Category Archives: Europe

FMCG mega trends and the all-powerful consumer

What mega trends are set to shape the global FMCG industry of the future?

I believe that the world is changing. In past centuries we saw that the producer of goods was the market leader, and this then shifted to the suppliers / shippers of goods overseas. Today we are living in an era where the consumer is the leader of the market.

Living in the information age (internet, digital and social media), acccess to FMCG products and services is availabe to consumers in seconds. Comparative data with scientific, financial, medical, utility, costing, availability, and more importantly company reputation and image analysis is readily available, allowing for easy comparison of all options on the market. Thus consumer choice remains the top factor governing the FMCG industry.

Another key factor is the pricing of FMCG products in the market, which should be in line with the buying capacity and priority choice of consumers in a particular market. This is tricky indeed, but requires a very careful analysis of consumers.

In a nut shell, the following can be classified as the mega trends for the global FMCG industry for the future:

  • The reputation management of the FMCG company (as a top priority)
  • Pricing (market level and global compatibility)
  • Sustainability for quality (both for goods and services)
  • Continuing renovation and innovation for all product lines
  • Responsible sourcing
  • Access and availability of product details to the consumer in a transparent and ethical manner (be it ingredients or scientific reasoning); compliance with regulatory or mandatory industrial law alone is not enough.
  • Strategies which prioritize volume sales for top line and bottom line achievement will lose in the long run, and companies competing for winning consumer trust and product of choice will win.

A lean business model, as excessive costs incurred in production are ultimately paid for by the consumer – and the consumer is aware of this

What role are big data and social media set to play in the future of FMCG?

As previously mentioned, the company reputation is the top priority. We live in an information age where news travels faster than can be comprehended or responded to by most organisations. Consumers will go for a good company image rather than a bad company image. My 12 year old son knows in the super market that we will not buy certain brands because they have certain ingredients in their products, which are bad for health or other reasons.

Social media is a highly interactive medium, engaging people from all walks of life and all age groups, nationalities, and gender. From Dad to Mom and from Grandpa to grand daughter, everyone has an opinion, and these opinions have a lot to be shaped by social media.
Social media is now a double-edged sword and can make or break your business with one single negative campaign by a single dissatisfied consumer (due to any reason – justified or otherwise).

Thus FMCG companies with good vision must continue to invest and engage consumers, opinion makers, and the general public to keep them informed of their product line and to provide answers to concerns regarding ingredients, scientific facts and other related factors which are frequently challenged and debated. Excessive amounts of anything is negative, but a constant and balanced presence on social media is a must.

What strategies will middle ground retailers employ in order to fight back against the current dominating trend of price discounters and high end retailers?

This is a debate in which even governments are involved, debating small and medium retailers versus mega super markets and price discounters.

I believe that this has to do with a careful analysis of the consumer shopping habits in any market. For example, in the US people are accustomed to shopping in mega malls, with discounts and time spent, whereas in India, Pakistan, Thailand or other Asian or African markets, consumer shopping habits also depend on distance and travel – thus going to a small retailer nearby is easier. Getting home delivery via the internet is becoming increasingly popular in developed nations such as the US and China, but again, in many developing or underdeveloped nations, the small and medium retailer is still in good focus for consumers (primarily for reasons of convenience to the local consumer).

Good strategies of large FMCG maufacturers or marketers do focus on both primary and secondary sales channels for price dicsounts, and have to take good account of small and medium retailers, as in most developing economies, the SMEs account for more than 75% of overall sales, a fact which cannot be overlooked.

How will increasing consumer awareness of health concerns affect the FMCG industry?

The FMCG industry has to adopt responsible sourcing and utmost compliance to health regulations, both for their employees and their consumers. The value chain (both upstream and downstream) has become a critical factor for all FMCG manufacturing companies, and it is crucial to remember that providing limited information about your product ingredients will not hide undesirable information, as there are other information mediums available to consumers.

