By 2020, estimates show that between 30 billion and 50 billion products will connect to the Internet. Self-aware and interconnected, these devices will generate countless streams of data allowing for enhanced diagnostics and information-sharing.
All this data means companies that embrace the creation of self-aware products have a decided advantage.
Successful companies use so-called smart products to differentiate themselves in today’s competitive environment. To remain ahead of other companies, manufacturers need to rethink product design.
These new products can gather, record, and send data. Companies can leverage that data to build better and more connected products. In the process, the products become far more powerful and valuable to potential customers.
These enhanced products provide huge opportunity for nimble companies. They can change relationships with customers, provide new bundled services, and expand revenue streams. To get there, though, companies need to rethink the design, purpose, and functionality of products.
Internet of Things (IoT)
The Internet of Things is a popular buzzword today. It refers to products that are “intelligent” and “self-aware” in that they connect to each other. These products contain features and devices such as software, sensors, and Internet connectivity. These technological enhancements let equipped devices interact in ways that before were not possible.
The power of these devices is the widespread applications made possible across business sectors. Smart devices are already making their mark. We see them in products as diverse as medical devices that send vital signs to physicians and in automated building controls.
Three innovation areas
Digital transformation in manufacturing occurs in three key areas: self-awareness, connectivity, and customization. Progressive companies think about their products through these lenses.
Products become self-aware as technology such as computers, sensors, and communications tools are added. In real time, these products can record data such as location, weather conditions, and operational performance.
Many of these products use the data to predict future states. In some cases, the products can identify and correct problems independent of human intervention.
Smart devices can send the data to central servers or databases for detailed analysis. In turn, this analysis can lead to future product improvements or brand-new product lines.
Technology allows for interconnectedness among smart products. Shared data among these products allows for faster identification and solving of problems.
Sharing occurs not just among the products themselves. Data shared within a company or with external partners has lots of advantages. Supply chain management and inventory control can be automated. Customers and manufacturers can share performance data.
Industrial machines connected to computers can alert suppliers when inventory is low. Machines can alert users when maintenance is needed. Supplies can be ordered automatically. The costs and time lost plummet.
Connectivity offers new market opportunities, too. A manufacturer’s relationship with a customer is no longer limited to the final sale of a product. Companies can leverage this gathered data in new ways. New bundled services open up new business channels. Services can include performance analytics, automated maintenance and repair scheduling, and usage consultation.
Smart companies share smart product data with internal partners and suppliers. Many firms are building open platforms to share gathered data and analysis. Customers often are included. The collective insights provide for a richer product improvement process.
Sharing is good for business, too. It deepens the connections of suppliers and customers with the company. Improved product design and performance is good for all the players.
All in all, it’s a wise step for long-term customer and supplier relations.
Smart products benefit customers in another way. Smart features let companies offer more versatile products that have varied uses.
Customers can then decide on the settings and features they want to use. Adaptable components give customers far more choice and flexibility. This empowered usage also is a key driver of customer loyalty.
Tech propels innovation
Smart products play a major role in competition. A recent article notes the many ways tech has helped this growth in the number of smart products.
Processors are more efficient. Advances in miniaturization allow for more products to become smart-enabled. Batteries and sensors have become more energy-efficient and last longer.
In addition, wireless access is now much easier to find and more affordable. Registering new devices on the Internet is easier and cheaper than in previous years. So too are recently developed tools to capture and analyze large amounts of data.
Collectively, these technological improvements make it possible for more products to become connected.
Cost of standing still
The cost of not creating these products is high. It’s likely that if you are not thinking about making your products smart, your competitors are. Eighty percent of companies are planning to invest in IoT. You should, too.
One major advantage to smart technology is the ability to upgrade. Self-aware products are more agile. Wireless service lets companies deliver improvements and new functions to customers fast and with little effort.
A Harvard Business Review article points out the many ways smart products have changed the way business is done. Companies compete now in very different ways. Smart products require faster R&D cycles. Internal processes from the shop floor to sales need to be reconsidered. Businesses and governments need to assess how these changes affect regulatory needs.
Smart products have had a dramatic effect on businesses and the quality of life. For businesses and business leaders, the fast-growing rise of smart products means huge opportunities. Connected, customizable, and collaborative products will reshape most industries. Companies that start developing smart products stand to gain market share and customer loyalty.
For more information, please download the white paper Digital Manufacturing: Powering the Fourth Industrial Revolution.