It’s no secret that technology is advancing all around us. We have been collecting data on everything from sports statistics to how many people visit Disney World every year (52 million in case you were wondering.) However, we are not fully using all the data we collect to our advantage. Changes need to be made now to stay ahead in each industry as technology continues to become more advance. We need to make a Digital Transformation.
The Digital Transformation is defined as “profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind.”
In simpler terms, Digital Transformation is using digital technologies that allow a business to capitalize on their owned data that impacts their future. This concept is essential for modern day growth and those who do not act now, will fall far behind the crowd.
As trends continue to change so must the way we operate. Businesses need to embrace digital technologies to help transform their operations and perform more efficiently or risk falling behind their competition.
In 2000, the founder of Netflix reached out to the CEO of Blockbuster with a proposition that they partner up and have Netflix run Blockbuster’s online stores. He was shot down almost instantly. Ten years later, Blockbuster goes bankrupt and Netflix is at the top. At the time, nobody seemed to believe that people would want to have DVDs mailed to them on a subscription platform rather than be able to go to the video store and pick out a movie in the same night. However, Netflix continued investing into their streaming platform, they eventually disrupted the whole industry. They first saw a huge opportunity to grow as the internet did with the opportunity to create a cloud-based streaming service that would eventually allow customers to instantly stream movies and shows. As they evolved, so did their presence of AI and Machine Learning in their business. Now, they use it to recommend new movies and shows based off the viewer's history. They did not completely go away from the DVD business however, as they had created DVD.com that does what Netflix was first known to do. But, they continue to grow bigger than any competitors because they invested in the digital future. Blockbuster was so reliant on what had been working, they failed to survive.
Amazon also started very similarly to Netflix. Barnes & Noble suggested to Jeff Bezos that he partner with them because they were soon launching an online store that would wipe out Amazon very quickly. Bezos refused to partner and doubled down on Amazon's digital initiatives to grow to be what they are today. Currently, Amazon is able to use AI to know where around the world to store their inventory that ensure the fastest delivery possible. This also is seen within their warehouses in their use of IoT and robots that can move and select products which maximizes their use of space. Also, Amazon has begun their own delivery service that is run by AI to show the fastest and most efficient routes to take on deliveries. Their large digital presence also affects most people because 90% of consumers compare prices on Amazon to the stores they are shopping at before they make a purchase.
The digital transformation extends into manufacturing and operations as well. Companies have begun transforming their operations by installing IoT devices (Internet of Things) to pieces of equipment on the plant floor to collect and display data in real time. Their able to accurately measure and improve machine up-time, utility usage, employee performance, and track their production requirements as they complete their planned work for the day. AI can analyze this data and make recommendations to managers on how they can more efficiently run their operations, while lowering their costs. Today, AI can help predict:
Intel published a report in which they found that 40.2% of IoT users are in the business and manufacturing industry. These devices track real-time analytics of supply chains, equipment and robotic machinery.
As humans, we are and have always been working to improve our technology to make our lives much easier. We started in the Hunting Age where we relied on simple tools and weapons to feed and protect ourselves. From there, we moved into the Agrarian Age, when we learned to grow food from year to year, making our lives much safer. We then moved into the Industrial Age as we .
Currently, we are living among the Information Age, one that is greatly influenced by our development and advancements in computers and IT. This age has brought us to Industry 4.0 which is the current trend of automation and data exchange in manufacturing technologies. Some of the biggest components of Industry 4.0 are:
These are only a few of the many components that make up a “smart factory” which are used to design a virtual copy of the real world that allows for AI to make very accurate predictions and informed decisions. But what exactly are these technologies and what do they mean?
In its simplest form, IoT is the extension of internet connectivity into physical devices and objects. In manufacturing and other plant operations, IoT devices can be implemented that track anything the manager wants to collect information on. These sensors can track production, monitor equipment, and notify managers if anything is wrong. Utilizing IoT devices, operations can collect and transmit massive amounts of data more quickly and reliably than ever before.
Now that we’re able to collect all this data, what do we do with it? Raw data by itself can only provide so much value. Humans still need to parse it, find trends, correlate them with specified outcomes, and act on it in a timely manner. The more data we collect, the harder it is for humans to be able to do all this.
This is where Artificial Intelligence (AI) and Machine Learning (ML) shine. AI and ML can quickly parse through the data, learn from it, and make recommendations based on what they learn. The more data put into AI and ML, the more accurate their predictions will eventually become (when done correctly).
It’s obvious that integrating more advanced digital technologies creates a great deal of value for the company. Industry 4.0 has shown major positive impacts on developing countries, environment, even employment and other internal operations. Any company who truly wants to last should know that digital isn’t just the future, it is happening now. It should not be pushed off as long as possible. Digital integration is going to make or break all companies soon and we will discuss why it is so important in the next lesson.