Health concerns surrounding the ingredients in every FMCG product is a very current issue. There are debates on GMO-based versus organic products in F&B, there is debate over food colours and preservatives, levels of pesticides and insecticides, and even packaging of PET, Plastics etc., and the use of colours, batteries and so on in children’s toys.

Companies of today‘s modern times must engage the following principles:

  • Transparency in diclosure (for ingredients)
  • Scientific reasoning must support your ingredients. Companies with in-house and third party R&D validation for ingredients are better off; this is not an excess cost, rather a necessary investment into R&D for quality assurance
  • Addressing health concerns on labelling (transparently) is the need of the day, particularly for the food and beverage industry, and it is advisable to adapt to this scenario sooner rather than later.

What is the outlook for manufacturing and production within FMCG?

As the world population grows, so does the FMCG industry. The global recession has had an impact to varying degrees, with the majority turning to a “need to have“ concept versus “nice to have“.

I will summarise the outlook as follows:

Operationally: The outlook for the FMCG indstry is challenging yet positive for those who are willing to invest in sustainability, excellence, transparency in dislosure, responsible sourcing, continued renovation and innovation, lean structures, reputation management, and outward market analysis, paying attention to consumers‘ opinions and evaluating the market economy before launching new products. Moreover the dynamics of the US, European, Asian/ Afro Arab and Latin markets are entirely different from each other— balancing your product with the market economy, peoples‘ employment situations and GDP, as well as supply chain optimization and prioritizng peoples‘ needs are essential for success.

Geographically: in known human history of 10,000 years, the Greater China region (as the „middle empire“) , and India, Pakistan and Bangladesh as well as South Asian Countries, Persia (Iran) and the far east sub-continent accounted for two-thirds of the world‘s market economy for more than 9,500 years. History is now repeating itself; the FMCG companies who embrace change and adapt to and engage with the emerging markets will thrive. Resisting these changing opportunities is no longer an option.

“Transforming Wind Power: Technological drivers and critical challenges” interview with Rod Poublon

What is the current outlook for the wind power industry?

Wind power has become the most affordable and versatile form of renewable energy, and has reached vastly diversified sites, from agricultural land to mountains, from sea to desert, from single units to gigawatt plants, from industrialised to developing countries around the globe. More than 51GW were installed in 2014 to reach 370GW in total, China having installed almost half of the new global capacity, followed by Europe with a quarter, and North America with almost a sixth. The growth has been sharp and steady over the last 15 years, and should carry on, with new dynamic areas in emerging markets such as China, Brazil, Turkey and Chile compensating for phases of regional slowdowns such as in many European countries (for example, Spain, France and Italy) due to a change of regulatory framework.

What technological innovations will transform both the installation and the physical form of wind turbines?

The transformation of the installed turbine has been related more to scale rather than to the form itself, at least in power-plant scale facilities: hybrid towers (see below) higher than 160m; blades longer than 80m thanks to new profiles, materials and moulding technologies; generators able to produce more than 8MW per unit. Nevertheless an increasing number of segments have appeared to deliver solutions with a specific blend of the core features matching special requirements such as complex topography, low or turbulent wind resource, limited accessibility, far sea, and specific regulatory or technical frameworks. In the future, the diversity of the available machines will further increase, the bar being raised in terms of size for sites that require it. The deepest physical transformation is perhaps to be seen under water, as the support structure (between the turbine and the foundation in the sea belt) is a major area of innovation and technical breakthrough, with a panel of currently available solutions ranging from monopole to tripod, lattice, gravity, and floating structures being in development.

New logistical concepts are being developed to bring ever larger turbines to increasingly difficult sites e.g. in mountains or at sea. Hybrid concrete and steel towers, typically for hub height greater than 100 meters, enable the transportation of heavy steel sheets for the upper part of the tower only, while having the bulky tower base locally produced in concrete. In offshore sites, much is done in the harbour to avoid difficult and risky works at sea. In mountains, on the contrary, parts are brought by new, smaller and more agile trucks and assembled on site. New cranes enable us to build higher, faster, and in a more mobile fashion in order to be ready sooner for the next turbine.

