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Information technology is revolutionizing products. Once composed solely of mechanical and electrical parts, products have become complex systems that combine hardware, sensors, data storage, microprocessors, software, and connectivity in myriad ways.
Information technology is revolutionizing products, from appliances to cars to mining equipment. Products once composed solely of mechanical and electrical parts have become complex systems combining hardware, sensors, electronics, and software that connect through the internet in myriad ways.
The changing nature of products is disrupting value chains, argue Michael Porter and PTC CEO James Heppelmann, and forcing companies to rethink nearly everything they do, from how they conceive, design, and source their products; to how they manufacture, operate, and service them; to how they build and secure the necessary IT infrastructure.
Smart, connected products raise a broad set of new strategic choices for companies about how value is created and captured, how to work with traditional partners and what new partnerships will be required, and how to secure competitive advantage as the new capabilities reshape industry boundaries.
Smart, connected products offer exponentially expanding opportunities for new functionality, far greater reliability, much higher product utilization, and capabilities that cut across and transcend traditional product boundaries. The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally.
These new types of products alter industry structure and the nature of competition, exposing companies to new competitive opportunities and threats. They are reshaping industry boundaries and creating entirely new industries.
Smart, connected products raise a new set of strategic choices related to how value is created and captured, how the prodigious amount of new and sensitive data they generate is utilized and managed, how relationships with traditional business partners such as channels are redefined, and what role companies should play as industry boundaries are expanded. Yet this phrase is not very helpful in understanding the phenomenon or its implications. The internet, whether involving people or things, is simply a mechanism for transmitting information.
Companies must look beyond the technologies themselves to the competitive transformation taking place. This article, and a companion piece to be published soon in HBR, will deconstruct the smart, connected products revolution and explore its strategic and operational implications.
Twice before over the past 50 years, information technology radically reshaped competition and strategy; we now stand at the brink of a third transformation. Before the advent of modern information technology, products were mechanical and activities in the value chain were performed using manual, paper processes and verbal communication.
The first wave of IT, during the s and s, automated individual activities in the value chain, from order processing and bill paying to computer-aided design and manufacturing resource planning. The productivity of activities dramatically increased, in part because huge amounts of new data could be captured and analyzed in each activity.
This enabled coordination and integration across individual activities; with outside suppliers, channels, and customers; and across geography. It allowed firms, for example, to closely integrate globally distributed supply chains. The first two waves gave rise to huge productivity gains and growth across the economy.
While the value chain was transformed, however, products themselves were largely unaffected. Now, in the third wave, IT is becoming an integral part of the product itself. Embedded sensors, processors, software, and connectivity in products in effect, computers are being put inside products , coupled with a product cloud in which product data is stored and analyzed and some applications are run, are driving dramatic improvements in product functionality and performance.
Massive amounts of new product-usage data enable many of those improvements. Another leap in productivity in the economy will be unleashed by these new and better products. In addition, producing them will reshape the value chain yet again, by changing product design, marketing, manufacturing, and after-sale service and by creating the need for new activities such as product data analytics and security. This will drive yet another wave of value-chain-based productivity improvement.
The third wave of IT-driven transformation thus has the potential to be the biggest yet, triggering even more innovation, productivity gains, and economic growth than the previous two. As with the internet itself, smart, connected products reflect a whole new set of technological possibilities that have emerged. But the rules of competition and competitive advantage remain the same. Navigating the world of smart, connected products requires that companies understand these rules better than ever.
Smart components amplify the capabilities and value of the physical components, while connectivity amplifies the capabilities and value of the smart components and enables some of them to exist outside the physical product itself. The result is a virtuous cycle of value improvement. In a car, for example, these include the engine block, tires, and batteries. Smart components comprise the sensors, microprocessors, data storage, controls, software, and, typically, an embedded operating system and enhanced user interface.
In a car, for example, smart components include the engine control unit, antilock braking system, rain-sensing windshields with automated wipers, and touch screen displays. In many products, software replaces some hardware components or enables a single physical device to perform at a variety of levels. Connectivity components comprise the ports, antennae, and protocols enabling wired or wireless connections with the product.
Connectivity takes three forms, which can be present together:. Connectivity serves a dual purpose. First, it allows information to be exchanged between the product and its operating environment, its maker, its users, and other products and systems. Second, connectivity enables some functions of the product to exist outside the physical device, in what is known as the product cloud. To achieve high levels of functionality, all three types of connectivity are necessary.
Smart, connected products are emerging across all manufacturing sectors. This alerts utility control centers to possible overload conditions, allowing adjustments that can prevent blackouts before they occur. In consumer goods, Big Ass ceiling fans sense and engage automatically when a person enters a room, regulate speed on the basis of temperature and humidity, and recognize individual user preferences and adjust accordingly.
Why now? An array of innovations across the technology landscape have converged to make smart, connected products technically and economically feasible. These include breakthroughs in the performance, miniaturization, and energy efficiency of sensors and batteries; highly compact, low-cost computer processing power and data storage, which make it feasible to put computers inside products; cheap connectivity ports and ubiquitous, low-cost wireless connectivity; tools that enable rapid software development; big data analytics; and a new IPv6 internet registration system opening up trillion trillion trillion potential new internet addresses for individual devices, with protocols that support greater security, simplify handoffs as devices move across networks, and allow devices to request addresses autonomously without the need for IT support.
