Industry 4.0 & More…

I have been asked by a consultant recently that what does the term “Industry 4.0”  means to you and how you see its relevance in Indian context. So I thought of putting my views together to express what I make of Industry 4.0 and more.

Industry 4.0 is the term coined by Germans putting 4 components together. It comprises of Automation, data transfer and processing in Manufacturing environment, cloud based automated systems and IOT/AOT. It gets supports from cloud based systems and data processing to provide data mobility, consistency and security. If a manufacturing unit has all this incorporated, we call it a Smart Factory (of course a term derived from Smart Phone). At times, the term also get linked to 4th Industrial Revolution which emphasis interconnected systems (IoT) hence Industry 4.0.

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Source: DFKI (2011)

With latest modular structures (a place of everything and everything in its place) equipped with automated system will help monitoring floor activities at a factory. An integrated cloud based environment like this will empower decentralized (modular) decision making. This is possible when IoT and automated systems communicate and create synergy with humans in real time. And hence the one link which connects all other 4 components is Human (hence I prefer calling Industry 4.0 and more), without which such an environment cannot not achieve its full potential. Coupled with similar external systems, backward and forward integrated services will create a complete value chain.

If I go back to the original design principles of Industry 4.0, it suggests that there are 4 design principles in Industry 4.0. These principles help manufacturing units to identify and implement Industry 4.0 scenarios. Interoperability, Data Transparency and consistency (SVOT i.e. Single Version of Truth), Technical Support and Decentralized decisions. One can call this Digital Transformation of factories but a real meaning of what Industry 4.0 is missing. Everyone is excited about the term without knowing its real goal. I believe that anyone can achieve this if they stick to the basic four principles. Hiring agencies or expensive consultants resulting expense of millions without a goal will create only negative bottom lines. We must take one step at a time but make sure its a sustainable one. In Indian context, I would say that we are just scratching the surface of it and a genuine appreciation of what transformation requires is lacking. Inadequate IoT infrastructure is amongst the chief obstacles businesses face when launching such initiative. And because labour remains cheap in India, it’s easier for companies to hire people to do jobs that this transformation could otherwise do. Many Indian executives surveyed by the EIU confirm such infrastructure issues are a major impediment to such transformation. One-third (33%) point to a lack of affordable broadband connectivity in this context, and another 35% complain of a lack of technology solutions within their manufacturing units. Human resource talent shortages also hold companies back in their efforts to push this. There is no lack of engineering specialists with the ability to address technical challenges. But once done it will start showing its impacts very early. Latest communication systems coupled with data analytics (AoT) will help reducing the losses due to many manufacturing fugai (manufacturing defects) enabling increase productivity and quality. This also help achieving Total Productive Maintenance (TPM – which requires another 500 words to explain so may be my next blog).

To summarize, Impact in industry 4.0 environment, the decisions are based on processed data and errors does not get multiplied to incur losses but get stopped at its inception only. This processed data (Informative insights) is available in real time with management equipping them to take decision with estimated projections/scenarios. These scenarios are generated using complex algorithm and analytics. As a true impact, real time data gives us projected scenarios and decision being made on factory floors to reduce or stop such future losses or increase the gain.

India’s Connecting Capabilities

This is an excerpt from the whitepaper published by The Economist on “Connecting Capabilities” which is an in-depth research program exploring the potential for digital transformation within 11 countries in Asia. I have shared my views on India’s capabilities and its digital transformation index in the same. I would like to thank and congratulate the intelligence unit of The Economist for the the effort. I would like to share this with my readers.

The Environment for Digital Transformation

Digital transformation is currently a hot topic in India, according to Vikash Kumar, chief digital officer of Trident Group, a diversified manufacturing company. The finance and IT sectors, strategy consultancies, marketing agencies and parts of government are all pushing a digitisation agenda. Consumers are also clamouring to become digitally empowered, he says, for example through better mobile broadband capabilities. A genuine appreciation of what digital transformation requires is lacking, however. “Everyone in India is excited about going digital but few know how to implement it,” Mr Kumar observes. “Too many executives believe that it amounts to having a website which you can find on the first page of Google. But digital is about much more than this.” Inadequate ICT infrastructure is amongst the chief obstacles businesses face when launching almost any type of digital initiative. In the digital infrastructure category of the Index, India ranks last or next to last in most indicators. “Most advanced digital technologies are not readily available in India,” says Mr Kumar, “and need to be obtained in the US or Europe.” They are also extremely costly for Indian businesses, he complains. And because labour remains cheap in India, he adds, it’s easier for companies to hire people to do jobs that technology could otherwise do. Many Indian executives surveyed by the EIU confirm such infrastructure issues are a major impediment to digital transformation. One-third (33%) point to a lack of affordable broadband connectivity in this context, and another 35% complain of a lack of technology solutions within their organisation. Talent shortages also hold companies back in their efforts to push digitisation. There is no lack of engineering specialists with the ability to address technical challenges, says Mr Kumar. “But when it comes to people with advanced digital skills in areas such as design or UX [user experience], we have to turn to countries such as Singapore or the US”.