How will the wind power industry evolve to overcome financial obstacles and the issue of unpredictability and intermittence in power supply?

The goal of the industry is to achieve sustainability with as little financial and regulatory support as possible. This depends on the design of the power market, decided by the regulator and government of each country, pushing wind power in or out, depending on whether it honours the availability of power or the production of energy.

The integration of wind power into the current energy-driven market designs requires a power production that would be dispatchable in reasonably predictable volumes convenient for consumption and trading (like conventional power plants). Amongst the various options explored to achieve this goal, the bundling of several facilities of various technologies into virtual power plants (the flexible facilities such as hydro or biomass plants smoothening the less actionable wind power curve) and the addition of energy storage systems combined with smart grid integration, are the most promising.

What is the position of wind power in the future global energy market compared to alternative renewable energy sources?

The advantages of wind power (e.g. high installed power with reduced land use, price) make this technology very versatile and compatible with the current land use of a large number of areas close to energy needs around the planet. It will continue to play a dominant role in terms of new installed capacity, and even more in terms of produced energy. According to EIA, wind power should surpass hydro power within 25 years in terms of installed capacity, becoming the first source of clean power in the world. Solar power should grow at a higher rate but starts from a much smaller base.

 

 

“Sustainable Supermarkets: Do they really work?” interview with Mr. Antonio Vlamis

What is a “sustainable supermarket” and should competitors fear this new “eco-friendly” business model?

A sustainable supermarket, from an engineering perspective, is designed and constructed by using methods and technologies that ensure:

  • Minimum amount of electricity consumption
  • Usage of environmental refrigerants
  • Utilization of natural – renewable resources of energy

There are several KPIs that are critical for the financial sustainability of a commercial chain. One of them is the consumption of electrical power. The budget that is spent for the electricity needs of a retail chain must be less than 1.5% of the annual turnover.

The operational expenditure of a supermarket is highly affected by the energy cost, which means that an “eco-friendly” designed supermarket is more competitive and profitable. Just imagine:

  • An ECO convenience store (from 100 -350 m2 of sales area) spends 15,000 € less per year for electricity.
  • An ECO medium sized supermarket store (350-1000 m2 of sales area) spends 35,000 € less per year for electricity.
  • An ECO hyper market (over 1000 m2 of sales area) spends 50,000 € less per year for electricity.

Now, for example, imagine a commercial chain that is consisting of 100 convenience stores, 30 medium sized supermarkets and 5 hyper markets. This means that if the above mentioned commercial chain is consisted by ECO Stores, then it saves 2,800,000 € per year. This is a very serious reason for the competitors to fear this new “eco – friendly model”.

Please share examples of the environmental waste that occurs within current supermarket practices and how this created the push for more “eco-friendly” stores?

There are several types of waste that are produced by a commercial chain (like food waste that is not only an ethical and economic issue but it also depletes the environment of limited natural resources) but for the purpose of this interview I will focus on CO2 emissions which are very critical for the environment.

Global warming is caused by the emission of greenhouse gases. A total of 72% of greenhouse gases emitted are carbon dioxide (CO2).

Average Carbon emission due to electricity production of 1 kWh is 0.47kg (figure for electricity production methods that are used in the UK).

With that said, let’s imagine a commercial chain like the one described above, which is not made up of ECO stores. It operates 24 hours per day & 7 days per week. This commercial chain consumes 43,750,000 kWh/year and produces 20,562 tons of CO2 emissions.

A same sized commercial chain that is composed by ECO stores, produces 12,337 tons of CO2.

According to the Kyoto Protocol roll out plan and negotiations that were held in Lima in 2014, there was an agreement on a post-Kyoto legal framework that will obligate all major polluters to pay for CO2 emissions in future.

