Over the last few years, Industry 4.0 has ushered in a deluge of digital tech innovations in the manufacturing space. When integrated effectively, these sophisticated computing technologies can support and elevate manufacturing operations, allowing for enhanced efficiency, improved productivity, and reduced costs.
Industry 4.0 in the Manufacturing Sector
Industry 4.0 offers an arsenal of valuable tools, including cloud computing, Big Data, artificial intelligence (AI), the Internet of Things (IoT), 3D printing, and robotic process automation (RPA). Not only do these technologies have the power to change the way information is communicated across supply chains and across companies, they also have the power to transform the manufacturing industry as a whole, by:
- Connecting both B2B and B2C companies with customers in more effective ways, offering instantaneous and easily accessible communication options.
- Streamlining, integrating, simplifying, and automating the global supply chain, and, as a result, providing a higher degree of collaboration, supplier engagement, and visibility within all links in the chain.
- Keeping companies limber and agile, ready to make calculated decisions as soon as problems arise.
- Leveling the playing field for small- and mid-sized businesses that otherwise would not have access to the kind of resources within reach for larger corporations, allowing for the creation of unique opportunities and partnerships.
- Providing companies with actionable business intelligence through the analysis of massive amounts of data, allowing for the creation of micro and macro roadmaps that can be used to navigate through both known and unknown risks.
- Creating smart factories that are safer, energy efficient, environmentally sustainable, and cost effective.
- Monitoring equipment and facilities, and analyzing performance metrics such as error rates, production history, or energy consumption. Using this data, digital technology can identify potential problem areas and schedule predictive maintenance on an as-needed basis, which is more targeted than preventative maintenance and more cost-effective than repairs.
- Improving the design and prototyping phases. For example, AI can be used to digitally experiment with design concepts based on specified measurements and material parameters, or 3D printing can be used to quickly produce engineering models and prototypes for a reduced cost.
Although few manufacturers have achieved full digital integration, many have started to take the first steps in turning their high-tech plans into reality. As manufacturers and other B2B companies continue to integrate digital technologies into standard operations, it stands to reason that the production process itself, the nature of products and services, and the manner in which manufacturers interact with one another and their equipment will also see dramatic changes.
The Rise of Everything-as-a-Service (XaaS)
Digital technologies have revolutionized the way both customers and businesses are using certain types of products. While the traditional paradigm was built upon the purchase and ownership of physical objects, digital technology has shifted the focus from product to on-demand service.
The most well-known example of this is the Software-as-a-Service (SaaS) trend. This kind of software is centrally hosted by a company and used by customers on a subscription basis. Most of the time, these programs can be accessed easily via web browsers. SaaS is already ubiquitous in the business world, and includes familiar programs such as Microsoft Office 365, Google’s suite of productivity apps, and Salesforce.
The “as-a-service” features a simplified mode of production and delivery that is easier for companies to manage, and can improve customer relations in a variety of ways, allowing for enhanced customization options and better pricing. And by utilizing an ongoing subscription framework, companies can foster long-lasting customer relationships, whereas the traditional standard creates a one-and-done purchasing relationship.
The “as-a-service” model is now being applied to other areas outside of the cyber realm, such as products and even manufacturing itself. With Products-as-a-Service (PaaS), customers pay to use or lease a product but do not actually own it. Instead, the company leasing the product is the owner, and is also responsible for the product’s maintenance.
For example, Spotify, the popular music streaming platform, sells the product of music but provides it in an on-demand, service-type capacity. Users pay a monthly fee, and have access to a massive library of songs. Even though the consumer doesn’t own the music in a physical form, like a CD, or a digital format, like an MP3, the system still manages to create value in other ways.
In addition to having a catalog of millions of songs, Spotify utilizes user data to create a suite of personalized features for each user, including curated playlists based on individual music preferences. These playlists can turn users onto artists and songs they may have never discovered otherwise.
Spotify also shares the data with their customers, showing each user a summary of their music listening habits. To make it more appealing and engaging, the information is arranged in a variety of ways, and is accompanied by clean, colorful graphics with descriptive, uplifting words that celebrate the user’s specific tastes. Using the data in this way creates an experience of value for the user, which is becoming an increasingly important aspect of purchasing. It also instills a sense of connection between consumer and company.
Although manufacturing and B2B companies don’t operate in this exact way, the example illustrates how the idea of products and ownership is slowly evolving as a result of digital technologies.
The Emergence of Manufacturing as a Service (MaaS)
This shift from physical ownership to lightweight leasing is made possible through the digitalization of the business world. As technologies such as sensors, data analytics, the IoT, and cloud computing become more commonplace in the industrial world, OEMs and B2B companies may start to adopt their own versions of “as-a-service” business models, including but not limited to PaaS.
In particular, Manufacturing-as-a-Service (MaaS) has gained some traction among smaller startups. With this type of system, a network of manufacturers integrates with one another to purchase and share equipment, as opposed to each manufacturer owning and using their own machines. The equipment is connected to the internet, giving all parties real-time insight into the equipment’s status and use.
By distributing the costs for equipment, software, maintenance, and repairs evenly among a group of companies, the system helps each business significantly reduce expenses, thereby improving the bottom line. It also improves ROI by making it easier for these companies to expand their capacities and scale quickly in a way that would be expensive and difficult to achieve if they were footing the bill solo.
In addition to changing the way manufacturers purchase and use their equipment, MaaS also encourages collaboration and new partnerships by democratizing the manufacturing process, creating a B2B sharing economy.
The Future of Digitized Manufacturing
Digitalization is changing the face of the manufacturing sector, transforming not only the way companies communicate and make use of equipment, but also the very foundation of the industry as a whole.
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