Cutting across all the layers is an identity and security structure, a gateway for accessing external data, and tools that connect the data from smart, connected products to other business systems for example, ERP and CRM systems. Smart, connected products require companies to build and support an entirely new technology infrastructure. This technology enables not only rapid product application development and operation but the collection, analysis, and sharing of the potentially huge amounts of longitudinal data generated inside and outside the products that has never been available before.
Building and supporting the technology stack for smart, connected products requires substantial investment and a range of new skills—such as software development, systems engineering, data analytics, and online security expertise—that are rarely found in manufacturing companies. Intelligence and connectivity enable an entirely new set of product functions and capabilities, which can be grouped into four areas: monitoring, control, optimization, and autonomy. Each capability is valuable in its own right and also sets the stage for the next level.
For example, monitoring capabilities are the foundation for product control, optimization, and autonomy. A company must choose the set of capabilities that deliver its customer value and define its competitive positioning.
The capabilities of smart, connected products can be grouped into four areas: monitoring, control, optimization, and autonomy. Each builds on the preceding one; to have control capability, for example, a product must have monitoring capability.
Using data, a product can alert users or others to changes in circumstances or performance. This data has important implications for design by reducing overengineering, for example , market segmentation through the analysis of usage patterns by customer type , and after-sale service by allowing the dispatch of the right technician with the right part, thus improving the first-time fix rate.
Monitoring data may also reveal warranty compliance issues as well as new sales opportunities, such as the need for additional product capacity because of high utilization. In some cases, such as medical devices, monitoring is the core element of value creation. Monitoring capabilities can span multiple products across distances. Joy Global, a leading mining equipment manufacturer, monitors operating conditions, safety parameters, and predictive service indicators for entire fleets of equipment far underground.
Joy also monitors operating parameters across multiple mines in different countries for benchmarking purposes. Smart, connected products can be controlled through remote commands or algorithms that are built into the device or reside in the product cloud.
Control through software embedded in the product or the cloud allows the customization of product performance to a degree that previously was not cost effective or often even possible. The same technology also enables users to control and personalize their interaction with the product in many new ways. For example, users can adjust their Philips Lighting hue lightbulbs via smartphone, turning them on and off, programming them to blink red if an intruder is detected, or dimming them slowly at night.
Doorbot, a smart, connected doorbell and lock, allows customers to give visitors access to the home remotely after screening them on their smartphones.
The rich flow of monitoring data from smart, connected products, coupled with the capacity to control product operation, allows companies to optimize product performance in numerous ways, many of which have not been previously possible. Smart, connected products can apply algorithms and analytics to in-use or historical data to dramatically improve output, utilization, and efficiency.
In wind turbines, for instance, a local microcontroller can adjust each blade on every revolution to capture maximum wind energy.
And each turbine can be adjusted to not only improve its performance but minimize its impact on the efficiency of those nearby. Real-time monitoring data on product condition and product control capability enables firms to optimize service by performing preventative maintenance when failure is imminent and accomplishing repairs remotely, thereby reducing product downtime and the need to dispatch repair personnel.
Even when on-site repair is required, advance information about what is broken, what parts are needed, and how to accomplish the fix reduces service costs and improves first-time fix rates. Diebold, for example, monitors many of its automated teller machines for early signs of trouble. Often these can occur remotely, via software.
Monitoring, control, and optimization capabilities combine to allow smart, connected products to achieve a previously unattainable level of autonomy. At the simplest level is autonomous product operation like that of the iRobot Roomba, a vacuum cleaner that uses sensors and software to scan and clean floors in rooms with different layouts.
Autonomy not only can reduce the need for operators but can improve safety in dangerous environments and facilitate operation in remote locations. Autonomous products can also act in coordination with other products and systems. The value of these capabilities can grow exponentially as more and more products become connected. For example, the energy efficiency of the electric grid increases as more smart meters are connected, allowing the utility to gain insight into and respond to demand patterns over time.
Ultimately, products can function with complete autonomy, applying algorithms that utilize data about their performance and their environment—including the activity of other products in the system—and leveraging their ability to communicate with other products.
Human operators merely monitor performance or watch over the fleet or the system, rather than individual units. Equipment is monitored continuously for performance and faults, and technicians are dispatched underground to deal with issues requiring human intervention.
To understand the effects of smart, connected products on industry competition and profitability, we must examine their impact on industry structure. In any industry, competition is driven by five competitive forces: the bargaining power of buyers, the nature and intensity of the rivalry among existing competitors, the threat of new entrants, the threat of substitute products or services, and the bargaining power of suppliers.
The composition and strength of these forces collectively determine the nature of industry competition and the average profitability for incumbent competitors. Industry structure changes when new technology, customer needs, or other factors shift these five forces. Smart, connected products will substantially affect structure in many industries, as did the previous wave of internet-enabled IT.
