Manufacturers need to think through their business model with the Industrial Internet of Things (IIoT) or Industrie 4.0 and ask how can a product become a service with a long-term revenue stream.
There is much talk about the Industrial Internet of Things (IIoT). However, ‘things’ are just part of the plumbing. We connect devices, giving them, no more than, nominal intelligence. The real innovation is the internet of services. Manufacturers need to think through their business model and ask how can a product become a service with a long-term revenue stream. Many manufacturers, however, recognize this and are exploiting the opportunity to improve their operations. For example,
Tesla is delivering vehicles with hardware and software which can be upgraded, their cars are sensor ready and software upgrades will provide extra intelligence, delivered via the internet. The customer could pay for the upgrades which then generates extra revenue for Tesla.
Otis is supplying elevators/lifts with sensors which send data into their cloud. The data is analyzed and Otis sells a predictive maintenance services package, again adding a long-term revenue stream.
Additionally, a catering company in The Netherlands is supplying custom meals to hospitals. Each meal is prepared for the patient based upon data received from the hospital about the patient’s needs. The meals are prepared in an automated plant.
The individualization of mass production and the internet of services add additional revenue. The smart manufacturing plant needs to be flexible and deliver intelligent products. A major misunderstanding is that this is not a cost saving exercise; it’s a new business model to increase revenue and profitability.
It’s important to map out opportunities and match them against the realities of today’s technology. A manufacturer who was heavily investing in a factory of the future did not build this type of strategy. Enthusiastic engineers ordered additive manufacturing (3-D printing machines only to learn they could not connect them to their network using international standards. They paid a heavy price for this error and damaged the initiative’s reputation. It’s worth taking independent advice before completing a company’s manufacturing strategy.
The best way to avoid these mistakes and build a successful strategy is to learn from other manufacturers in a safe space. MESA is a safe harbor to share best practices and lessons learned so that the industry can collectively rise to Industrie 4.0.
Mike James is chairman for MESA International Board of Directors. This article originally appeared on MESA International’s blog. MESA International is a CFE Media content partner. Edited by Chris Vavra, production editor, CFE Media, firstname.lastname@example.org.
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