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Figure 1. Asia’s Digital index (Research Credit : The Economist)

The Front line: Digital Transformation of Businesses

Four-fifths of Indian business executives report that their firms’ investments in digital transformation “have already proved their value. ” When asked about the nature of the benefits they have gained, top of the respondents’ list is more innovative ideas for new products and services. Following closely behind are expanded reach into new markets as well as cost savings. In terms of digital technologies, social media has been the dominant focus of digital transformation initiatives thus far, judging by the survey responses, reinforcing the view that many companies have tended to view digital as primarily a marketing tool. This looks likely to change, however, as respondents indicate that more transformation efforts will involve big data and analytics in the future. Infrastructure and digital talent shortages, as discussed, are difficult impediments to transformation. The most serious obstacle to progress, however, in Mr Kumar’s view, lies squarely in the executive suites of Indian businesses, including the IT sector. Technology and talent shortages are surmountable, he believes. But changing executive mindsets about digital is another matter altogether. “There is good talent at entry and middle levels of management,” he believes. “Unfortunately, however, not many people are available with the right kind of vision and strategy to man the top positions.” This contributes, Mr Kumar observes, to organisational inertia when it comes to digital change. “Most companies in India are two decades or more old and have this fear of change to do something new, even if the technology is available.”

Digital Transformation, one step at a time

Using digital technology to drive change is a challenge in any organisation, whatever its size or industry profile. Achieving it in a sprawling manufacturing conglomerate employing over 12,000 people may be considered particularly testing. “We are like an elephant which is trying to run,” is how Vikash Kumar describes his digital transformation challenge. In 2015 he was appointed chief digital officer of Trident Group, a venerable Indian manufacturing firm with separate businesses in paper, chemicals, power equipment, linen and yarn. “You have to understand that the processes which we have been following are 30 or 40 years old.” Mr Kumar’s approach to implementing a digital strategy has therefore been to start small. The first step was to establish a dedicated digital team which, he emphasises, is involved in more than digital marketing; it has a remit that overlaps with IT and other functions. Thus a major early achievement was to ensure that all enterprise information flows through electronic systems and is no longer registered manually. Digital transformation, believes Mr Kumar, relies on how efficiently and quickly information flows through a company’s IT system, and how consistent its data is across the platform. “We now have a ‘single version of the truth’ across every department in the business,” says Mr Kumar. “The information is available everywhere, including via a mobile platform to employees on the move.” The most obvious early benefits have been in time and cost savings which, he says, have been especially significant for the HR function. Another is transparency, made possible with the help of an e-supply chain management system. “We buy and sell using digital platforms, be it staplers, pins or huge fabric dyeing boilers. There is a system for everything, and everything is now on a system.” Moving all information systems onto one enterprise-wide platform is a first in the Indian manufacturing industry, says Mr Kumar. It’s a start of the company’s digital transformation but, he acknowledges, there is a long, difficult road ahead before the destination is reached.

 

Please follow the link for complete research. http://connectedfuture.economist.com/country/india/ 

 

Trinity of AoT and More

I have an agenda with this blog: To change the way people use IoT (Internet of Things) and data gathered from it. This is the right time to change how we perceive things when enterprises, companies (small or big) and individuals are planning to invest in IoT and if time and money permits in AoT (Analytics of Things). For more than a decade, we have seen how web analytics has evolved itself. For a bigger part of this piece, I have used analogy of web analytics to make it more simple for a novice to understand the concepts of AoT. So as was applicable on world wide web in early years, we have been relying on faith-based initiatives when it comes to IoT, its Data collection, process and Analysis. Which is obvious because that is how we decide in our daily life and professional careers as well. But do we really need to do it when we have enough data to bank upon?

Internet of Things, according to me are “Devices which can generate and share/ communicate data over Internet with other devices”. So essentially , the basic infrastructure of an IoT system are

  1. Devices (Things able to capture information)
  2. The Network (Medium to communicate)
  3. System (to process information generated by things).

At present, we live in the most data rich eco-system in the history of mankind. We are on the quest of finding such other lives on distant planets with the help of this data ecosystem. Usage of data is becoming more popular day by day as we are getting used to smart devices, internet and connectivity. Its easier to communicate, travel, work, run or even sleep with the help of data. Today we want our surroundings to be smarter than yesterday. We want our needs to be understood and this more or less comes out as a pattern it starts watching closely. Artificial intelligence is an advance science of these patterns only. This blog will talk about things which surround us with lesser degree of complexity or at least what they appear to be on surface. I will let you decide as at times simplest things are most complex to design. I might be digressing but the point what I am trying to reach is that these patterns are recordable and hence create a data bank. If you can design a system which can read the patterns hidden within the data, this can help you to unfold the true potential of Analytics of things; you will begin to decipher the hours of readings, numbers, patterns etc.