The effects will be greatest in manufacturing industries. Smart, connected products will have a transformative effect on industry structure. The five forces that shape competition provide the framework necessary for understanding the significance of these changes. Smart, connected products dramatically expand opportunities for product differentiation, moving competition away from price alone.
Predictive maintenance PdM is a popular application of predictive analytics that can help businesses in several industries achieve high asset utilization and savings in operational costs. This guide brings together the business and analytical guidelines and best practices to successfully develop and deploy PdM solutions using the Microsoft Azure AI platform technology. For starters, this guide introduces industry-specific business scenarios and the process of qualifying these scenarios for PdM. The data requirements and modeling techniques to build PdM solutions are also provided. The main content of the guide is on the data science process - including the steps of data preparation, feature engineering, model creation, and model operationalization.
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Experts from all over the world and from the most diversified application areas have met for years at this international event. The conference is unique in its target group and offers visitors the opportunity to become acquainted with the latest developments in CAN technology. It is also a platform for lecturing on CAN-based research and for exchanging experiences internationally with experts from related work fields. During the last few years a shift of focus has taken place from theoretical to practical and application-oriented. This is true for the speakers as well as for the visitors.
How Smart, Connected Products Are Transforming Competition
Cardiac arrhythmias are characterized by an abnormal heart rhythm, less than 60 beats per minute, more than beats per minute, or irregularly. Arrhythmia Improper functioning of the electrical systems regulating the heart can cause arrhythmia. Arrhythmias are of various types, including atrial fibrillation, atrial flutter, and atrioventricular nodal re-entrant tachycardia. Treatment for cardiac arrhythmias involves the use of endovascular catheter ablation procedures.
One of the biggest issues related to property, plant and equipment is accounting for spare parts, servicing equipment, stand-by equipment and similar items. IFRS standards are pretty silent about this topic, the guidance is very limited and as a result, companies need to rely on careful assessment of the situation and their judgment. The standard IAS 16 , paragraph 8 specifically says that spare parts are recognised in accordance with this IFRS when they meet the definition of property, plant and equipment thus they need to meet the definition of PPE. If not, then spare parts might be considered PPE. Time aspect Do you need spare parts to operate some other asset during more than one period? Do you plan to use these items during more than 1 period? If not, then they are inventories. Some spare parts are easy to classify, for example back-up engine with significant acquisition cost is a major spare part and thus accounted for as PPE.
If the grid goes down for a few days after a major storm generators help to keep the food in the fridge from spoiling, keep the sump pump running and make sure a few lights stay on inside the home. A generator is an item of equipment that is used to convert kinetic or mechanical energy from an outside source into electrical energy which can be used for the application at hand. The Polar DC Generators are designed and optimized to deliver high currents at low voltages which is required for battery charging and operating DC loads.
The Scheme aims at facilitating technology upgradation by providing upfront capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional finance credit availed of by them for modernisation of their production equipment plant and machinery and techniques. The eligible amount of subsidy calculated under the pre-revised scheme was based on the actual loan amount not exceeding Rs. It is in this background that the Finance Minister made an announcement in the Budget Speech of to raise the ceiling for loans under the Scheme from Rs. Further, in the light of the experience gathered in implementing the Scheme, certain other modifications were also required to make it more useful to the SSI units, including tiny, khadi, village and coir industrial units, in taking up technology upgradation on a larger scale. The revised scheme aims at facilitating technology upgradation by providing 15 per cent upfront capital subsidy with effect from the 29 th September, 12 per cent prior to Priority shall be given to Women entrepreneurs. Existing SSI units registered with the State Directorate of Industries, which upgrade their existing plant and machinery with the state- of -the -art technology, with or without expansion. Capital subsidy at the revised rate of 15 per cent of the eligible investment in plant and machinery under the Scheme shall be available only for such projects, where terms loans have been sanctioned by the eligible PLI on or after September 29, Industry graduating from small scale to medium scale on account of sanction of additional loan under CLCSS shall be eligible for assistance. Eligibility for capital subsidy under the Scheme is not linked to any refinance Scheme of the Nodal Agency ies. Hence, it is not necessary that the PLI will have to seek refinance in respect of the term loans sanctioned by them from any of the refinancing Nodal Agencies.
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How to Account for Spare Parts under IFRS
The transport sector encompasses industries that are involved in the transportation of goods and passengers throughout the world. This sector is structurally complex and vitally important to economies locally, nationally and globally. The transport sector is vitally important to the economic viability of nations. Transportation plays a key role in economically important factors such as employment, utilization of raw and manufactured goods, investment of private and public capital and generation of tax revenues. In the United States alone, the Department of Transportation reported that in , there were approximately 7. The transport sector is also a major consumer of raw materials and finished goods in most industrialized countries. Capital investment utilizing public and private funds to purchase trucks, ships, airplanes, terminals and other equipment and facilities easily exceeds hundreds of billions of dollars in industrialized countries. The transport sector also plays a major role in generating revenues in the form of taxes. In industrialized countries, transport of passengers and freight is often heavily taxed Sampson, Farris and Shrock ; Gentry, Semeijn and Vellenga
Azure AI guide for predictive maintenance solutions
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