This article was first published in Manufacturing Management.
Driverless cars we use but don’t own. Autonomous robots that do our bidding. Hyperloop transport moving us from A to B through frictionless tubes. 3D printed parts we slot in to aircraft engines. These things seemed like fantasies only a short time ago. Yet now they’re very real possibilities. In fact, those aero engine parts are already flying.
They’re developing (and fast) because manufacturing is going digital. Data is where the value is now. Manufacturing is as much about services as it is about products. Data sits behind both. And manufacturers who thrive will be the ones who harness it to produce new value for themselves and their customers.
Sizing up the opportunity
The prize is huge. Manufacturers we’re talking to expect this data-derived added value to help them grow by 10-30% in the next five years. In other words, an extra $1,200-3,600 billion a year in global manufacturing revenue. We see profitability growing by 50% as manufacturers gravitate towards new profit pools in industry.
But it won’t happen by itself. Manufacturers have to decide where they sit in this world of new business models, digital value chains and enhanced connectivity – and where they see themselves in five and ten years. But what are the options? How can businesses place bets with any certainty when their world is so fluid?
Choosing a digital world
Manufacturers have to decide how to spread themselves across three evolving, overlapping ‘worlds’.
IoT world – connected assets, products and services
Manufacturers are building on existing automation platforms but dramatically ramping up how they use data. It’s helping them sharpen up processes, improve products and get closer to customers.
Platform world – shared IoT
Manufacturers, customers and suppliers are starting to come together on cloud platforms to create new products and markets. This world is emerging and fragmented. Already, over 1,000 platform environments are competing – current examples include Amazon Web Services, GE Predix and Siemens Mindsphere. Manufacturers connect their production machinery to the platforms, which through apps and services help them exploit and understand their data. They can also develop and deploy their own apps and connect to new partners. These platforms are competitive catalysts for industry, but some could become significant industry players in themselves.
Artificial intelligence world – automated business
This is the furthest away of the three worlds. Here, technologies like machine learning and natural language processing automate everything from customer service to predictive maintenance. How fast it develops, and in what directions, depends on how the technologies progress. It also depends on solving the AI skills shortage and forming partnerships between tech platform developers and industrial or project engineers.
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Joining the digital dots
Increasingly, we’re helping businesses prepare to take advantage of the opportunities in these worlds. Doing that means making the business think more about use cases and customers than products and technologies. It means joining up different pockets of digitisation around a single strategy. It means choosing the right partners. And it means looking beyond efficiency to see digitisation as a growth engine.
Most of all, it’s about getting beyond using digitisation just to do today’s processes better. It’s about imagining a totally different tomorrow instead.
Thomas Brand is an advanced manufacturing expert at PA Consulting Group