The rise of digitalization and automation in manufacturing is resulting in the generation of a colossal volume of data. Previously, businesses would gather data (often manually) across the business and try to draw a meaningful conclusion from any further examination.
The challenge was that a good data conversion seldomly made an impact across the value chain.
Today, new technologies are connecting the manufacturer directly to their operations and their customers like never before. With historical data as a foundation, manufacturers can fulfill a promise to end customers.
They can track inventory anywhere in the supply chain as well as track and forecast delivery dates of raw materials as well as accurately forecast manufacture dates.
One way in which manufacturers are collating data at the edge is through the Internet of Things or a network of interconnected sensors, instruments and other devices. Businesses are then able to access a single source of truth through their ERP system and use data insights to facilitate the improvement of productivity and efficiency.
While data insights are clearly the route to improved operational efficiencies, the industry is also asking whether there is an opportunity to generate new revenue streams through data monetization and the re-exploration of business models.
Defining data monetization
Gartner defines data monetization as the process of using data to obtain quantifiable economic benefit. Internal or indirect methods include using data to make measurable business performance improvements and inform decisions.
External or direct methods include data sharing to gain beneficial terms or conditions from business partners, information bartering, or offering information products and services (for example, including information as a value-added component of an existing offering).
Gartner goes on to say that businesses use information as an asset and create new services or enter new business models.
There are a few ways that manufacturers can monetize data.
1. Blurring the distinction between products and services
Some manufacturers are seeing the benefits of not only selling a product, but also offering a post-sales service through a ‘pay and use model’.
Take for example a traditional refrigerator manufacturer. Imagine if they were to attach an IoT sensor to each of their appliances to monitor up-time and the product’s average temperature and humidity on the customers’ premises.
As soon as any of these factors drop below a certain threshold, the device could send a message via the ERP system, which could in turn create a ticket and notify a technician that they need to address the issue on that refrigerator.
Predictive maintenance can then allow that manufacturer to improve overall customer service by reducing equipment breakdowns and they could even offer an extended maintenance contract.
Manufacturers could also use this opportunity to upsell and cross-sell more products, especially when the refrigerator reaches end-of-life.
Often referred to as ‘assets-as-a service’, ‘equipment-as-a-service or servitization, this type of transition from a product to service offering would require a good understanding of end customer pain-points. This connected society will ultimately allow manufacturers to build better products.
2. Enabling cross-sector collaboration
Data can also open pathways to cross-sector collaboration. A good example could be a partnership between an electronics manufacturer that produces alarm tracking systems for motor vehicles and the car hire industry.
The car rental company can leverage data from the manufacturer to monitor how drivers are treating the vehicles and to monitor speed. The manufacturer can then monetize both their devices and their data by collaborating across various industry sectors.
3. eCommerce as a new route to market
2020 SYSPRO research revealed that organizations that were impacted by supply chain disruptions started to shift their operations to accelerate their digital transformation journeys. In fact, 67% stated that due to digital initiatives such as e-commerce, they could continue to trade effectively during the pandemic.
Manufacturers can leverage existing eCommerce platforms such as Amazon to sell products directly to consumers online with APIs, or software intermediaries that allow application programs to interact with each other and share data.
APIs are integrated into an ERP system for manufacturers to gain first-hand information on what customers are buying. By analyzing this information, manufacturers can gain a host of critical insights.
Considerations for the smart manufacturer of the future
To embrace these new business models and new digital routes to market, all of your data needs to be live and all systems need to be integrated.
Here, ERP acts as a platform to integrate systems and provides real-time visibility into stock, while supporting the collection and control of payments from direct consumer sales.
It is also vital to select an IoT agnostic ERP system that is compatible with all of the major IoT platforms to achieve these improved efficiencies and added revenue streams.
Last, but not least, your ERP provider should be cloud compatible to allow you to collect all data from IoT devices.