, meaning it’s highly modular and therefore can fit into existing plant layouts, as well as be integrated into planning and production. Deploying this in larger volumes is the next step.”
“A lot of material handling equipment is already engineered to order, meaning it’s highly modular and therefore can fit into existing plant layouts, as well as be integrated into planning and production. Deploying this in larger volumes is the next step.”
From prediction to action
Closely linked to the paradigm shift taking place in manufacturing are the opportunities that predictive analytics opens up. Piller sees these opportunities as something material handling companies should be taking advantage of and implementing in their systems. “As the basic premise of predictive analytics is that we must guess less, and know more, an implication for a material handling company could be making better forecasts of the incoming flow of material.”
A consumer goods company will traditionally do some market research or extrapolations of the first few weeks of sales, in order to see how sales will develop for the rest of the season. “Now they can get access to much more unstructured data from social media conversations or purchasing behavior in key stores, and thus better predict the operational planning necessary to meet the demand,” says Piller.
However, as with most new data related developments, predictive maintenance and analytics don’t come without potential pitfalls. Piller appropriately sums up the paradox surrounding predive analytics and maintenance, by stating, “the better we are with predictions, the worse we become in executing.
“Imagine a huge plant that has many material handling systems across the globe, and let’s say they are all assessed using predictive maintenance. The plant manager will then know ‘ok, in a weeks’ time, 20 out of my 1000 pieces of equipment will breakdown, and I only have 2 repair teams. How do I allocate them?’ Therefore, action as opposed to prediction is the ultimate goal.”
First an app, then a platform
Another significant development that will only increase the capacity of the Industrial Internet to create new customer-driven business models, is the emergence of the platform economy. However, according to Piller, traditional industries should not be looking to immediately develop a platform as the likes of Amazon and Uber have. For instance, the transportation and material handling industries would benefit by starting off with an app.
“Of course, managers think that ‘we will become a platform,’ but this requires a big mental shift in companies, a shift towards openness. However, I think that traditional industries should first acknowledge the possibilities an app introduces to their business. In a connected world, an app can be a piece of equipment and shouldn’t be limited to the notion of a smart-phone app,” Piller notes.
Becoming a platform-based industry certainly doesn’t happen overnight. What Uber or Amazon managed to do on a consumer level, would be extremely difficult to successfully execute in the industrial world, simply because of the level of openness it requires. For Piller, more companies need to recognize the benefits of an app.
“Established B2B companies are very conservative when it comes to putting their data in a platform, so even if a platform is created by an established player, filling it with meaningful data is a question on its own. Therefore, in terms of market entry, being an app on a platform has a lot of advantages. My advice would be to learn how to become the preferred app, like the Angry Birds of material handling.”
Experimenting for future solutions
Piller is confident that companies experimenting even with more left-field utilizations of the Industrial Internet will ultimately drive innovation, and do so in a customer oriented way.
“Take the Amazon Dash Button, a solution which costs the consumer $4.99. At that price point, even a small established company can start experimenting by asking, for example, ‘what could we do, if we managed to increase the connectivity between equipment that allows you to monitor actions and actives?’”
The issue some managers and CIOs face is making sense of the “huge pile of possible things to do, and sometimes they end up doing nothing,” says Piller. “Therefore, I think it’s always better to start experimenting and testing assumptions in order to get real feedback, instead of making huge PowerPoints.”
Professor Frank Piller will share his thoughts in depth at the 2nd annual Internet of Manufacturing, scheduled to take place in Munich from February 7 to 8, 2017.
Internet of Manufacturing is a strategic conference that gathers together stakeholders from a variety of industries and who play an active role in developing the Industrial Internet.
Among the conference’s keynote speakers who will share their experiences in realizing and capitalizing on IoT are Ernst Stöckl-Pukall, Head of Division – Digitization, Industrie 4.0, German Federal Ministry of Economic Affairs and Energy, Thomas Hahn, Chief Software Expert at the Research and Technology Center of Siemens, Juha Pankakoski, CDO at Konecranes and many more.
