Lecture 7 - Transforming Businesses and Smart Products

Question 1

How are smart products transforming businesses (how have they changed)?

Answer 1

• Conventional Products were composed solely of mechanical and electrical parts in the past.
• But now Products have become complex systems that combine
• hardware
• sensors
• data storage
• Computing entity
• software
• connectivity

Question 2

What oppotunites do smart products offer to transform businesses?

Answer 2

• New functionality
• Far greater reliability
• Much higher product utilization
• Capabilities that transcend traditional product boundaries.

Question 3

How are smart products transforming business thinking?

Answer 3

• The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally.
• The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs.
• Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
• These new types of products alter industry structure and the nature of competition, exposing companies to new competitive opportunities and threats. They are reshaping industry boundaries and creating entirely new industries.

Question 4

How are smart products transforming business strategic choices?

Answer 4

• Smart, connected products raise a new set of strategic choices related to
• How value is created and captured
• How the huge amount of new (and sensitive) data they generate is utilized and managed
• How relationships with traditional business partners are redefined
• What role companies should play as industry boundaries are expanded
• What makes smart, connected products fundamentally different is not the internet, but the changing nature of the “things.”
• It is the expanded capabilities of smart, connected products and the data they generate that are ushering in a new era of competition.

Question 5

How are smart products transforming business - How were they different before compared to now?

Answer 5

• Before the advent of modern information technology, products were mechanical and activities in the value chain were performed using manual, paper processes and verbal communication.
• The first wave of IT, during the 1960s and 1970s, automated individual activities in the value chain, from order processing and bill paying to computer-aided design and manufacturing resource planning. This resulted in increase in productivity.
• The rise of the internet, with its inexpensive and ubiquitous connectivity, unleashed the second wave of ITdriven transformation in the 1980s and 1990s.
• This enabled coordination and integration across individual activities; with outside suppliers, channels, and customers; and across geography. It allowed firms, for example, to closely integrate globally distributed supply chains.
• The first two waves gave rise to huge productivity gains and growth across the economy. While the value chain was transformed, however, products themselves were largely unaffected.
• Now, Information Technology is becoming an integral part of the product itself. Embedded sensors, processors, software, and connectivity in products, data storage and analysis, resulting in improvements in product functionality and performance.
• Massive amounts of new product-usage data enable many of these improvements.

Question 6

How are smart products transforming business - How will they get better?

Answer 6

• There will be new and better products.
• In addition, production process will alter by changing product design, marketing, manufacturing, and after-sale service and by creating the need for new activities such as product data analytics and security.

Question 7

What are the three core elements of smart products?

Answer 7

Smart, connected products have three core elements:
* Physical components
* “Smart” components
* Connectivity components
Smart components amplify the capabilities and value of the physical components.
Connectivity amplifies the capabilities and value of the smart components and enables some of them to exist outside the physical product itself.

Question 8

What are physical components?

Answer 8

• Physical components comprise the product’s mechanical and electrical parts. In a car, for example, these include the engine block, tyres, and batteries.

Question 9

What are smart components?

Answer 9

• Smart components comprise the sensors, microprocessors, data storage, controls, software, and typically an embedded operating system and enhanced user interface. In a car, for example, smart components include the engine control unit, antilock braking system, rain-sensing windshields with automated wipers, and touch screen displays.

Question 10

What are connectivity components?

Answer 10

• Connectivity components comprise the ports, antennae, and protocols enabling wired or wireless connections with the product.

Question 11

What 3 forms can connectivity components take?

Answer 11

• One-to-one: An individual product connects to the user, the manufacturer, or another product through a port or other interface. Example, when a car is hooked up to a diagnostic machine.
• One-to-many: A central system is continuously or intermittently connected to many products simultaneously. For example, many Tesla automobiles are connected to a single manufacturer system that monitors performance and accomplishes remote service and upgrades.
• Many-to-many: Multiple products connect to many other types of products and often also to external data sources. An array of types of farm equipment are connected to one another, and to geo-location data, to coordinate and optimize the farm system. For example, automated tillers inject nitrogen fertilizer at precise depths and intervals, and seeders follow, placing corn seeds directly in the fertilized soil.

Question 12

What type of purpose does connectivity serve in smart products?

Answer 12

• Connectivity serves a dual purpose. First, it allows information to be exchanged between the product and its operating environment, its maker, its users, and other products and systems.
• Second, connectivity enables some functions of the product to exist outside the physical device, in what is known as the product cloud. For example, in Bose’s new Wi-Fi system, a smartphone application running in the product cloud streams music to the system from the internet.
• To achieve high levels of functionality, all three types of connectivity (one to one, one to many, many to many) are necessary.
  REFER TO SLIDES FOR ABBs, Schindler PORT and Big Ass Fans EXAMPLE

Question 13

What do smart, connected products require?

Answer 13

Smart, connected products require that companies build an entirely new technology infrastructure, consisting of a series of layers known as a “technology stack”.

Question 14

What does a technology stack include?

Answer 14

This technology stack includes :
* Modified hardware
* Software applications
* Operating system embedded in the product itself
* Network communications to support connectivity
* Product cloud (software running on the manufacturer’s or a third-party server) containing the product-data database
* A platform for building software applications
* An analytics platform
* Smart product applications that are not embedded in the product

Question 15

TECH STRUCTURE

Answer 15

REFER TO SLIDE 30

Question 16

How are the tech structure layers accesses with examples?

