Digital Ecosystem: the acceleration from automation to personalisation

We are currently in the middle of the rapid developments that are transforming the way we work and the digitisation of the workplace. Often referenced as the Fourth Industrial Revolution (in short Industry 4.0), the future opportunities around personalisation and mass customisation of products and services are already being assessed as the potential Fifth Industrial Revolution – Industry 5.0. 

If Blockbuster, Toys R Us and Kodak had learned the lessons of constant innovation from manufacturing industries, they might not have missed the digital revolution. Many organisations are yet to explore what Industry 4.0 means to them and yet potentially we are not that far away from entering the fifth revolution. The challenge for many organisations is how to keep innovating and increasing agility when the pace of change is only accelerating.

We have explored previously how a strong Infrastructure and Operations capability is one of the foundations of an organisation’s future-ready digital ecosystem. We believe that in order to gain efficiency and streamline their physical and industrial environments, organisations will need to focus on:

1. Increasing their agility through new business models and technology
2. Empowering their people
3. Exploiting the digital synergies between physical and virtual technology

Both Industry 4.0 and 5.0 set the scene for the organisations addressing these challenges. 

Industry 4.0 drives agility 

Industry 4.0 is based on cyber-physical systems, which digitise manufacturing and operations using sensors, data exchanges, the internet of things (IoT), cloud computing and machine learning. It takes basic automated machines and adds a layer of data extraction and exchange to improve organisations’ supply chain. In essence, the real world is converging with the digital world , allowing more automation in factories, faster decision making based on sensor data, and higher efficiency in the production and logistics processes. 

Industry 4.0’s impact on the world-wide supply chain has already been significant. Now it is much easier and cheaper to innovate, research, develop and manufacture with minimal reliance on third party suppliers. Ten years ago, new entrants disrupted service businesses by providing better virtual offerings; the entrants of today disrupt factories by releasing and operating their own physical products at lower cost. 

As a result, organisations are reshaping their entire business models. They can bring heavy manufacturing from offshore back on-shore, they can cut ties to suppliers and run micro-factories that 3D or even 4D print the necessary components, or they can move to an asset light business where instead of physical products they sell templates. An example of this is Olli, a driverless shuttle bus manufactured locally in half a day. The firm behind Olli admits that they have an ‘unfair advantage’ due to their ability to produce directly from computer aided design (CAD), short time between design and production, and mass customisation without penalties for redesign. 

Efficiency is also increased through digital twins which help our clients understand how their physical products are performing in the real world and predict how they will perform in the future. Through analysis of data from connected sensors, a digital twin tells the story of a physical thing (such as a car) from testing to the end of its life-cycle. Technologies like natural language processing, machine learning, visual recognition and others can help determine which tests should be run more frequently against a digital twin, and which tests are no longer necessary. In essence, it contributes to the trends in Industry 4.0 which bring intelligence to dormant technologies.

Industry 5.0 lets the people in

Though some businesses are yet to react to Industry 4.0, the next stage, Industry 5.0 is imminent and looks to bridge the gap between the human capabilities of creativity and the efficiencies of robots. There are two key implications of this transition – an increase in collaboration between people and machines and an increase in customisation of products.

We expect to see people and machines working seamlessly side by side, as discussed in our previous article on Digital Workforce. Organisations will be redefining the roles of their people working on shop floors at factories and plants. Today’s warehouse operations can be fully automated  , and the industry is already experimenting with last mile delivery robots .  What is often overlooked is that efficiency and creativity are higher when people work together with robots, rather than when machines work independently. As mundane operations and manufacturing become automated, personnel receive more freedom to design personal products and monitor them through the lifecycle, which are necessary in product-as-a-service models. This added human value is the focus of Industry 5.0. To succeed in this future environment, we believe that firms building operations need to develop a long-term vision for how to bring people and robots together . 

At Moorhouse we see Digital Customers expecting customisation of goods rather than mass produced products, and Industry 5.0 promises such higher personalisation. Whilst Nike and Audi allow customers to configure their products today, Industry 5.0 will see data collected on customers preferences being fed to a human working alongside a robot, to build tailored products in superfast time. This will be particularly critical for developing digital health solutions by gathering health data, triangulating it and refining a manufacturing process for each product, such as a 3D printed hip replacements or an AI-empowered device that delivers insulin into the blood of patients with diabetes . 

Some of the enabling technology is already available, and whilst its adoption is in early stages, we believe that accelerated innovation will soon make customisation widespread rather than premium.

Exploiting the digital synergies

Traditionally, organisations kept their corporate digital capabilities and manufacturing capabilities separately. In the digital future, this pattern is going to change. Over the past years, both the corporate and manufacturing sides of our clients have adopted similar agile and lean approaches, similar product management principles and similar tools. It is no longer efficient to produce and operate physical digital products independently from virtual services or solutions.

The battle for the digital car will be one of the first where strong synergies will emerge between digital services from the likes of Google and Apple and physical products from traditional manufacturers like Volvo. In the future, organisations that excel in infrastructure and operations will adopt the same approaches and resources (including people) to develop physical, embedded and virtual solutions.

What this means is that firms need to start bridging any gaps between IT and physical operations’ capabilities related to data science, Internet of Things and automation. Businesses with market leading infrastructures should also make sure that these internal capabilities are closely aligned to those of their external partners. 

Preparing for the future

For many organisations, it is easy to feel overwhelmed by the advancements in new technologies and talk of constant revolution. It leaves many paralysed and unable to react to changing consumer and market demands, and even widely praised digital natives such as Tesla struggle to get the balance of innovation, profitability and demand right. 

In order to start, we believe organisations should consider:

  • Where their operations could be managed differently, and what new business models they can unlock by reshaping their manufacturing and supply chain.
  • How to shift from manufacturing products to offering services, and building products that are efficient, secure, and provide real-time data from the field.  
  • How to help their people adapt to new ways of working.

By focussing on these points, businesses start transitioning to what we call Digital Infrastructure and Operations. It means empowering organisations with digital solutions that lead to efficiency and agility and streamline their entire physical and industrial environments including supply chain, manufacturing and operations. As part of our Digital Journey offering, Moorhouse helps organisations reach excellence in their Digital Infrastructure and Operations. 

Themes of people, change and technology are similar to the ones previously explored in Digital Workforce. We will dive deeper into product design in the next perspective about Digital Products and Services.

For more information, please contact Indi KaliraiNikita Knyazev or Don McShee.

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