Creating new business models with Industry 4.0

Creating new business models with Industry 4.0

Technologies such as the IoT and AI are changing the way manufacturers operate

Caspar Herzberg |

This article first appeared in the Autumn 2017 issue of The Record.

There is little doubt in my mind that Industry 4.0 can create new business models. All over the world, entrepreneurs are discovering ingenious ways to apply Industry 4.0 technologies to create new products and services. These entrepreneurs are working inside some very large corporations, while some are just starting out.

BMW makes the Mini. Take a look at the number of configurations we as consumers can order – from shape to stripes to wing mirrors. It’s virtually individualised production. Marketing, engineering and production have worked together to form a seamless Industry 4.0 smart manufacturing process. The enabler is the internet of things (IoT) and the industrial internet of things (IIoT). Those folks at BMW are entrepreneurs.

On the other side of the spectrum are start-ups. Entrepreneurs who think ‘let’s make a better widget’. New materials, such as graphene, means they may just be the first to market with ultra-thin and ultra-strong products.

Our experience is that it’s the traditional manufacturers like BMW who are making the best use of new materials and new manufacturing processes. By working with research and industry organisations and closing in on a tight supply chain, BMW are reaping massive rewards from Industry 4.0.

However, as I mentioned in my last article for The Record, there is an area which is spinning off some small but important Industry 4.0 innovations – artificial intelligence (AI). Bennit, a small US start-up backed by some of the smartest people in the industry, is making waves. People make decisions in a manufacturing environment daily. When those decisions are followed and turned into results via more and better production, then it learns. It begins to understand what works and what does not. Curiously, AI does not need to know why, just what works and what does not.

This ability to skip the engineer’s intense curiosity to figure out the ‘why’ means it can be applied quickly with immediate results. The whole idea of not understanding the ‘why’ may seem counterintuitive, but that is exactly why corporate or start-up entrepreneurs are making it work for them. It will work for a simple reason – it delivers a return on investment. Industry 4.0 and smart manufacturing may seem a technical game, but as always, it’s actually about the money.

Mike James is president of the Manufacturing Operation Management Institute

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