Answer 16

All the layers are accessed through an identity and security structure, a gateway for accessing external data, and tools that connect the data from smart, connected products to other business systems. For example, ERP(Enterprise resource planning ), Product lifecycle management (PLM) and CRM (Customer relationship management) systems.

Question 17

What is ERP?

Answer 17

ERP (Enterprise resource planning) system: ERP system track business resources (cash, raw material, production capacity, orders and payroll etc.

Question 18

What is PLM?

Answer 18

Product lifecycle management (PLM) system: PLM is the process of managing the entire life cycle of a product from its inception through the engineering, design, manufacture as well as service and disposal of manufactured products.

Question 19

What is CRM?

Answer 19

CRM (Customer relationship management) system: CRM manages the company’s relationship and interaction with customers and potential customers.

Question 20

How is IOT and the technology stack helping development?

Answer 20

• IoT enables not only rapid product application development and operation but the collection, analysis, and sharing of the potentially huge amounts of data generated inside and outside the products that has never been available before.
• Building and supporting the technology stack for smart, connected products requires substantial investment and a range of new skills—such as software development, systems engineering, data analytics, and online security expertise—that were rarely found in manufacturing companies in the past.

Question 21

What are the four area of the capabilities of smart connected products?

Answer 21

• Monitoring
• Control
• Optimization
• Autonomy

REFER TO SLIDE 35 FOR MORE EXPLANATION

Question 22

What is monitoring?

Answer 22

• Smart, connected products enable the comprehensive monitoring of a product’s condition, operation, and external environment through sensors and external data sources.
• Using data, a product can alert users or others to changes in circumstances or performance.
• Monitoring also allows companies and customers to track a product’s operating characteristics and history and to better understand how the product is actually used.
• The collected data has important implications for design (by reducing over-engineering), market segmentation (through the analysis of usage patterns by customer type), and after-sale service (by allowing the dispatch of the right technician with the right part, thus improving the fix rate).
• Monitoring data may also reveal warranty compliance issues as well as new sales opportunities, such as the need for additional product capacity because of high utilization.

Question 23

What are some example of monitoring?

Answer 23

• In some cases, such as medical devices, monitoring is the core element of value creation.
• # Medtronic’s digital blood-glucose meter uses a sensor inserted under the patient’s skin to measure glucose levels in tissue fluid and connects wirelessly to a device that alerts patients and clinicians up to 30 minutes before a patient reaches a threshold blood-glucose level, enabling appropriate therapy adjustments.
• Monitoring capabilities can span multiple products across distances.
• Joy Global, a leading mining equipment manufacturer, monitors operating conditions, safety parameters, and predictive service indicators for entire fleets of equipment far underground.
• Joy Global also monitors operating parameters across multiple mines in different countries for benchmarking purposes.

Question 24

What is control?

Answer 24

• Smart, connected products can be controlled through remote commands or algorithms that are built into the device or reside in the product cloud.
• For example, “if pressure gets too high, shut off the valve” or “when traffic in a parking garage reaches a certain level, turn the overhead lighting on or off, or display the filled capacity”.
• Control through software embedded in the product or the cloud allows the customization of product performance to a degree that previously was not cost effective or often even possible.

Question 25

What are some examples of control?

Answer 25

• The same technology also enables users to control and personalize their interaction with the product in many new ways. For example, users can adjust their Philips Lighting hue light bulbs via smartphone, turning them on and off, programming them to blink red if an intruder is detected, or dimming them slowly at night.
• Doorbot (now named as Ring, https://ring.com), a smart, connected doorbell and lock, allows customers to give visitors access to the home remotely after screening them on their smartphones.

Question 26

What is optimisation?

Answer 26

• The rich flow of monitoring data from smart, connected products, coupled with the capacity to control product operation, allows companies to optimize product performance in numerous ways, many of which have not been previously possible.
• Smart, connected products can apply algorithms and analytics to dramatically improve output, utilization, and efficiency.

Question 27

What are some examples of optimisation?

Answer 27

• In wind turbines, for instance, a local microcontroller can adjust each blade on every revolution to capture maximum wind energy. And each turbine can be adjusted to not only improve its performance but minimize its impact on the efficiency of those nearby.
• Real-time monitoring data on product condition and product control capability enables firms to optimize service by performing preventative maintenance.
• Advance information about what is broken, what parts are needed, how to accomplish the fix reduces the repair costs.

Question 28

What is autonomy?

Answer 28

• Monitoring, control, and optimization capabilities combine to allow smart, connected products to achieve a previously unattainable level of autonomy.
• At the simplest level is autonomous product operation like that of the iRobot Roomba, a vacuum cleaner that uses sensors and software to scan and clean floors in rooms with different layouts.
• # More-sophisticated products are able to learn about their environment, self-diagnose their own service needs, and adapt to users’ preferences.
• Autonomy not only can reduce the need for operators but can improve safety in dangerous environments and facilitate operation in remote locations.
• # Autonomous products can also act in coordination with other products and systems. For example, the energy efficiency of the electric grid increases as more smart meters are connected, allowing the utility to gain insight into and respond to demand patterns over time.
• Ultimately, products can function with complete autonomy, applying algorithms that utilize data about their performance and their environment—including the activity of other products in the system—and leveraging their ability to communicate with other products.
• Example, The Google self-driving car project , Waymo. - REFER TO SLIDES