connected products take tracking to an entirely
new level. Now it can be done continuously, wherever products are, without the need for a scanner, and provides rich information on not just
their current location but also their location history,
their condition (their temperature, say, or exposure
to stresses), and their surrounding environment.
We believe that smart, connected products will
ultimately move logistics to a whole new generation.
For example, the management of large, far-flung
fleets of vehicles is being transformed by the ability to remotely monitor each vehicle’s position and
function, check its local traffic and weather conditions, and provide drivers with an optimized delivery
schedule. And automated drones capable of dropping packages directly on the customer’s doorstep—
which are now being tested by Amazon, Google, and
DHL—could revolutionize the delivery process for
MARKETING AND SALES. The ability to remain
connected to the product and track how it’s being
used shifts the focus of a company’s customer relationship from selling—often a predominantly one-time transaction—to maximizing the customer’s
value from the product over time. This opens up
important new requirements and opportunities for
marketing and sales.
New ways to segment and customize. The data
from smart, connected products provides a much
sharper picture of product use, showing, for example, which features customers prefer or fail to
use. By comparing usage patterns, companies can
do much finer customer segmentation—by industry, geography, organizational unit, and even more-granular attributes. Marketers can apply this deeper
knowledge to tailor special offers or after-sale service
packages, create features for certain segments, and
develop more-sophisticated pricing strategies that
better match price and value at the segment or even
the individual customer level.
New customer relationships. As the focus shifts
to providing continual value to the customer, the
product becomes a means of delivering that value,
rather than the end itself. And because a manufacturer remains connected to customers via the product, it has a new basis for direct and ongoing dialogue
with them. Companies are beginning to see the product as a window into the needs and satisfaction of
customers, rather than relying on customers to learn
about product needs and performance.
new equipment) to stream information into a data
lake, where it can be analyzed for insights on cutting downtime and improving efficiency. In one
plant, this approach doubled the production of
Simplified components. The physical complexity of products often diminishes as functionality
moves from mechanical parts to software. This
shift eliminates physical components, along with
the production steps needed to build and assemble
them. Withings, for example, has reduced its blood
pressure monitor to a cuff and sensor, eliminating
the display through an app that can track blood pressure and send updates directly to clinicians. Similarly,
manufacturers of aircraft, automobiles, and boats
are moving toward “glass cockpits,” in which a single screen displays numerous configurable gauges.
As the physical complexity of products decreases,
however, the quantity of sensors and software rises,
introducing new parts and complexity.
Reconfigured assembly processes.
Manufacturing has evolved toward standardized platforms, with customization of individual products
occurring later and later in the assembly process.
This approach reaps economies of scale and lowers
inventory. Smart, connected products go even further. Software in the product or in the cloud can be
loaded or configured well after the product leaves
the factory, by a field service technician or even by
the customer. New apps can be added or touchscreen
keyboards set up for different languages. Product
design changes can be incorporated at the last
minute, even after delivery.
Continuous product operations. Until now, manufacturing has been a discrete process that ended once
the product was shipped. Smart, connected products,
however, cannot operate without a cloud-based technology stack. In effect, the stack is a component of
the product—one the manufacturer must operate
and improve throughout the product’s life. In this
sense, manufacturing becomes a permanent process.
LOGISTICS. The earliest roots of smart, connected products were in logistics, which involve
the movement of production inputs and outputs
and the delivery of products. Commercialized
in the 1990s, radio frequency identification, or
RFID, tags greatly enhanced the ability to track
shipments. Indeed, the term “Internet of Things”
was coined by a founder of MIT’s Auto-ID Center,
which specialized in RFID research. Today’s smart,