the impact of digital transformation on industries · headline verdana bold the impact of digital...

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The impact of digital transformation on industriesTim Hanley, Deloitte Global Leader, Consumer & Industrial Products Industry group

March 2017. Sao Paolo, Brazil

2 | Copyright © 2015 Deloitte Development LLC. All rights reserved.

What we will cover

• Impact of IoT on industries

• Developments in advanced technologies

• Digital developments in various industries

• Strategic considerations

• Digital transformation lessons

© 2017. For information, contact Deloitte Touche Tohmatsu Limited. 2

Impact of IoT on industries

View of Industry 4.0



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

4© 2017. For information, contact Deloitte Touche Tohmatsu Limited. 4


Industry 4.0

Represents the completion of the physical-to-digital-to-physical transition, enabling manufacturers to create value in the physical products


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:


Industry 4.0

• Significant pace of innovations in advanced technologies

• Industry convergence leading to new ecosystem collaborations

• As-a-service opportunities


Developments in advanced technologies



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

© 2017. For information, contact Deloitte Touche Tohmatsu Limited.8


Some trending advanced technologies

• Artificial Intelligence

• Drone technologies

• Robots as colleagues


Digital developments in various industries



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


Source: Deloitte University Press. Industry 4.0 and manufacturing ecosystems. Exploring the world of connected enterprises. 2016.


Digital developments in consumer products

12© 2017. For information, contact Deloitte Touche Tohmatsu Limited.

Wearable technologies


Digital developments in consumer productsEngage customers in innovation


3-D printed mold enables made-to-measureCustom printed shoes power elite athletes

http://cdna.tid.al/cd29c26be3ebba123ab746d4dafbc4d5555023d5_600.jpeg


Digital influence on the retail experience


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


Digital developments in retailMaking a payment



Digital developments in retailReinventing how to reach consumers


Tesco Virtual Store in Seoul Subway Kate Spade Virtual Store in NYC


Digital developments in automotiveFuture of mobility



Digital developments in buildingsConnected buildings - “The Edge” in Amsterdam



Digital developments in energy

• Rising global demand for energy

• Renewable energy growth

• Energy as integral to ecosystems


Strategic considerations

Supply chains

Ecosystems

Service opportunities

Cybersecurity

Talent



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



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

© 2017. For information, contact Deloitte Touche Tohmatsu Limited.

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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


Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, Advanced Technologies initiative. Manufacturing & Innovation


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.

24


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



Service opportunities

Example: After-market service opportunities

Telematics devices in machinery to predict failures and engage in proactive maintenances and repairs



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


https://www.youtube.com/watch?v=KTQLulPUowE


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



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


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


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


Source: Deloitte Global Human Capital Trends 2017. Rewriting the rules for the digital age


Importance of robotics, cognitive computing and artificial intelligence (AI)


Source: Deloitte Global Human Capital Trends 2017. Rewriting the rules for the digital age

Digital transformation lessons



Readiness for digital transformation


Source: MIT Sloan Management Review and Deloitte. 2016 Digital Business Study.


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?



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



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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About this presentationThis communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, ortheir related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice orservices. Before making any decision or taking any action that may affect your finances or your business, you should consult aqualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by anyperson who relies on this communication.


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