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Figure 1. Actionable insights

Now put this in the business scenarios. We can use the data to determine how my machines are working, predict breakdowns, Invest in lesser inventories, lesser WIP, Shorter Turn Around Times (TAT), higher machine performance, Low insurance premiums and what not. Now in an individual case one can take Prescriptive Decisions to invest in his own health and time, avoid accidents in households, low health insurance premiums and the applications is limitless. If you know how to use the data right, you are the next billionaire and on the cover of a Tech Magazine. Many of them already are. But this blog is not about how to become a billionaire (if you know do let me know too), rather how to exercise right usage of IoT data. AoT is not about simply collecting the data, data processing and simple insights more like a salsa between your heart and your brain. It is Art and science applied simultaneously. It will tell you what is the economic value of the data generated by IoT in daily routine if you go through rigorous resultant analysis in the right direction. Imagine the below situation for a better understanding (Refer Fig 1). Being from the digital marketing world I worked upon huge chunk of web generated data, yet critical at times. But the lack of data types and depth leads to very less of meaningful data. As said by Avinash Kaushik , “I say this only partly in jest, we could blame incompetence on the lack of sufficient types of data.” So we always have a get-out-of-jail-free card.

 

 

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Figure 2. Trinity of AoT

I would like to introduce Trinity of AoT (credit to a best seller on Web Analytics called Web analytics: An Hour A day) here applicable for Analytics of Things. Trinity of AoT i.e Experience, Behaviour and Outcomes. Desired Experience-> Read Behaviour -> Correction in Outcomes (Refer Fig 2). Why “Trinity” because these three processes need others to exist for its own existence. I have modified to put a sequence in IoT context where I have taken Bottom to top approach. You set a target/task assigned to system to reach a desired experience. So you start noticing behaviour because deviations occurs. But reading behaviour will tell you What but not why ? We have the what : what part of machine is not working as desired? What is the average time taken to complete the task ? What sources are causing deviations ? what is and what is not ? But not Why. So You start noticing Outcomes and put a feedback in the system to improve results and decrease the gap in every iteration till we reach desired experience. Please note this is applicable only on certain IoT system which is targeted to reach such desired experience only. Any Auto Tuning system (with a feedback) could be an example.

I would like to stop here and wait for the feedback if you have read this far. I will write more IoT and its possible applications in coming weeks. I would like to know what else you want to know about IoT and AoT. Help me to help you better.

It Takes Two to Tango

Welcome to my first blog which shares my perspective on Indian e-Commerce specially on near past where all leading e-commerce portals started focussing on Home Furnishing and related categories instead of electronics category. Home furnishing was an ignored category in the yesteryear of eCommerce. But as per the e-Commerce home furnishing market 2016 report, in 2015 world eCommerce home hard and soft furnishings market, combined, were worth $39.9 Billion, with overall world furnishings market forecast to grow at a CAGR of 8.87% in the next 5 years. With cellphones (especially Smartphones) and increasing Internet penetration, end user can make the purchase on the go. This has led to a surge in the sellers and buyers on e-commerce platform. Sellers on the e-Commerce home furnishing portals now provide free deliveries, Cash on Delivery, easy exchange and replacement warranties.

A number of exciting figures and facts are available if you go in detail of complete report on e-Commerce home furnishing market available at Sandlerresearch The reports tell us that analysts forecast world’s e-Commerce home furnishing market to grow at a CAGR of 19.45% during the period 2016-2020. The report clearly indicates that Europe led the world e-Commerce home furnishing market and had a market share of more than 44% during 2015. The Luxury range with sale of premium-priced and customised home furnishing products in the west Europe especially UK, France, Italy, and Germany and the presence of leading vendors like Bol.com, IKEA with other premium stores in the region will contribute to the growth of this market in Europe in the years to come.

A few international brands / Sellers and many local vendors are making the world e-Commerce home furnishing market fragmented. Product portfolio, differentiation, and pricing plays pivotal role in the complete forecasting scenario. To create an impact in highly competitive environment, brands/stores need to distinguish their product and service offerings through a clear and unique positioning. There are few names which has done this successfully are amazon, Ikea, costco etc. Presence of these stores in US also plays an important role to become the leader.

a05ee29f-5b3d-4ee4-9161-a59fae4c3aa8-originalThe thing which enables these brands to provide better products with sufficient margin to operate is sourcing. Ideally, China would have been the obvious choice but to surprise, manufacturers like Trident Group and Welspun are one of the two big exporters apart from Alok Industries and others. The superior quality coupled with competitive pricing making India a better choice. In Indian perspective, despite of slump in foreign investment, the e-commerce is surviving and credit goes to focus on home furnishing category. Some consolidation and wallah ! ; we would enter into Indian E-commerce 2.0 where focus will shift from discounts to service quality. It will definitely going to take time and could be painful for some of the high aspiring startups (they will either die the slow death or bought by bigger players). Despite of all this chaos “it will take two to tango”, Home Furnishing and Indian E-commerce Industry in coming times.