That means an ECO commercial chain will not only spend less on electricity, but will also pay less on environmental penalties.

One result of the Kyoto agreement is also the F-GAS Regulation that was voted by the European Parliament on 2014 (No 517/2014), which forbids the use of hydrofluorocarbons (HFC) as refrigerants because of their high GWP value. (GWP stands for the climatic warming potential of a greenhouse gas relative to that of carbon dioxide (CO2), calculated in terms of the 100-year warming potential of one kilogram of a greenhouse gas relative to one kilogram of CO2).

Due to F-gas regulation restriction, HFC refrigerants are going to disappear from the market and their price is going to be multiplied, so a possible leakage will cost to retailers a fortune.

Thus, by upgrading the refrigeration installations of a supermarket, retailers achieve two targets at once:

  • Usage of low GWP environmental refrigerants and regulation compliance
  • Lower electricity consumption

Consequently, in order to conclude in addition to energy – expenditure saving, retailers have to comply to the relevant regulations in order to avoid penalties.

Can you share an example of a supermarket that made the transition to a “sustainable” initiative and succeeded? Please share the details of the overall process, i.e. timeline, prices, etc.

I will refer to two different examples. The first is from a scratch design and construction of a supermarket and the second is the modification of an existing commercial chain.

1. Creation of new ECO Store

Around 14 months ago, I undertook the design & project management of three 700 m2 supermarkets in Greece, more specifically, Santorini, Kyparisia and Akrata. The owner was a franchisee of AB Vasilopoulos SA, which is a subsidiary company of the Belgian Delhaize Group.

When I explained to the owner the benefits of an ECO Store, he was immediately convinced to follow through with my proposal and agreed to award me the study of the stores.

In the end, these stores included several new technologies in refrigeration, lighting and air-conditioning:

Refrigeration

Usage of floating condensation technology in refrigeration (a technology where the condensation set point is dynamically adjusted according to the external environment temperature). – Saves up to 25% energy. 

Usage of a liquid sub-cooler in negative refrigeration. – Saves up to 20% energy.

Usage of CRO technology, which is a technology that is based on an algorithm in order to adjust dynamically the suction pressure, according the achievement of the set point of the temperature of the refrigerators. – Saves up to 10% energy. 

Usage of asymmetric set up of compressors rack by applying an inverter to a small compressor of the positive temperature rack and one to a small compressor of the negative compressors rack (with this method partial loads were managed accurately) – Saves up to 10% energy.

Usage of electronic expansion valves at the refrigerated self services and cabinets – Saves up to 7% energy.

Usage of “eco-friendly” refrigerant

Lighting

    Installation of T5 ECO electronic lamps for the linear lighting (lighting of the corridors) – Saves up to 40% energy.

    Installation of LED lighting for the spot lights and the parking lights. – Saves up to 50% energy.

    Movement sensors in warehouses

 Air Conditioning

  •  Installation of inverter air conditioning of high energy class.

 Automation for opening and closing of the store

Automation that permits personnel to turn on and off all the equipment of the store by using a single button (This way personnel doesn’t forget to turn off one equipment during the closing of the store, like air conditioning, boilers, lighting, etc.)

After one year of operation, the stores energy consumption statistics were astonishing and my client was very happy. Every store consumed 40% less electricity compared to the average energy consumption of similar commercial chains of AB Vasilopoulos S.A.

This was translated to a saving of 90,000 € per year for my client.

Regarding the capital expenditure, we succeeded to keep the cost down compared to standard solutions because we succeeded to assemble the refrigeration equipment and all necessary automations in a Certified Greek factory with lower costs.

2. Energy improvement of an existing commercial network.

One success story of optimizing the energy footprint of a commercial chain is the Greek Super Market Company Market in SA. Market has been a client of mine for 4 years and the owner was willing to improve the sustainability of his network.

