As we hurtle toward a new year, everyone talks about New Year’s resolutions. For global electronics original equipment manufacturers (OEMs), the best place to start would be a decision to get in step with the manufacturing developments that have to potential to disrupt the industry in the coming year.
3D printing: The hype is over, let the benefits begin
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. But, just like IoT, 3D printing will enter a new, more mature phase in 2018.
We are already seeing developments that point in that direction. A new generation of 3D printing companies is moving into manufacturing 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.
Stratasys has collaborated on a new printer, the Demonstrator, that combines three printers into a stack system, with each one able to communicate to its neighbors in real-time. The new printer is highly scalable, meaning it can significantly increase production capacity, printing up to 2,000 components a day. This means that businesses can achieve an economy of scale to bring costs down, which will be an important catalyst for the success of the 3D printing technology.
The aviation industry is currently leading the way when it comes to using 3D printing to create product differentiation. The new GE turboprop ATP Engine used 3D printing techniques to combine 855 engine components into just a dozen parts, helping deliver a 20% lower fuel burn and 10% higher cruise power compared with competitor’s offerings.
The expanded capacity and reduction in pre- and post-processing that new, highly innovative 3D printing companies are bringing to the field mean that, in 2018, I think we will see manufacturing companies joining in with A&D, and fly high with new 3D printing capabilities.
Servitization as a main source of revenue
With the manufacturing industry becoming more and more commoditized, the need to differentiate yourself is key to survival and profitability. Many manufacturers are now shifting to a more service-centric business model, or ‘servitization’ as a way to add capabilities to enhance their overall offering in addition to the product itself. Apple did this when it had gained the majority of market share with the iPod, introducing iTunes and Apple Music to increase loyalty, differentiate itself, and generate more revenue.
Companies are starting to reap the rewards of servitization across several different sub-segments. Philips provides Schiphol airport outside Amsterdam with “lighting as a service” – Schiphol pays for the light it uses, while Philips remains the owner of all fixtures and installations. This model has resulted in a 50% reduction in electricity consumption without even having to buy a lamp.
Meanwhile, 68% of manufacturing companies claim that servitization 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 are still to derive value from servitization, missing out on revenue streams and new ways to develop their offerings. To keep up with market and technology changes, manufacturers must look to new business models to compress time to market, taking an idea through from design to a saleable item as quickly as possible.
In 2018, manufacturers will need to realize that with technology accelerating as fast as it is, today’s luxury products turn into tomorrow’s commodities faster than ever before, pulling prices down with them. With servitization, manufacturers escape the corrosion of commodification. Expert services built on years of experience provide value customers will always pay for, regardless of technology trends.
IoT as part of the design process
Manufacturing is one of the markets most heavily impacted by IoT today. According to Global Market Insights, IoT in the manufacturing market was valued at over $20 billion in 2016 and will grow at more than 20% (Compound Annual Growth Rate estimate) from 2017 to 2024.
2018 will change the perception of IoT from just a sensor added to manufacturing products to become the brain of the product. The next evolution of IoT will see sensors constantly receive, process and send information of the product throughout its lifetime, enabling new services and revenue streams.
There are currently three key IoT initiatives unique to the manufacturing environment that are taking place: smart manufacturing, connected products and connected supply chains.
Smart manufacturing, or Industry 4.0, is the method of using IoT to increase production output, product quality and workforce safety while lowering resource consumption. This is backed up by connected products, which collect information on product performance for remote diagnostics and maintenance, and connected supply chains, helping increase visibility and coordination by tracking assets and inventory.
Manufacturers are quickly realizing that by engineering IoT technology into products and equipment already in the design process, they will be able monitor not only the equipment’s performance to predict when it needs repair, but also how and when it is being used—providing game-changing competitive advantages.