Who remembers Alan Shepard? If you’re not familiar with the name, it’s probably because he was the second man to go into space. It doesn’t matter that Alan displayed the same skills and courage as his Soviet counterpart, Yuri Gagarin. People only remember the pioneers – Christopher Columbus, Edmund Hillary, the Wright Brothers – not those who followed in their footsteps. It’s the same for manufacturers as it is for explorers: being the first to bring a new product to market gives the company a cachet that catapults it far ahead of its rivals, and forever associates that brand with innovation and ambition.
There are many factors that can cause fatal delays in the race to be first: legal compliance, problems in the supply chain and unexpected complications in the test and development stage. However, by utilizing technologies such as IoT, 3D printing and AI effectively, manufacturing companies can reduce the time-to-market significantly and gain the all-important competitive advantage.
The 4.0 transformation journey
The advent of Industry 4.0 has disrupted long-established businesses and organizational models, and placed IT at the heart of product and go-to-market strategy. There are two major trends underlying this transformation: first the move away from mass production to mass customization/personalization, where customers can design their own unique products and bundled services. The second is the fact that products themselves are changing, and now have a range of technologies embedded deep within them.
Not long ago, a car was a car. Now it’s a four-wheeled communications device. Technology is not just a fundamental component of vehicles today; it’s also enabling manufacturers to create new business models based on that ugly neologism, ‘servitization’. Examples of these value-added services include the provision of a car as a service that may include weekly fuel top-ups based on geo-location and car mileage, on-board entertainment with live streaming and usage-based insurance.
It’s not just embedded technology that is changing long-trenched business models: other technologies such as 3D printing can open up even more services and revenue opportunities. Think of a washing machine where the manufacturer can remotely detect when a component is on the verge of failure, print a replacement, and ship directly to a local dealership or plumber for installation – all before the user is aware there is a problem with their machine.
The revenue opportunities of Industry 4.0 are almost limitless, yet we’re, for the most part, still at the conceptual age. The manufacturer that brings these new business models to market first will not only achieve a crucial lead over their competitors; they will establish their brand as a visionary innovator in the minds of consumers. So valuable is this perception, it’s impossible to put a price on it.
Bringing new business models to market
Launching a new business model successfully in the market is a complex endeavor which will require a reduction in time-to-market, a reshaping of core product offerings to include IT components, and a strong partnership between business and IT. Traditionally, technology provided the underlying infrastructure that enabled project design and delivery; today it is a part of the product being sold.
Manufacturers cannot just hope that this transition happens organically. Instead, management must find a better way for the operating model between businesses and IT departments to co-opt their leaders into an aligned product strategy and strike the right balance between risk and reward.
Alternatively, businesses may be given more autonomy and funding to develop innovative systems, enabling them to develop products faster and reducing time-to-market, which could see a small part of the IT department dissolving into the business functions to support product development.
However, in such a model, the governance and rules of engagement have to be defined in partnership with IT to ensure a smooth execution and alignment with the overall IT strategy.
We have barely reached the pioneer stage of Industry 4.0. To make that great leap into the unknown, manufacturers will have to reinvent the rules as they progress through this journey.
Partner, Infosys Consulting
Rafi Billurcu has been with the organization for over 11 years and leads our manufacturing practice in the UK and Nordics and is responsible for some of our top accounts in the region. Rafi has over 22 years of experience in the consulting industry with several years spent with the biggest technology and consulting firms, such as PricewaterhouseCoopers, IBM and HCL.