The Internet of Things (IoT) is the idea that machines, sensors, monitors, and humans can all engage in real-time communication. Digital innovations, embedded into traditional physical products (and their production systems), are paving the way for product companies to enter new markets and create new value streams with unprecedented efficiency.
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The Internet of Things, especially when combined with advances in Artificial Intelligence (AI) and Big Data, is creating technological disruption in the engineering and manufacturing industries at a rapidly increasing pace. New tech startups are shaping a more diverse and complex industry, while long-time market leaders are gearing up to adjust to the new reality. In order to sustain innovation, manufacturing companies need to digitize their products, customer interactions, and value chain.
IoT solutions are enabling companies to ingest, aggregate, and compress real-time data from sensor devices, as well as automate the analysis of that data to provide predictive insights that wouldn’t have been possible just a few years ago.
This enhanced communication across the value stream can have a significant impact on efficiency metrics like equipment effectiveness, labor utilization, and throughput.
The Internet of Things could also revolutionize the value manufacturers provide to their customers in both their products and after-sales services. We’re already seeing aerospace manufacturers like GE Aviation and Rolls-Royce use the Internet of Things to connect engine devices, creating rich sources of data that guide product strategy. As a result, information-led after-sales service-driven revenues are surpassing the traditional product sales models.
3 Factors Impacting the Internet of Things
Digital factories use real-time production data to create predictive data as a product. This predictive data is then applied to processes and product, allowing manufacturers to see where improvements can be made.
Digital factories have clear advantages over the more common static, retroactive approach of data-gathering and analysis, allowing those with digital factories to see great cost-savings, process improvements, and increased agility, due to the proactive nature of data analysis.
Big Data, Artificial Intelligence (AI), and Predictability
Being able to offer smart products that can predict users’ needs (for the consumer) or predict usage patterns and improvement / revenue opportunities (for the manufacturer) is a clear competitive advantage and attractive proposition for both the consumer and manufacturer. This development is especially relevant to the after-sales market where preventative maintenance is often a key goal and therefore a source of information-based, service-driven revenue.
While technology is the enabler, it is people that drive innovation through Internet of Things. Digital cells are multidisciplinary teams, responsible for nurturing digital competencies, data analysis and information-based innovation. These teams interface across the width (value stream) and depth (organizational structure) of their business to ensure the organization is leveraging opportunities for improvement or new market development.
Value Creation through Lean Thinking and IoT
Increased business agility, made possible by IoT, is helping companies break the mold of being perceived as “a product company only.” When combined with advances in AI and Big Data, the Internet of Things is creating fantastic opportunities for organizations to explore and exploit digitally enhanced products and services.
“Design digital, deliver analog” has become a guiding principle for product and process design that focuses on the delivery of human-centric value. It’s no coincidence that placing customer value creation first is also a cornerstone principle of Lean thinking.
By combining Lean thinking approaches to value creation, engineering and manufacturing organizations have a great opportunity to build deeper, more meaningful relationships with their customers. Developing new and extended customer experiences that are fueled by an innovative and agile workforce will be key to remaining competitive in an environment where the barrier to entry is lowering rapidly.
Buyers are better at articulating what they value. From the customer’s perspective, value is no longer just measured around dry product performance metrics such as up-time, fuel efficiency and running costs. Buyers expect metrics around predictive maintenance scheduling, lifetime efficiency tracking and live performance data.
This places Lean organizations in an advantageous position to deliver the kind of value they have come to expect. If incumbents are able to quickly embrace Lean thinking and leverage the possibilities of IoT, they can significantly reduce waste, for themselves as well as their customers.