Smart Manufacturing: A Growth Driver for Business Model Innovation

In today's fast-changing and hyper-competitive business environment, the automotive industry, business model (BMI) innovation, and equivalents have emerged as a promising approach for achieving competitive advantage. At the same time, BMI involves a high level of uncertainty and financial risk. Product and process innovation, as well as manufacturing - particularly smart manufacturing - have recently become more open and collaborative in order to reduce costs and risks. The goal of this study is to look into the role of open and collaborative innovation practises in BMI as a foundation for competitive manufacturing ecosystems and to provide a comprehensive review of the available literature in this field.

Accelerating change, shortening product life cycles and excess supply in most markets put severe economic pressure on today’s market players. As a result, firms increasingly use business model differentiation to break out of intense competition, particularly in the face of the (higher) imitability of products and processes. In fact, business models have become the new basis of competition.  Since the dot-com boom and the wave of new information and communication technology-based business models, however, Business Model Innovation (BMI), on the one hand, has received increasing attention from both academia and practice. BMI requires a change in the three primary dimensions of the business model, i.e., value creation, value proposition and value capture. A firm employing BMI has found a way to create value (for its customers) and capture value (for itself) at the same time. Huang et al. (2013) have defined BMI as the process of repositioning the value proposition, including a redesign of the profit formula and the adjustment of other related business model elements (e.g. new key partners or activities). In general, BMI occurs in two forms: it can be the introduction of a new business model or stem from improvements of an existing one. 

Goals of Support Smart Manufacturing

The goals of smart manufacturing, on the other hand, lie in the recognition of automatable workflows and the improvement of the manufacturing process. It involves logistics, production and the Internet of things. To exploit the full potential of smart manufacturing a fundamental strategic vision needs to be developed. In the mid 90's, the first applications of supply chain management left behind a strictly isolated, enterprise-centred view, which had dominated management decisions. Supply chain management at that time was an important step in linking business functions and business processes within and across firms into enhanced business models. In fact, it was a forerunner of collaborative value generation. Since co-creation and collaboration as generic organizational types or even paradigms are strong drivers in the design of smart manufacturing systems, in a first step we need to analyze the possible roles, players, and approaches that determine manufacturing ecosystems. Against this background, a systematic literature review has been conducted to provide a comprehensive overview of available literature on BMI to identify the major topics and concepts discussed in this field. Five leading scientific databases were selected for the literature search. The analysis of the literature has revealed that publications within the field of open BMI in manufacturing ecosystems show different thematic priorities as analyzed in the next section.

Smart manufacturing leverages Industry 4.0, which is characterized by interconnected cyber-physical systems such as intelligent robots and machines that can self-diagnose and warn of possible failures. The proliferating IoT brings more powerful devices and machines with smart sensors that upload continuous streams of usage data to the cloud for analysis. Those Big Data sets are crunched using AI with machine learning that becomes more accurate and predictive as it absorbs more data. Automation and data connectivity create more agile supply chains, in which ships and trucks “talk” to warehouses, autonomous or semiautonomous vehicles, and drones. Mobile robots and cobots (collaborative robots) are also folded into this process, making shipping and logistics more automated. Smart manufacturing helps manufacturers become more efficient, stay ahead of the competitive curve, and explore new business models and practices.

Conclusion

The term "smart manufacturing" refers to a new-age, connected manufacturing system that employs cutting-edge technologies throughout the manufacturing value chain. Technology has the potential to transform the Indian manufacturing sector by driving efficiency and cost savings through innovative strategies. Because of the need for digitization, leading manufacturers are taking a more proactive and strategic approach to new programmes. However, with limited resources and skill gaps, redefining future manufacturing organisations and identifying focused themes for top and bottom-line impact remain significant challenges.