To find out more about the agenda and speakers of Internet of Manufacturing, visit http://www.internetofbusiness.net/manufacturing/speakers/
Frank T. Piller works as Professor of Technology & Innovation Management at the Business School of RWTH Aachen University, Germany
Image credit: chombosan / Shutterstock.com
The most read articles of Industrial Internet Now in 2016
The past year has further matured the solutions in the field of the Industrial Internet, and also sparked a great deal of thought-provoking discussion and articles. Some of the most discussed topics this year include IT/OT convergence, change management in digitalization, and the future of manufacturing. Below are the five most read articles of Industrial Internet Now in 2016.
5. Semantic interoperability opens doors to the digitalized world
Dr. Richard Soley, the Executive Director of the Industrial Internet Consortium, expressed his skepticism towards a universal IoT standard, stating “I’ll be glad to be the first one to say that there will never be a single universal standard”. According to his view, instead of aiming for a universal standard, achieving interoperability is a much more important issue to tackle.
4. Building an insight-driven business
Having huge amounts of information is one thing, harnessing data to create new business models is another, stated Alun Jones, Data Scientist at Konecranes. In his article, Jones discussed about utilizing machine learning, understanding security issues and improving operational efficiency as steps in building an insight-driven business.
3. Managing change in the connected workplace
Alexander Reay, Chief Digital Officer at Sodash and President of the Nordic IT Association, explored the role an organization’s structure and culture play in maximizing IoT’s potential for businesses. He also focused on the leadership issues that need to be addressed during this transformation.
2. Five steps to digital innovation
First you need to map and prioritize the needs of your organization. Technology comes in second. But what came next? Marko Yli-Pietilä, the Business Development Director and Managing Consultant at Midagon, walked us through the five stages of successful digital innovation.
1. 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. The most read article of Industrial Internet Now in 2016 shared 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.
Image credit: Eugenio Marongiu / Shutterstock.com
2017 will be about data ownership and security
Whether it’s the sensors or it’s the platforms people are using, the Industrial Internet market has become much more mature overall in 2016. Good examples of monetization have emerged, demonstrating that organizations have begun leveraging capabilities and competencies and turning these opportunities into something that could positively affect their bottom line. Juha Pankakoski, Chief Digital Officer at Konecranes, assesses the key developments of the past twelve months and looks ahead to the themes and possible breakthroughs of 2017.
Companies that have been in this area for quite some time are now starting to leverage value from the data that has been collected. It’s one of the things we assumed to happen already a couple of years ago, but are only now seeing to realize. Once you have proper quality data to mine for information, you notice that there are several additional layers of value that you can start generating by aggregating information from multiple sources.
Connectivity and intelligent machines are somewhat breaking the boundaries of traditional industries. On a number of fronts where automation has already been set up, for example, the speed at which it is possible to gain insight from machines is increasing at a significant pace. Some of the very successful cases have come from industries where assets are quite remote and not that easily accessible, such as the vessels or oil rigs. New solutions now allow remote support teams to better understand what is happening in the field and help local teams using different augmented reality and virtual reality (VR) devices. This is definitely something that is proving to be exciting.
The industry that is really providing excellent opportunities for others is the automotive industry, with connected vehicles and automated driving becoming more and more commonplace. Companies with billions of dollars in revenue are developing all these capabilities and putting them in place, making them more cost efficient at the same time. These solutions are then deployed in many other areas and industries where automation or “sensing” is required.
Lessons from hackathons
From our perspective, all the hacks we have organized have taught us something. In the case of the recent Maritime Hack, we encountered practical challenges associated in combining open and closed data. We found out that it is still much more challenging today than perhaps expected to get all the parties inside the port to share data with each other, despite sharing the same customer and the same objective. There are practical restrictions – legislative, contractual, but also artificial – and still quite a number of concerns in the open data sphere. This isn’t entirely unexpected, but it’s still somewhat disappointing because it’s by combining those different data streams and different actors which is required to arrive at additional value. There’s still some way to go before net openness can be achieved.
