Innovative Digital Trends For Profitable New Business Models
Originally posted 11-May-16 at http://www.digitalistmag.com/digital-economy/2016/05/11/innovative-digital-trends-for-profitable-new-business-models-041…
Digital Economy | Business Networks
Written by Georg Kube
The world is in the grips of what some call the “4th Industrial Revolution.” In recent years, digital technology has reached new heights as continuous innovation and hyperconnectivity bring a steady stream of new developments to manufacturing.
Technologies that are transforming the manufacturing industry
Intelligent machines are improving accuracy and efficiency. These machines have embedded sensors that track specific factors and collect the resulting data. In a convergence of IT and OT, the data is then sent to a server, where the company analyzes it according to need. For example, analytics can measure production speed, material quality, and amount of waste product. The analytics resulting from this IT/OT convergence can to help reduce cost and risk. They can also help improve operational processes.
Artificial intelligence is the ability of a computer to act as an autonomous entity. It must also be self-aware. Experts have not yet been able to confirm true artificial intelligence. Yet intelligent machines are able to perform a wide variety of actions. They can also communicate those actions and any recorded data to other systems. That means they can trigger and coordinate a set of actions without human input.
3D printing is another exciting new technology, offering a quick and flexible alternative to traditional manufacturing. It’s simpler to adapt a design and incorporate improvements. It’s also more cost-effective when a client needs only a small number of parts. For example, Collider 3D prints industrial-grade parts. These used to be available only through traditional manufacturing.
There’s also a lot of focus on the business potential of virtual reality (VR). It’s interesting to note that much of this technology comes from the gaming industry. CIO reports that 2016 will see the launch of a product called Oculus Rift, which will enable global teams to connect in a virtual space and do things such as examine new products in 3D.
New business models are critical to success
It should be clear that some of these developments are disruptive, making many established procedures and processes outdated. As a result, many IM&C companies must rethink their business models.
For example, in the past, a company that relied on parts from a supplier would need to track inventory. When inventory was low, an employee would place an order with the supplier. On the supplier’s end, an employee would process the order and send it to the right department for fulfillment.
Today, digitization has changed this process. Sensors embedded in assembly machines can track inventory. Low inventory triggers an automated order that’s transmitted to the supplier’s system. There, it’s routed to the right department. In short, the order originates in one company and goes to another with no human action required. The companies have de facto integrated their systems.
Note that this is just one example of how business is changing; there are many more. It’s important to understand the potential for heightened efficiency and cost savings. Customers will seek out suppliers that offer this kind of advanced, integrated service. Companies that fail to embrace digital business will lose their competitive advantage.
Asking the right questions to innovate business models
To remain competitive, companies need to ask themselves the right questions: How can we add to our customers’ value chains? What are our customers’ requirements and expectations? What digital capabilities can I offer?
Many digital business processes now involve integration of two or more companies’ systems. It’s logical, then, that companies can offer better services when they collaborate. The question then becomes, “How can we work together to create good outcomes?”
For example, intelligent machines and IT/OT can form integrated systems between many companies. These systems can operate an entire supply chain. Production then becomes faster, better, and more cost-effective. Risk is lower because the companies coordinate their procedures and materials.
Production processes can include 3D printers to streamline production segments such as prototype creation. 3D printing is flexible, so engineers can use it to tweak designs increment by increment. Manufacturing companies can outsource this process to smaller, specialized 3D printing firms. That keeps costs and capital investment down.
Virtual reality offers risk reduction and cost savings. Engineers can test products completely in VR and review them for performance and flaws. Again, the potential of outsourcing VR to specialized companies adds value. Companies do not need to invest in purchasing the equipment and expertise themselves.
Collaboration with quality partners reduces risk and keeps capital investment low. It allows companies to work together and profit from each other’s strengths, forming a “business ecosystem.” In this ecosystem, partners rely on each other for performance, productivity, and profit. By doing this, they can add to their customers’ value chains. And that, in turn, ensures that their customers return for more business.
Visit Industrial Manufacturing. Reimagined for the new economy to learn more about digital transformation for IM&C.