Headline Verdana Bold The impact of digital transformation on industries Tim Hanley, Deloitte Global Leader, Consumer & Industrial Products Industry group March 2017. Sao Paolo, Brazil
Headline Verdana Bold
The impact of digital transformation on industriesTim Hanley, Deloitte Global Leader, Consumer & Industrial Products Industry group
March 2017. Sao Paolo, Brazil
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What we will cover
• Impact of IoT on industries
• Developments in advanced technologies
• Digital developments in various industries
• Strategic considerations
• Digital transformation lessons
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Impact of IoT on industries
View of Industry 4.0
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Companies are using IoT to impact their
businesses in several ways, to:
• Enhance customer experience
• Generate new revenue
• Create efficient operations
• Achieve product differentiation
• Improve aftermarket / aftersales experience
• Reinvent their business models
• Collaborate with others to innovate
Impact of IoT on industries
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Industry 4.0
Represents the completion of the physical-to-digital-to-physical transition, enabling manufacturers to create value in the physical products
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Source: Deloitte University Press. Industry 4.0 and manufacturing ecosystems. Exploring the world of connected enterprises. 2016.
• Industrial Internet
• Connected Enterprise
• SMART Manufacturing
• Smart Factory
• Manufacturing 4.0
• Internet of Everything
• Internet of Things for
Manufacturing
Industry 4.0 is known by several
terms:
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Industry 4.0
• Significant pace of innovations in advanced technologies
• Industry convergence leading to new ecosystem collaborations
• As-a-service opportunities
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Developments in advanced technologies
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Which advanced technologies will we see?
(Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, 2016 Global Manufacturing Competitiveness Index)
Ranking of future importance of advanced manufacturing technologies by US CTOs
US: Predictive Analytics, Smart Products (IoT), and Advanced Materials are considered most promising
China: Prioritizing Predictive Analytics to close the gap with the US and creating competitive
advantage through HPC
Europe: Integrated priorities very much aligned with “Industry 4.0” paradigm, creating
closed loop design/build process
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Some trending advanced technologies
• Artificial Intelligence
• Drone technologies
• Robots as colleagues
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Digital developments in various industries
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Digital transformation in manufacturing
Grow
• Adding intelligence to existing products• Creating new data products and services• New product possibilities through I4M tech
Products
• Marketing and selling products• Aftermarket experience• Dealer integration
Customers
• Reducing “idea to market” time• Linking design with product intelligence• Improving engineering effectiveness
Engineering
• Demand sensing and planning• Supply planning and supplier integration• Outbound network optimization
Planning
• Enhancing capability effectiveness• Production asset intelligence• Activity synchronization and flow
Factory
• Creating leverage for technical talent• Customer configuration knowledge• Support optimization
Support
Operate
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Source: Deloitte University Press. Industry 4.0 and manufacturing ecosystems. Exploring the world of connected enterprises. 2016.
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Digital developments in consumer products
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Wearable technologies
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Digital developments in consumer productsEngage customers in innovation
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3-D printed mold enables made-to-measureCustom printed shoes power elite athletes
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Digital influence on the retail experience
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Source: Deloitte. The new digital divide. The future of digital influence in retail
$0.56
Amount of every dollar spent in a store which is
influenced by a digital interaction
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Digital developments in retailMaking a payment
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Digital developments in retailReinventing how to reach consumers
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Tesco Virtual Store in Seoul Subway Kate Spade Virtual Store in NYC
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Digital developments in automotiveFuture of mobility
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Digital developments in buildingsConnected buildings - “The Edge” in Amsterdam
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Digital developments in energy
• Rising global demand for energy
• Renewable energy growth
• Energy as integral to ecosystems
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Strategic considerations
Supply chains
Ecosystems
Service opportunities
Cybersecurity
Talent
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Supply chains are getting “smarter”A few trends in the distribution setting
• Higher traceability of products along the supply chain enabled through connected technology
• Voice-directed warehousing or voice picking using speech recognition
• Mobile and wearable augmented reality technologies and adaptive robotics in distribution centers
Source: Deloitte University Press. Industry 4.0 and distribution centers. Transforming distribution operations through innovation. October 2016
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Emergence of new ecosystems
• Collective ability to learn, adapt, and, innovate together to capture new value
• Public policy and collaborative investments from government and business are vital
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Innovation requires collaborative supportMany nations have invested heavily in ecosystems to connect people, policies and organizations to translate ideas into commercial products and services
An illustration of the current US innovation ecosystem
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Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, Advanced Technologies initiative. Manufacturing & Innovation
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Public and private partnerships
3Open innovation and ecosystem
Ford, Dow, and Oak Ridge Laboratory have created a partnership to bring each of
their expertise in materials, process technologies, and federal research and grants to
develop lower-cost, more energy efficient vehicles. In June 2012 the US DOE
committed $9 million to funding this partnership.
