Industry 4.0 Transforms Business Models

Marc Bruurmijn

The fourth industrial revolution brings with it a wealth of possibilities – things can be done now that were never before possible. This gives organizations in the manufacturing industry the freedom to, say, make the leap from supplying a product to delivering a service. In my view, an interesting example of this is the German company Kaeser Compressors. It transformed from being a supplier of compressors and being quite active both inside and outside manufacturing into being a supplier of compressed air. Yes, Kaeser supplies air.

This transformation was realized after Kaeser started up a large-scale project to integrate business processes. To do this, the Internet of Things (IoT) – the motor that runs Industry 4.0 – was put into place to connect processes and devices via sensors. As a consequence, Kaeser got great insight into the entire production chain, a starting point from where service levels could be raised. Service is therefore central in the revamped business model.

The predictability of maintenance

Kaeser worked towards a single, holistic, and integrated IT infrastructure. This certainly led to more insight and clearer processes from an internal perspective. But in addition to that, the integration of the entire infrastructure sped up Kaeser’s processes around handling and solving incidents, and customer service levels went up a notch.

Because of its large sensor network, Kaeser has a constant overview of the status of each compressor. This makes predictive maintenance possible, which guarantees uptime for the customer. As a result, Kaeser has been able to let go of the “vicious maintenance cycle,” meaning scheduling exactly when a particular machine requires a particular service. Quite often, maintenance took place too soon or worse, too late. Now, at any given moment, technicians can see up-to-date information on a compressor and get advance warning when a certain part needs to be replaced. They respond proactively to each request and can work directly with the customer.

Well before the technician has arrived at the customer’s location, he can have a detailed look at their machine. That’s because the whole compressor has been captured in a visual application: all article numbers, as well as the complete maintenance log, can be looked up on a smartphone or tablet. Gone are the days that a technician turns up without the exact replacement part that is needed! Also, determining the economic lifespan of the machine has been simplified. In terms of service delivery, these elements have enormously impacted the business.

Complete overview

Industry 4.0 is all about connecting everything centrally, including services and matters that are outsourced or that a company might not provide itself. IoT helps share simple information with third parties. Via a cloud-based portal, end users have access to the data of all collaborating parties. Not only has insight been created, but flexibility too.

Kaeser also shares data via this sort of portal, which provides customers with essential information and control. In fact, all necessary information can be called up via this network. This flexibility improves collaborations – and makes Kaeser the more appealing choice for customers.

Real time is the key

With IoT, many previously unavoidable production process, stepping stones as it were, can now be skipped. This has created space for the company to review business models. And it is now possible to deliver a custom service at the price of a mass product.

All this requires an IT system with the capacity to compute an enormous amount of data. All mutations must be recorded and accessible, day and night. That necessitates a powerful database. If you can get your  hands on this kind of power, then, all the information you need is available in real time, and you can respond even better to your customers’ requests.

With real-time insight, buffers are a thing of the past. That’s where I see the true transformation for companies in manufacturing.

Want to know more about the fourth industrial revolution? Read the online Flipboard magazine Industry 4.0.

Click here for the Dutch version of this post.

Marc Bruurmijn

About Marc Bruurmijn

Marc Bruurmijn is Senior Solution Sales Manager at SAP. The manufacturing industry is his area of expertise. He combines his extensive experience in the world of SAP with his knowledge of manufacturing to help businesses think about, and deal with, the changes in the industry. Marc is passionate about his job and follows all industrial developments closely. In his blogs, he shares his views on how smart industry – enabled by Internet of Things, Big Data, and artificial intelligence – is disrupting the manufacturing industry and how manufacturers can benefit from it.