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Forget Internet of Things – The Real Business Transformation Explained

January 12, 2016 Leave a comment

I took my 5-year old to Jet Propulsion Lab one day he was quite amazed with this shining object exhibit that is supposed to demonstrate how data are being transmitted from space. Once upon a time we must have been amazed by imagining these lights moving along indicating live communication with a remote object. Now we all take the data transmitting part for granted. On the contrary, apps and cartoons about how our lives have changed by technologies are what is getting more of our attention today. One day we will look at the Internet of Things (IoT) in the same way.


In the past year, there have been many inquiries from manufacturers around the world about buzz words such as Industrie 4.0, Smart Manufacturing and IoT. While there have been a lot of information on new technologies, less focus has been on the business transformation underway. What is beyond the automation of existing tasks? What are the fundamental changes from a business perspective? How do you prioritize the transformation of different parts of business for such changes?

To answer these questions, we need to better understand the underlying mechanism of these changes. I would propose one way is to look at these issues in the light of “Smart Pull,” a concept that expands the traditional definition of Pull in Lean manufacturing to a new world enabled by digital technologies.

The mechanism of Pull processes – those triggered by an actual event instead of a forecast (Push) – is nothing new. It is at the heart of many successful manufacturing strategies, MTO (Make-to-Order) and JIT (Just-in-Time) models. In the new paradigm, there are three major types of Pull made possible by digitization.

Collaborative Pull – This refers to the ability to draw out people and resources inside and outside an organization to collaborate on addressing a need as it appears. Some of the key technology enablers are virtual prototyping, simulation, additive manufacturing, social networking and enterprise search. These technologies enable people and resources across the globe to be identified quickly to work on a design or to solve a particular challenge, and to do so with better efficiency.

Services-oriented Pull – This refers to the ability to deliver a capability addressing a need as it appears. Famous examples are Uber personal transportation services or AirBnB lodging services. In each of these cases, a transportation or accommodation are delivered as a service to address a customer’s need through a social platform powered by Apps. In many cases, the pricing model is also based on the actual consumption of these services. MaaS or Manufacturing-as-a-Service is the consumption of manufacturing capacity as a service. Enabling technologies including IoT, intelligent sensors, cloud computing and social network platforms that carry out transactions required for matching sellers and consumers on-demand.

Adaptive Pull – This is the most common type of Pull used in manufacturing and logistics operations. Within traditional Lean manufacturing, Pull-based processes are being powered by digital technologies to go beyond elimination of over-production and inventory. Quality, maintenance, costing, procurement, production and inventory control can leverage these types of Pull processes. For example, a large number of real-time quality data can be gathered to analyze and benchmark across global production sites. Frontline workers and managers can now be automatically notified based on risks identified from such actual data. This is again a form of digital Pull that can be used to trigger an action based on actual data instead of a forecast. Enabling technologies include intelligent sensors, M2M, IoT, Big data analytics, BPM (Business Process Management), simulation and digital modeling.

These different types of Pull processes can be mixed and matched to create new customer experiences, or to pursue new level of efficiency. An example of a mixed Pull is the case of agricultural equipment manufacturer Kubota. They put sensors on their agricultural equipment to gather usage data at the field. Based on these data collected and analyzed, they now offer a value-added service to the customers on how to better optimize their farming operations. At the same time, such information is used to understand demand patterns. This knowledge has let Kubota know when to sell what types of equipment, and to which type of user. In this scenario, an equipment manufacturer and farmers work collaboratively to optimize farming operations (Collaborative Pull). The data analysis can then be sold as a service (Service-oriented Pull). The selling of additional equipment based on actual demand is also a type of demand Pull (Adaptive Pull).

The advantage of thinking in terms of the above “Smart Pull” concept is that it takes the focus away from technology and put it on business transformation. Challenges and inefficiency based on Push are then presented as opportunities. Perhaps you can start asking the following questions to identify areas of opportunities.

  • What kind of improvement in capital lockup or wait time has most impact to business?
  • Can these areas be improved by Pull?
  • Which part of your customer engagement or operation inefficiency can be addressed by changing from push to pull?

Perhaps the day will come when design, engineering, manufacturing, logistics and after-sales resources are all available as services to be called upon on demand just like what Uber is doing to transportation resources. A consumer could then use his or her phone to customize an order that meets his or her special needs. All the necessary industrial resources could then be orchestrated – on demand – based on Pull to fulfil each specific order. The concept of “Smart Pull” is truly revolutionary, given its role to help bring these business transformations to market.


The Post Industry 4.0 World

August 14, 2015 Leave a comment

Veerle from France was on a business trip at California and met her colleague Linda, the Californian lady who was wearing a silver bracelet of a spiral design that got her attention. She quickly took a picture and posted on her facebook public page about this surprise finding and commented that while this was a really nice piece of artwork, her skin may be allergic to silver and so she would not be able to wear it. She then attended a business meeting on the topic of Industry 4.0 that she did not realize at that time, could change her whole experience on her tasteful affection towards accessories.

