Digital Transformation Part 9 - Product Digitalization

In the "Digital Transformation: Lessons Learned on the Way to Value" interview series, Digital Strategy and Business Transformation experts Don Mishory and Jim MacLennan discuss a simplified Digital Transformation framework for defining and realizing value across your business. In Part 9, Don & Jim answer this question: How does product digitalization deliver value?

Transcript

Don: The last area I want to ask you about: Especially in manufacturing-oriented or product-oriented organizations, what are some of the digital trends that you’re seeing that traditional products are being used to innovate with?

So, you mentioned AI, we talk a lot about Mixed Reality as a set of technology, [can you share] your insight as to where we’re going to see some of that digitalization on products?

Jim: Well a lot of manufacturing firms start by doing it for their own shop floor. I mean there’s definitely this thread, a lot of people want to start with what’s called internet 4.0 or the industrial internet. To me, that’s Internet of Things (IoT), used inside your own four walls. ‘I’m going to apply IoT sensors and things on my machines. I may buy products now that have these sensors, and I’m going to start optimizing my operations but I’m going to teach my company to understand how metrics and data can impact how this stuff works on the floor.’ That’s great because you get optimization benefits but you also start learning: ‘Huh, if I want to make a product that does this well, this is all the stuff I’m going to have to think about.’ So, it’s a great way to learn and fail and test your hypotheses and succeed and not necessarily freak out a lot of customers.

Definitely in products, when they get into adding data to products, people are now seeing that they can expand more into the service business. Some people don’t like service businesses, some people understand that they’re great because the profitability of service and spare parts and replacement parts is really high. So very much a data-driven, top line.

And then back to internal operations, if you’re really understanding the flow of data, from the supply chain all the way out to the end customer, there’s a lot of opportunity to pull costs down and drive optimization there as well.

When it comes to e-commerce, manufacturing, yes. Especially B2B. We are just scratching the surface in ecommerce because over the years they’ve pushed it off as long as they could, but now the average buyer and their customer is getting younger and is expecting everything to be as easy as Amazon is; drop ship and the whole nine yards. So, ecommerce is getting big with digital in two different ways. Data that will sort of facilitate transactions and take the friction out of transactions. As well as the complexity of data required to engineer solutions with your products. So you see a lot of efforts going there as well.

So that’s a pretty broad stretch of areas where manufacturing has lot of opportunities to gain but also sort of generate savings.

Don: We’re seeing a lot of excitement around being able to push computing power and logic further and and further and further out. So, products themselves having the ability, in the products itself, to process complex AI algorithms, making decisions in the product. That’s an area that we’ve seen some innovation on, so I think that aligns what you’re saying.