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Monetizing Industry 4.0: Design Principles for Subscription Business in the Manufacturing Industry
(2019)
Subscription business models have a major role for monetizing products and services for manufacturing companies in the age of Industry 4.0. As the manufacturing industry has difficulties generating revenues through digitalization, the implementation of innovative business models are essential to remain successful. Physical assets are often capital-intensive and require a more complex manufacturing process than subscription business models. Moreover, subscription models can focus on the individual customer benefit and a consistent service transformation, constituting a unique selling proposition and a competitive advantage. Hence, the following paper provides a management model that enables manufacturing companies to successfully realize the transformation towards a subscription business model. The management model presents four major fields of action, each matched with one design principle that must be considered when dealing with subscription models in the manufacturing industry. These principles were determined by an in-depth case study analysis among various manufacturing companies. Opportunities, challenges and recommendations for action were then systematically derived and integrated into the management model.
Data-driven services play an important role in
innovative business models of successful manufacturing
companies: They hold great potential for the creation of unique
selling points and improve the differentiation of manufacturing
companies in highly competitive markets. However, the large
number of newly invented digital services that fail shortly after
launching implies that companies struggle with the invention and
implementation of data-driven service solutions, which ends in a
waste of resources. The following paper introduces guideline
principles for successful innovation processes for data-driven
services. The principles were identified during in-depth case
studies with manufacturing companies. They contribute to a
necessary paradigm change for manufacturing companies in
terms of data-driven services for machines. The six identified
principles emphasize new aspects regarding the new dimension of
data-driven solutions and improve the life cycle management of
products and services. They demonstrate how the rules of agile
development can lead to successful and more efficient service
innovations in the industrial sector.
Digitally connected industrial production promises faster and more efficient processes - in development and production, services, marketing & sales and for adapting entire business models. Agility and the ability to make changes in real time are strategic chracteristics of successful companies in Industrie 4.0. To acquire these features, it is necessary to create a continuously expanding data base. However, a company's organisational structure and culture also play an important part in determining whether this data's potential is leveraged effectively.
This acatech STUDY describes a new tool for helping manufacturing enterprises to forge their own individual path towards becoming a learning, agile company. The acatech Industrie 4.0 Maturity Index is a six-stage maturity model that analyses the capabilities in the area of resources, information systems, culture and organisational structure that are required by companies operating in a digitalised industrial environment. The attainment of each development stage promises concrete additional benefits for manufacturing companies. The model's practical application was validated in a medium-sized company.
The change from the traditional to the digital service provider is not easy. The digital maturity level of many industrial companies is still too low to successfully place these digital service innovations on the market. One problem of service development is the increasing involvement of information and communication technology in service development and implementation. The additional technology makes the innovation processes for services on the part of manufacturers increasingly complex by involving different internal and external stakeholders (e.g. IT partners, data protection officers or product development departments). In addition to this, data-driven services also require that manufacturers (e.g. data scientists) develop new competencies in order to use the customer data obtained to increase machine productivity and to offer new business models. Furthermore, industrial companies that want to successfully offer data-driven services must develop new market introduction strategies to create a high degree of acceptance and trust among their customers. This is necessary to get access to relevant data. These and other challenges caused the success rate of companies in regarding the development of new, industrial services to shrink.
To change this, this white paper presents six principles that help industrial enterprises to develop new successful data-driven services.
The FIR at the RWTH Aachen University continuously develops the concept and the principles of RoM further. It is already noticeable that the gap between companies that began preparing their maintenance departments for Industrie 4.0 years ago and those that are still struggling with the mere foundations of a professional maintenance organisation is rapidly increasing.
The first driver of the development sparked by Industrie 4.0 is the collection of and work with condition data. It is used to create a digital shadow of a service, e.g. maintenance measures in a specific
context. In the future, critical machine functions will be monitored continuously within production processes.
Based on these observations, the likelihood of machine failures can be predicted, which makes it possible to prioritize data-based maintenance measures. This means that maintenance activities, i.e. production plans, are based on prognoses regarding machine failures. By doing so, the currently existing separation between inspection, maintenance and reactive measures can be overcome, resulting in a holistic approach to maintenance. Maintenance specialists receive support from assistance systems, which give them access to all relevant information (e.g. machine history, spare part availability, proposals for measures, etc.). As a result, they can take on routine tasks in different areas as well and contribute to the increased flexibility of the production process. Although data is becoming an increasingly important driver of successful maintenance strategies,
maintenance employees continue to be central to specific tasks, machines and systems. In the future, it can be expected that they choose to become experts in a certain field and, ideally, actively share their knowledge with others within an open maintenance culture. Systems for interdisciplinary collaboration will be made part of everyday practice.
The maintenance department will be a center and distributor of knowledge in the agile company of the future.Only through the interaction of the outlined success principles, which amount to a paradigm shift within the maintenance department, the potential
benefit of maintenance as defined by RoM can be fully exploited, creating a long-term competitive advantage for those who consistently follow the path towards Industrie 4.0 in maintenance.
Today, however, agility is seen more than ever as a critical success factor for companies. In times of an increasing degree of digital interconnection and minimum viable products, a mentality is entering the industrial service sector that has so far only been exemplified by Internet companies (e.g. Google): New products and especially digital services are developed in highly iterative processes. To this end, customers are involved in early test phases of development and provide feedback on individual functional modules, which – in contrast to the previous approach – are only gradually assembled into a market-ready “100 percent version”. But especially with the development of new digital services, companies must ensure more than ever that both the existing analog service business and the design of new digital services are geared to effectiveness and efficiency in order to meet the growing demands of customers and competitors.
To achieve this, companies must not only be familiar with the products currently on the market, but also master the entire product history, which in some cases goes back more than 30 years and varies greatly from one industry to another.
Today, machine manufacturers generate a significant share of their revenues with the provision of services. At the same time, they are confronted with the challenge of adopting of Industrie 4.0.
One of the most important Industrie 4.0 concepts is the idea of the digital shadow, which contributes to the comprehensive structuring of different kinds of data from different data sources. It can be defined as the sufficiently precise, digital representation of reality in real-time.
Thus, it also functions as a database of the considered area of a company that can be used for numerous applications. It serves as a central platform for the aggregation and distribution of data. Thereby, it helps to open isolated data silos. A system architecture that enables extraction of data from various sources and the aggregation of that data is an important prerequisite for the digital shadow.
In addition, the merger of data from different sources requires a model of the part of the company to be mapped digitally. In this paper, we focus on maintenance, repair and overhaul (MRO) services of machine manufacturers. The scope comprises the whole order processing of a service including the utilized resources and the obtained results.
MRO services and their single elements are mapped and structured using a case study research in a first step. Those elements provide a basis for designing the digital shadow. A second contribution of this paper is a data model for the digital shadow of MRO services that entails a comprehensive representation of that department.