manufacturingtechnologyinsights

Connecting Things with Processes and People

By Hans Thalbauer, SVP, IoT and Digital Supply Chain, SAP [NYSE:SAP]

Hans Thalbauer, SVP, IoT and Digital Supply Chain, SAP [NYSE:SAP]

Whether it’s providing same-day delivery, customized products or creating personalized shopping experiences, in today’s on-demand world, companies must have an accurate pulse on their customers and their evolving expectations. This means organizations must get closer to their customers than ever before.

"Machine learning can ultimately change the very nature of manufacturing"

Accomplishing this requires more than simply harnessing larger and larger data sets—it requires an effective and strategic use of sensors and connected devices that are driving the rapid adoption of and advancements in Internet of Things (IoT) and Industry 4.0 technologies. It requires a keen recognition that these technologies can fundamentally change complete business models and how people work. To reach this state and deliver on this promise, a business must connect its systems and integrated business networks to its people, partners, and physical environment.

Smart products and smart devices are accelerating the transition to a full-scale digital and service economy, and organizations need to act sooner than later to keep pace with the dramatic change this will have on how business is conducted. Having an extended, digitized supply chain is an integral component of being able to run this typy of live business.

A Time of Change

There are monumental changes happening across all industries. Those that have somehow come to believe that IoT and Industry 4.0 solutions are only relevant for a select few industries, such as high-tech, manufacturing, or oil and gas, and that everyone else is taking a wait-and-see approach until the landscape settles, are misguided. We’ve already seen the way the transportation and hospitality industries have been upended by Uber and Airbnb. This alone should be a wake-up call for companies across all industries to realize that they can no longer continue moving along on the same track, just because that track has traditionally been profitable.

The reality is that industry upheaval can come anytime and from anywhere. 3D printing is just one example of a technology revolutionizing long-standing business models. While some applications of 3D printing may seem far-fetched, this type of innovation is happening across a variety of industries today. In retail, for example, consumers want personalized goods that can be customized to their specific needs. Companies like Nike are already leveraging 3D printing to make personalized shoes and deliver them to customers quickly and efficiently. Running a live supply chain allows businesses to develop this type of customized product that consumers are now beginning to expect from their retailers of choice.

This is just one example of how companies are leveraging this technology not just as a new way to produce goods, but as a way to change how they market and sell their products.

Robotics and automation are also disrupting industries. Just look at how they’ve impacted the overall business climate of Japan. With an aging population and little immigration in the country, Japanese businesses are bracing for a worker shortage, but thanks to robotics and automation technologies, strategies to cope with the shortage are evolving. In the past companies leaned heavily on delayed retirement incentives and overtime packages to keep their workers, but now are investing in a much higher degree of end-to-end business automation, exploring self-driving trucks and integrating enhanced logistics automation into the extended supply chain, as one example. Robotics, drones, and other innovative automation solutions and tools not only help to allay the problem of an aging workforce, they also drive greater productivity and efficiency and open new business opportunities that may even have yet to be conceived.

The Future of Innovation, Today

All of these trends point to the same thing—an acceleration of digitization in the enterprise. In implementing these technologies, it’s vital that companies not only look at how these solutions can best faciliatate an organization’s current goals and processes, but more importantly where it will go in the future.

In manufacturing, for example, the benefits of bringing machine learning and artificial intelligence to a production floor, go well beyond simply using machine-to-machine communication to produce on-demand products or to drive predictive maintenance. Machine learning can ultimately change the very nature of manufacturing. No longer will we need pre-defined routing for a manufacturing plant, for instance, as machine learning will influence parts instruction in completely new patterns.

Transitioning manufacturing from an outsourcing model to a distributed environment, where production approaches a one-to-one consumer relationship, will have a tremendous impact on the entire extended supply chain. This in turn will affect how people work.

The food industry is another area we are seeing benefit from IoT. Take the transportation of ice-cream for example. We can now equip the coolers that hold the ice-cream during transport with smart sensors to monitor the holding temperature and automatically adjust, should outside forces cause the temperature to go up or down. This type of technology eases the burden on the farmers and food manufacturers, giving them piece of mind that their food will be fresh and in good condition when it reaches the customer.

With end-to-end connectivity and automation comes a much higher volume of data. Connected devices, sensor technology, and external data such as traffic, weather, and social data all provide the business with signals. For end users, transforming these signals into insight entails far more than using static reports and spreadsheets, or picking up the telephone to ask a warehouse manager about a specific order. Enhanced automation and connectivity enables a workforce to anticipate issues and solve potential problems before they arise, and drives home the importance of machine learning to a live environment in which predictive analytics plays an important role.

Going Live Going Forward

A live supply chain should be considered a cornerstone of a company’s digital operations center. A key component of this will be ensureing that IoT processes are connected to both a digital platform, as well as to a strong network of vendors and suppliers. A connected, digital platform helps to turn an extended supply chain into a true live supply chain environment, which as we’ve seen means a live manufacturing environment, a live asset management environment, and live decision making.

Customers are starting to demand this type of live environment and we now have the ability to delver it in untold ways. Creating this type of environment will disrupt many preconceived notions people may have about what it means to fulfill a purchase order, stock inventory, produce a part, or sell a product.