IoT being built into the product design, manufacturers adopting a more service-centric business model, and 3D-printing reaching the tipping point of realizing business benefits on a large scale. These are the three game-changing predictions that Antony Bourne, IFS Global Industry Director of Industrial and High-tech Manufacturing outlines for 2018.
1) By the end of 2018, over 50 percent of manufacturers will be building IoT technology into the design phase of their products.
In 2018, IoT will take a decisive step forward in its evolution. If we once thought of IoT as a product’s nervous system, this year will see it grow from picking up signals at the periphery to being the brain of the product, constantly sending, receiving, growing and gathering information, from the center of the product throughout its lifetime, and in the process enabling new services and revenue streams.
Manufacturing is undoubtedly heavily impacted by IoT today. According to Global Market Insights, IoT in the manufacturing market was valued at over US$ 20 billion in 2016 and will grow at more than 20 percent up to 2024. Current IoT investments that are unique to the manufacturing environment are taking place in three major initiatives:
- Smart manufacturing to increase production output, product quality, or operations and workforce safety as well as lower resource consumption
- Connected products to impact product performance, including collecting detailed information on products in the field, remote diagnostics and remote maintenance
- Connected supply chains to increase visibility and coordination in the supply chain, tracking assets or inventory for more efficient supply chain execution
We will see IoT included as a part of the design process in all three of these IoT initiatives. Manufacturers are realizing that by engineering IoT technology into products and equipment already in the design process, you can monitor not only the equipment’s performance to predict when it needs repair, but also how and when it is being used—which provides game-changing competitive advantages!
2) Servitisation speeds ahead: by 2020, most manufacturers will earn over half of their revenue from services
With the manufacturing industry becoming more commoditized, the need to differentiate yourself is key to survival and profitability. We now see that a large number of manufacturers are shifting to a more service-centric business model. The buzz word is “servitisation”.
Servitisation is a way for manufacturers to add capabilities to enhance their overall offering in addition to the product itself. Apple, which did this a few years ago when it had gained the majority of market share with the iPod and introduced iTunes to increase loyalty, differentiated itself, and generated more revenue. You may think that it will never apply to your business, but companies are now reaping the benefits of servitisation across many different sub-segments.
For global furniture manufacturer Nowy Styl Group, servitisation has been crucial to its growth. Last year, its clarion call was, “for us, chairs are not enough”, starting a transformation from pure manufacturer to world-class office interior consulting company. Another example is a manufacturer of cleaning products that started offering delivery and service dosing systems. The company understood that choosing the right cleaning products was just part of its customers’ main objective, i.e. keeping its premises hygienic. Applying the products in the most effective way, choosing the right accessories, establishing the right routines— all these too were crucial to keeping premises clean.
Both these customers realized that with technology accelerating as fast as it is, no matter how beautifully designed a chair, or how effective a cleaning product, today’s luxury products turn into tomorrow’s commodities faster than ever, pulling prices down with them. Expert services built on years of experience provide a kind of value customers will always pay for, regardless of technology trends.
According to the IFS Digital Change Survey, conducted by the research and publishing company Raconteur, 68 percent of manufacturing companies claim that servitisation is either “well-established and is already paying dividends” or “in progress and is receiving appropriate executive attention and support”. However, almost one in three manufacturing companies has yet to derive value from servitisation.
They are missing out on revenue streams and new ways to develop their offerings. To be successful in their response to customer needs and increasing demands, manufacturers must look to new business models to compress time to market, and taking an idea through from design to a saleable item as quickly as possible.
New technology like IoT adds an additional layer to servitisation. With sensors detecting when your product or equipment needs service, this data can trigger an automated service action that will realize significant benefits to make your service organization more effective. This type of automated predictive maintenance will become more common as it is a natural next step after implementing IoT to optimize service efforts.
3) By 2019, the 3D printing print will be exhausted, with real benefits blooming
Like IoT, 3D printing will enter a new, more mature phase. No matter how big the ‘wow’ factor is when we first see it, apart from smaller-scale manufacturing production like hearing aids and jewelry, 3D printing has so far failed to live up to its full potential. All this could change in 2018, and refresh 3D printing with renewed momentum.
A couple of developments point in that direction. The first is the improved scalability of 3D printing solutions. A new generation of 3D printing companies is moving into manufacturing traditionally dominated by injection-molding manufacturers, with new, faster, better connected automated systems that reduce some of the time-consuming pre- and post-processing that has been such an obstacle to wide-scale uptake.
One company, Stratasys, has collaborated on a new printer, the Demonstrator, that combines three printers into a stack system—each printer able to communicate to its neighbors in real time. The new printer is highly scalable, meaning it can significantly increase production capacity, printing from 1,500–2,000 components a day. You can now achieve an economy of scale to bring costs down, an important catalyst for the success of the 3D printing technology.
The aviation industry is already pioneering 3D printing technology, and the manufacturing industry can learn from that effort. One successful example is the new GE turboprop ATP Engine, which was 35 percent 3D printed, taking it down from 855 components to 12 and contributing toward the engine being lighter, more compact, and delivering a 15 percent lower fuel burn and 10 percent higher cruise power compared with the competitors’ offerings.
The expanded capacity and reduction in pre- and post-processing that new, highly innovative mid-size 3D printing companies are bringing to the field mean that, in 2018, we will see manufacturing companies flying high with new 3D printing capabilities.