Remember that hackathons aren’t hacks as such. They deliver varying results based on the input, expectations and preparation that companies have put into those sessions. Some companies we know have had very limited success and varying results from the event. You take a risk when going into an event like this that doesn’t have a definite, specific outcome in mind. When you go in to meet new companies and new people with new capabilities, you can either be pleasantly surprised or find out that a company’s capabilities may not be exactly what you are looking for at that point in time.
As for possible breakthroughs in 2017, one of the things we will see is VR or enhanced reality-devices being used in field service operatives’ day-to-day industrial work.
Themes of 2017
2016 was the year of analytics. Data ownership and security will be very appropriate themes for 2017. Security is an underlying topic that can’t be avoided. We are already seeing connected devices that are being used for unintended purposes, such as DDoS attacks. We are also seeing several other areas where connected cars have been manipulated from a distance. It’s an unfortunate fact that every new machine or item that is connected or “smart” in one way or another is subject to hackers coming in, breaching security restrictions, and using them for unintended purposes. In an industrial environment, such situations can be hazardous.
Preparedness for this is not a straightforward or easy thing to do as it requires that you have security built into your architecture from the very beginning. Companies should either redesign their solutions or build additional layers of security into their solutions, so if something does happen, the machines can be safely ramped down to avoid an adverse effect.
In terms of business opportunities, the big potential is in data and the sharing of data. Going back to the hack itself, it is expected that we’ll see more and more collaboration between parties in terms of sharing data and information across customers and customer premises. The sharing of data and of knowledge – be it between the machines themselves or between the databases that contains the information – will then be used to generate new business cases. Interoperability and communication between machines and processes is something that will greatly profile 2017.
As for possible breakthroughs in 2017, one of the things we will see is VR or enhanced reality-devices being used in field service operatives’ day-to-day industrial work. These devices will allow the user to get support from the back office and from the applications that can deliver additional data, information or material related to the job in hand. In this area, we will see many interesting developments. There are many solutions in the pipeline, and I would be a bit disappointed if we didn’t see several viable applications that can truly be used in an industrial environment.
We may also see some interesting announcements from large software companies on how they plan to develop and combine their IoT offering with more traditional software packages or cloud services as bundles. Whether its software or machinery, I see companies building on what they already have in their portfolio to provide a platform to develop their capabilities to the next level.
Juha Pankakoski works as Chief Digital Officer at Konecranes
Image credit: yavuzunlu / Shutterstock.com
Pressing global challenges and disruptive technology will radically reshape manufacturing
The Global Manufacturing and Industrialisation Summit (GMIS), a world-first gathering of global governments, manufacturing businesses and civil society, will be held in Abu Dhabi next year, according to an article on Mubasher. Innovations in the manufacturing sector are set to have a transformational impact on the global economy and GE predicts that the industrial internet market will grow and lead the way in improving competitiveness and creating new jobs.
As the digital and physical sides of manufacturing converge, advanced technologies are becoming more essential to competitiveness. According to Anil Khurana, PwC Partner, capital-intensive heavy manufacturing, like oil and steel production, is getting a boost from new manufacturing and information technologies emerging from the hi-tech sector.
How manufacturing and logistics could work with smart cities
For decades factories, warehouses and power plants have used automation to huge levels of success, and yet there will still be disruption that promises to drive efficiency, increase safety and change manufacturing and logistics forever.
Although manufacturing and logistics are further along their automation journey than many others, “M2M (machine to machine) communication and device connectivity could be more accurately described as operating via an INTRANET of Things as opposed to an Internet of Things,” writes Jon Kennard in the IoT Tech Expo Blog.
Kennard continues to say that smart manufacturing gives power and insight to the business at every link in the supply chain. “Once manufacturing and logistics work together with the smart cities around them, we will see total upheaval in the way we make, sell, buy and transport goods all over the world.”
Read more about how the manufacturing and logistics sectors are driving technological change and IoT spend here: http://www.iottechexpo.com/2016/09/exhibition/manufacturing-logistics-work-smart-cities/
Image credit: Scanrail1 / Shutterstock.com
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
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
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.
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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