Material innovation
Identify new, low-cost, and light weight
materials and design manufacturing
processes that enable OEMs to reduce
vehicle weight and cost while maintaining
safety
2
Process technology
New process and design
technologies and
manufacturing methods will
be required to enable these
materials to be applied to
composite automobile frames
for high volume production
4
1Unmet need
Ongoing trends related to sustainability and
energy efficiency driving OEMs like Ford to
explore new ways to reduce energy use in their
high-volume vehicles with low weight materials
Source: DTTL Global Manufacturing Industry group. Reigniting growth: Advanced Materials Systems. 11 December 2012Source: Deloitte Global Manufacturing Industry group. Advanced Materials Systems© 2016. For information, contact Deloitte Touche Tohmatsu Limited.
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Service opportunitiesExample: Hitachi - Rail-as-a-service
• Hitachi Insights Group formed to bring together Hitachi’s unified Internet of Things (IoT) business and go-to-market strategy
• Hitachi has USD$5.4 billion in IoT solutions and services revenue generated in 2015 and 33 solutions in-market
• Hitachi pioneering Rail “As a Service” in the United Kingdom
• Exploring digital transformation and “As a Service” plays across industries
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Service opportunities
Example: After-market service opportunities
Telematics devices in machinery to predict failures and engage in proactive maintenances and repairs
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Service opportunitiesMobility-as-a-service
• Mobility as a service (MaaS) has potential to revolutionize transport and will change our mobility experience as consumers
• MaaS offerings will likely incorporate autonomous vehicles
• Collaboration between a consortium of players
• Technology that makes Maas work is already here
Watch Ben’s Journey
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Cybersecurity
Developing a mature, advanced cyber risk program starts with investing in a balance of secure, vigilant, and resilient capabilities tailored to the organization and aligned to its strategic goals.
• Work to define standards for interoperability
• Use purpose-built devices or add-ons, rather than pre-IoT solutions
• Develop clear responsibilities for the players in your ecosystem
• Establish a baseline of data
• Institute data governance
• Create loosely coupled systems
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A changing workforceDigitalization and demographical changes
The workforce of the future more globally minded and connected
Many highly-qualified employees want to be able to work independently of time and place
Millennials want rewarding and purposeful work experience By 2020, 70% of your
workforce will be Millennials
70% by
2020
Freelancing
Growing use of independent workers for short-term projects
34% of US workforce freelance with expected growth to 50% by 2020
Women
Surge in migration of high-skilled women. Highly skilled female immigrants in OECD countries rose 150% to 14.4 million between 1990 and 2010
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Source: Deloitte Global Human Capital Trends 2016. The new organization: Different by design.The Wall Street Journel. Four Nations Are Winning the Global War for Talent. October 2016
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Future of work – “Augmented workforce”
41 percent
Number of companies fully implemented or made significant progress to adopt cognitive and AI technologies within their workforce
34 percent
Number of companies in the midst of pilot programs
17 percent
Number of global executives say they are ready to manage a workforce with people, robots and AI working side by side
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Source: Deloitte Global Human Capital Trends 2017. Rewriting the rules for the digital age
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Importance of robotics, cognitive computing and artificial intelligence (AI)
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Source: Deloitte Global Human Capital Trends 2017. Rewriting the rules for the digital age
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Readiness for digital transformation
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Source: MIT Sloan Management Review and Deloitte. 2016 Digital Business Study.
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Companies are asking a range of questions about digital
• What does digital mean for my enterprise?
• How do I digitize critical areas of the business?
• What infrastructure do I need?
• How do I get the value out of the data I have?
• What are the leaders within the industry doing?
• What outside approaches could we adopt?
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Transforming into a digital industrial company
General Electric
1. Baseline your capabilities
2. Build a vision
3. Look for some quick wins that generate value
4. Don’t be scared of partnering
Source: GE presentation “Who’s going to eat your lunch?” at IoT Solutions World Congress. 25 October 2016
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Six keys to digital transformation
• Begin with a strategy-informed ambition
• Lead with capabilities
• Be agile and flexible
• Drive to value
• Build in sustainability
• Invest in talent
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