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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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Companies acknowledge IIoT’s importance, but lack strategic vision

In a recent survey by the Genpact Research Institute, the Internet of Things was seen as the most important factor in companies’ success in the near future. According to David Bolton, staff writer at ARC, companies are well aware of the benefits that the Industrial Internet offer facilities.

Still, only 25% of the respondents had a clear vision of their strategy for implementing it in their operations. Due to the sheer size of the Industrial Internet, it is seen to be one of the main driving forces for growth in the future. It also means that companies have to develop their digitalization strategy to be able to reap the benefits offered.

Read more about the findings at https://arc.applause.com/2016/06/03/industrial-iot-2016-genpact’/

Image credit: Brian A Jackson / Shutterstock.com

2 Comments

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  • Aaron Watts 22.09.2016 13:09

    Hey, great piece but I’ve just noticed a small spelling error within the title – double I in IoT.

    All the best and keep up the good work.

    Aaron Watts

    • Vineet Aggarwal 06.10.2016 10:52

      IIOT stands for “Industrial” Internet of Things

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Data processing becomes decentralized through blockchain

Blockchain comes with the promise of decentralizing information processing. It allows for a digital record of information packets coursing through the internet, and forms a record of digital events. What does this mean for businesses? Daniel Riedel, CEO of New Context offers an overview on the subject in this recent Readwrite article.

According to Riedel, “in an environment that requires continuous modification of data but also sensitivity to conditions required for uninhibited informational trade, blockchain is our best path toward a new industrial revolution”.

Read more about what blockchain is, and how it will affect business at http://readwrite.com/2016/05/09/blockhain-new-ir/

Image credit: Ekaphon maneechot / Shutterstock.com

Via Readwrite

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SMEs in the ecosystem of Industrial Internet

Despite large enterprises being at the forefront of the development of Industrial Internet, small and medium-size enterprises play an important role in contributing to the growth of its ecosystem. According to Karan Menon, Researcher, Industrial Internet at Tampere University of Technology, each player, whether big or small, brings something unique to the game, and also needs the other players in order to survive.

“Smaller companies have the benefit of having very detailed expertise and specific kind of knowledge. Furthermore, SMEs are more agile, have less bureaucracy, and can easily partner up with other companies to achieve their goals. Large manufacturers, on the other hand, tend to have more financial resources and overall technological capabilities,” he says.

In addition, bigger players on the field have the advantage of having access to more data. Thus, using intelligent technologies, they are able to collect much more information from their own sources in comparison to their smaller competitors.

For SMEs, being up against larger companies in the market also means having to be careful before embracing the digital connectivity and open innovation networks. Menon continues: “When contributing to an open value network there is unfortunately the risk of getting eaten by the bigger fish. Having to deal with intellectual property rights of solutions and products that were developed in common, for instance, can lead to smaller players being disadvantaged. In some cases, cooperation may result in the acquisition of the small business by a larger company, which means that the first one of the two disappears.”

The necessity of mutual platforms

Despite having addressed the risks, Menon strongly supports the basic idea of an open platform in which all operators can join and work together in order to create innovations.

“When you think of modern B2C services such as Uber and Airbnb, you see that it’s not about products, but platforms. B2B and the industrial internet is no exception. Instead of people it’s just about data. If you want to build an entire functioning ecosystem, creating a platform is the only way, because you need to provide means for the whole supply chain to communicate and interact,” Menon states.


“When you think of modern B2C services such as Uber and Airbnb, you see that it’s not about products, but platforms. B2B and the Industrial Internet is no exception. Instead of people it’s just about data.”

To put it simply, platforms are the base on which technologies can be built. And the more builders the better. “No organization exists in isolation. Providing real value to stakeholders requires combining different data and diverse sources of information. Handling large entities is where open platforms come in most handy,” Menon summarizes.

The future of pay-per-use business model in manufacturing

The superiority of platforms over products is closely linked to another key development in the field of intelligent technologies: the shift towards pay-per-use business models. Large equipment manufacturers, for example, have adopted this trend and succeeded in transforming their business models accordingly. Instead of selling the actual machines to their customers, they provide them with usability and reliability.

“When you think of material handling, for example, the term itself actually reveals the driver behind the business. It’s not really about lifting gear per se, but what it does and how it benefits the customer. The same goes for aircraft engines. Utilizing smart technologies enables equipment manufacturers to become service providers,” Menon says.

To be able to deliver the expected value to customers – and preferably exceed them – companies need to be on top of everything that may affect the performance of their products and solutions. Thus, having multiple players collaborating on an open platform is immeasurably valuable.

“Selling the outcome that a certain device or a machine has been designed to deliver is in way a lot riskier than selling just the machine. Especially if the final price that the customer pays is being determined based on the quality and performance of the deliverable. In this sense, it’s very logical that business operators welcome all the input they can get,” Menon concludes.

Karan Menon works as Researcher, Industrial Internet at Tampere University of Technology

Karan Menon on Twitter: @menonkaran 

Image credit: Alex_Po / Shutterstock.com

Interview w/ Karan Menon

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