Hype or Hope?

There has been many interpretation and messages overflowing the media about the 4th industrial revolution. Depending on the agenda behind each technology provider, automation vendor, system integrator or consulting partner, the emphasis has been different. Some of the common themes would include:

  • Integration from topfloor to shopfloor
  • Integration across supply chain
  • Integration between manufacturing and engineering
  • Shifting to a services-oriented business model
  • Installation of new robots and automated equipment
  • Driven by the Internet of Things (IoT)

And hey, aren’t we already doing all these things before someone labelled it as Industry 4.0? So is there anything truly revolutionary or is this just another marketing hype? Adding to the confusion is that the terminology came from Germany’s government initiative and many countries have been following suit to start their own initiatives of similar kind. China 2025, La nouvelle France industrielle, Smart Manufacturing Leadership Coalition (US), Robot Revolution Initiative Council (Japan)… to name but a few. All these initiatives are back by government resources. What is the common core concept that is driving all these initiatives with different terminologies?

This is not a revolution that has already happened. It is about groups of organizations putting resources to start a revolution. Many who do not understand the core concept and its endgame would easily jump into the conclusion that this is nothing more than an abstract marketing hype without any substance behind it.

It is 2008 All Over Again

To judge whether this could be truly revolutionary, I believe one should fast-forward and take a look at the new industrial world that is in the making. The industrial world today is somewhat like the consumer world 7 years ago, before cell phones become “smart” and mobile tablets were almost unknown. Probably very few could have seen why we need our mobile devices to connect to the internet other than for the purpose of reading emails and most would contend with their lives without Apps, Social and all other gadgets such as watches connected to their cell phone. Back then, some of the most advanced phones were made in Japan and names like Nokia and Blackberry were the dominant forces in the cell phone market. Few would have seen the coming of iOS and Andriod as the dominant software platforms that eventually pushed out phone giants who did not adapt. It has become a world that is all about the Apps. Phones which cannot run these killer apps won’t sell despite their superior HW capability. Billion dollars of transactions are now running today on these platforms touching almost every part of our daily life.

The Brave New World

In the Post Industry 4.0 world, industrial Apps will be running on a few dominant software platforms that orchestrate smart products, people, devices, sensors, production cells, robots, lines, factories which all will have not only their own IP addresses and smart built-in logics but also the capability to collaborate with each other through a set of standards and protocols. Manufacturing of a product could be about running an App on an operating system platform that coordinates all the manufacturing resources globally on demand. Production Lines will be so flexible and adaptable that they are no longer lines but individual cells that reconfigure themselves according to each product that carries its own specifications and bill of material. Every product coming out of the lines is hence custom built according to demand. Any unplanned interruption like quality issues, machine problems, and skilled worker sick leaves would be handled on spot through dynamic negotiation between intelligent agents to arrange an alternative path, somewhat similar to how flight delay and weather conditions are handled by travel agents. This new world operates in drastic contrast to the paradigm of factory automation and CIM (computer integrated manufacture) which were initiatives a decade ago based on centralized control. This world of smart devices are more adaptable and agile as they operate through a dynamic network of decentralized intelligence, capable of identifying themselves, discovering the others as well as collaborating and  optimizing on-the-fly.

The end game does not stop there. In the post Industrial 4.0 world, these industrial Apps will be able to talk to all the other Apps in the consumer world to act according to demand. The Facebook, Amazon, twitter world will now have access to the vast resources in the industrial world and orchestrate them to meet individual consumer demand. The line between B to C and B to B will be blurred and consumer will experience a whole new world.

The world of design and applied research will also join the game. The science of physics, biology, chemistry, material science will be part of the building blocks for designing new products from a molecular level, as they are being exposed as Apps and services, pulled by consumer demand as needed. This mechanism is sometime called “Smart Pull”.

There are apparent obstacles ahead in coming to terms with global standards, converging SW, HW, ICT technologies and some of today’s players will extinct or evolve. This new world may dawn slowly and gradually through-out the next decade as the industrial world is highly complex and interwoven. Many leaders are currently caught up by the complexity and forgot to view Industry 4.0 in the light of new era of experiences.

The Unique Experience

During Veelre’s wedding anniversary 2 months later, she was extremely surprised that her husband got her a new watch that was made with the same design that delighted her in California, with a new material of silver engineered for her DNA so it does not cause skin allergy. In the post Industry 4.0 world, intelligent Apps and Agents across both consumer and industrial platforms will be working actively behind the scene to dynamically synthesize science, design, manufacturing and logistics to create nothing short of revolutionary when viewedburberry-engraved-charm-bracelet-watch from the perspective of consumer experiences.

