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Originally posted at

on 26-April-2016 | Digital Economy | Business Networks

by Patrick Lamm

Worker adjusting buttons on factory control panel --- Image by © Ian Lishman/Juice Images/Corbis

The Internet of Things is ringing in a new Industrial Revolution and it’s changing the manufacturing industry before our eyes. As machines learn to communicate, companies can bring added value to their customers.

Industrial machinery and components (IM&C) companies are behind this monumental shift. By bringing intelligent, connected equipment to all industries, these companies are redefining an industry. The Internet of Things enables companies to develop new business models and improve customer interaction. It’s sometimes referred to as the fourth Industrial Revolution, behind mechanization, electrification, and computerization.

This allows companies to revolutionize business models by installing product safety stewardship.

There are four different business networks that are instrumental in this shift:

1. R&D collaboration networks

When companies come together on research and development, the customer wins. Still, every new technology has its skeptics. But studies show networked companies have greater sales and profits. They are more likely to be market leaders, too.

Collaborative technology is ushering in a new payday for companies that hop on the bandwagon. These technologies connect the efforts of employees and extend the organization’s reach to customers. Social media companies, such as YouTube and Facebook, have been using collaborative technology. Their success speaks volumes for its effectiveness.

While the two social networks are competitors, they have adopted each other’s technology. This makes sharing content between the two sites easier for the consumer. It also increases revenue and profits for both sites. Companies today are under more and more pressure to create new products. This can harm R&D efforts. Collaboration is key.

2. Manufacturing networks

By building networks around manufacturing, companies can better manage supply and demand. SAP found real-time monitoring of production facilities removes inefficiencies and improves transaction cycles. Companies can react in real-time based on customer needs. This helps streamline industrial processes.

New revenue streams materialize when a manufacturer can match production with demand and supply. This digital transformation goes beyond just outsourcing. Home improvement, interior design, and remodeling are industries already benefiting from digital business.

Competitors can share non-proprietary resources for improved efficiency. This has the ability to cut waste and remove machine downtime.

3. Collaborative supply chain networks

Sharing information is the wave of the future. Managing direct and indirect information from a network ofsuppliers is more efficient.

Take travel booking companies for example. Airlines, hotels, and car rental firms share rates and availability. Website sites such as Expedia and Travelocity drive customers to those businesses. In this case, the supplier works with the distributor to move product. Collaborative supply chains make that possible.

You can’t compete on price alone. Otherwise you’ll lose customers in the long run. The most successful supply chains offer business-supplier relationships.

When a supplier collaborates with a distributor, the result is a win-win.

4. Asset lifecycle networks

Managing network assets is complex and labor intensive. This means companies usually fail to integrate a working system and management becomes inefficient. If information isn’t available across all platforms, proper management becomes impossible.

Businesses with many customer and vendors can enable insight into asset usage. Knowing how an asset performs in different environments is crucial. Asset lifecycle networks allow simplified collaboration with suppliers and distributors.

Monitoring the lifecycle of equipment and inventory helps companies stay competitive. It allows firms to exchange or buy equipment when needed and cuts costs by staying up to date on maintenance.

These four business networks can work together to improve efficiency and increase profit. This is especially true for commercial project management, industrial machines, and the home-building industry.

The Internet of Things is the next step in this modern industrial revolution. The convergence of software and hardware will make industrial production and public services more powerful and efficient. Traffic congestion will ease as driverless cars become more commonplace, and power plants will be able to produce energy based on real-time demand analytics. We’re at a tipping point in history and these converging phenomena are the beginnings of a new industrial revolution.

For more information, please download the white paper Digital Manufacturing: Powering the Fourth Industrial Revolution.

Patrick Lamm

About Patrick Lamm

Patrick Lamm is a director of Industrial Machinery & Components in the Industrial Machinery & Components Industry Business Unit at SAP. Before Joining SAP, he held various positions at Hewlett-Packard as business analyst in strategic supply chain planning and as business process and SAP engineer in multiple divisions going back to 1998. Starting at SAP in 2004, Lamm held the position of Senior Business Consultant focusing on strategic projects in supply chain management and IT Strategy. Since 2008, Lamm is part of SAP's Industry Solution Management organization for Discrete Industries supporting partners and customers leveraging SAP solutions.