Categories: Uncategorized

How technologies have changed the way I deal with the Great East-Northern Japan Earthquake?

March 21, 2011 Leave a comment

I remember the president of Mitsui told me about why he started his pet IT project with me back at 2005. “My vision is that if Mitsui can function even during the great Tokyo earthquake, then we will be the number one company in the world. It all depends on how we handle unexpected events, not routines.” He believed that through business process management and hence process automation, Mitsui can function even during an unexpected disruption of unprecedented scale. While dealing with the aftermath of the recent events in Japan is certainly a bigger problem than trying to be the world’s number one company, it would be interesting to check back with him on how much his vision has achieved.

I was there at Kobe when the last earthquake hit with M7.9 at 1995. That quake had destroyed houses, freeway and brought down all the lamp posts around me in mere 15 sec. How did it feel in the recent event of which was a M8.9 (100 times stronger) hit for 6 minutes is way beyond my imagination. Nevertheless, information technology has leapfrogged in the past 16 years and I have noticed a lot of changes in how people in the world dealing with such an event. Back then, I had only been able to turn on my car engine and listen to the radio. I had not had any means to contact anyone. Had I been outside of Japan back then, I might not have known about the event till much later. Even if I had known, I could not have done much than being a sitting duck and praying.

Here are a few major changes that I noticed:

1. Respond faster through a Distributed rather than Centralized network

I was instant-messaging with a friend in Tokyo who told me an earthquake had just hit at 3/10 Thursday evening California time. I quickly did a Google search on “Japanese Earthquake” and I could not believe the number that I saw: M8.9. I thought there might be an error in the system. I then turned on TV and did other searches but there were very limited information to indicate a major disaster had just happened. Because of my experience in Kobe earthquake, I immediately knew that M8.9 could be a 100 times worse than what I had experienced back then. How should I confirm that before any images come on TV news? The next thing that I did was checking on Live Web Cam in Japan. Most of them were down but after several trials, I got some images of cars stopped in messy orientation at Tokyo downtown. I knew then that this was actually happening. I quickly posted on Facebook and emailed some friends to check with people whom I know. I spent the next few hours emailing, SMS, Skyping and twittering till I got tired and went to sleep. I did not get to see the horrible images of the Tsunami on TV till the next morning. Direct contact between individual devices that are loosely connected was definitely spreading information faster than a centralized architecture such as TV or radio broadcast.

2. Discover solutions on-the-fly through collaboration

I got a close relative living in Sendai who had not checked-in. I posted that on Facebook and quickly got several suggestions on how to locate him from my friends around the world. I then contacted his company through emergency line and we registered at Google people finder. I kept monitoring twitter and Facebook on minute-by-minute live events as people around Japan posted their feeds. We finally located him after more than 24 hours after the earthquake when one of his colleagues who identified him sent me a text message. That was such a relief. In reflection, it is not as easy for his colleague to send us a message because power to the mobile was such precious asset under the circumstance. My relative could not contact us because his phone was out of power.

3. Leverage Real-time monitoring across the globe

I thought I could catch my breath after I confirmed safety of all my friends and relatives but then come the news of the nuclear plant explosion. I have been keeping a look on the real-time radiation levels across multiple locations around the Fukushima nuclear plant through an official website.

4. Employ agent-based alert to catch and respond to events

I have also set to receive alert email on the aftershocks and how transportation systems are being affected. Based on this information, I do not have to hunt for information but being notified when events that I am interested in occur. I have hence adjusted the travel schedule accordingly.

5. Derive strategy through social media

It is interesting to point out that the rolling power outrage after the earthquake when Fukushima nuclear plant went down was first socialized through social media before putting into action. Social media was also used to gain support on the call for stopping panic buying. Irrational buying behavior was generally not observed and resulted in a big contrary to the run on salt and baby formula in some neighboring countries. (OK, I admit that part of this was owing to the very beautiful side of Japanese culture)

Internet, web, mobile devices, social media, Wi-Fi, physical sensors and webcams, event-driven alert and alarm, real-time monitoring from anywhere, all are indicating that democratization of information has replaced or complemented central broadcasting of news through TV and radio.

How about the manufacturing world?

It is kind of ironical to think of many global manufacturing companies that I am working with has not really leveraged much of the above mentioned technologies. Executives and managers still depend on occasionally bumping into colleagues at the hall way to discover whether the most critical machine in their supply chain is down. Even the enabling technologies are available, there is still limited sharing of best-practices manufacturing processes across geographic locations. KPI report upon which million dollars decisions are depended, are still weeks or sometimes months after the fact. The majority of the mobile devices, sensors and individual control units are not interconnected. Centralized systems like ERPs that depend on aggregating data and then broadcast a plan are still driving the majority of the manufacturing process. In wake of such an unexpected event that went beyond anyone’s imagination, I suppose that it is high time to ask: how well prepared is your organization for the next Tsunami?