This company owns 140 stores, so we started to study the electricity consumption statistics of the network. For every store, we prioritized our moves and began, for every store, to run the below procedure:

  • Energy audit
  • Energy improvement study
  • Feasibility study
  • Realization of the study
  • Monitoring of the results
  • By this way, we optimized 40 stores and the company was awarded by an annual 720,000 € decrease in electricity costs.

    The modifications that we implemented to the 40 stores had a cost of about 1,800,000 € and the payback of the investment was 2.5 years.

    Many consumers expect sustainability to be built into their purchase, but they also expect it not to change the price point. For example, Whole Foods was named the winner of Greenpeace’s Carting Away the Oceans report the second year in a row. But for those with lower than average income, Whole Foods is too expensive. Will this rise in prices cause sustainable supermarkets to be a luxury to only those with wealth?

    I really disagree with the opinion that creating a sustainable commercial network rises the prices for the consumer. 

    Reducing the operating costs of the network is making it more competitive and the final result equals better prices for the consumers.

    Supermarkets operate in a highly competitive market and selling more remains is the dominant driver. For many corporations, the effect on the environment is not priority. How would you persuade one of these “eco-wasters” to become sustainable when cost is their main issue?  

    I believe it is very easy for me to persuade the ECO wasters by:

    • Presenting to them success stories of my other clients and their financial savings
    • Explaining to them the upcoming directives and the new European Commission regulations and penalties for the non adopters.
    • Explaining to them that spending on sustainability is investing in their jobs by upgrading their equipment and their stores and that they will increase the market value of their companies

    If some retailers miss the train of sustainability, then this is definitely going to cause a negative effect on their sales.

     

    “Customer experience within the German automotive industry” interview with Mr. Peter Hopfinger

    How is the relationship between manufacturers/suppliers and consumers within the German automotive industry changing?

    As more OEMs compete in a stagnating market, pressure will be created across the whole value chain. The purchasing functions of the OEMs will as in the past generate much of this pressure in expectation that the suppliers of all tiers will be able to reduce cost while maintaining or even improving quality by adoption of more efficient manufacturing procedures and logistics efficiency.

    The traditional consumer base who has valued vehicles as a status symbol will gradually die out. An already apparent trend with urban millennial and post millennial generations is the negation of the motor vehicle as a status symbol. These customer sectors have a completely different approach to mobility, using an approach driven by the availability of networked offers, which include car sharing/ rental, public transport, bicycles etc. An increasing ecological awareness across all customer sectors will add to this. The trend of urbanization of populations will be a compounding factor.

    The German market, home market to the majority of premium players in the global automotive sector, will become more competitive than it already is, forcing the OEMs to optimize marketing/ sales and after sales service offerings. The approach adopted by the OEMs towards e-mobility in the after sales and service sectors will be a critical success factor. The current network for charging EVs will not be sufficient taking extrapolated growth and improvement of battery performance into account.

    Connective technology is starting to enter the automotive arena. What is the outlook for in-car connectivity in terms of consumer attitudes and satisfaction?

    Connective technology is already more widespread than many buyers of 2015 model year vehicles realize. This trend will strengthen with the launching of the first vehicles with full automated driving capability for motorway driving in around 2020. This trend will be further strengthened in the following decade to 2030. The seamless functioning of handheld devices and motor vehicles will bring about the introduction of new generations of both hardware and software to answer an increasing demand for ease of handling, intuitive driving, reliability and above all safety. This combination of hand held devices and motor vehicles will have a reverse positive effect on the reliability of hand held devices as we currently experience them with often questionable functional stability.

    A key success factor in customer experience in this new seamless world is reliability and intuitive operation. Customer attitude and satisfaction will be driven by a wider complex of factors, spread between instant satisfaction (click and immediate response), long term performance, reliability and safety.

    The first show room experience when acquiring a new vehicle will remain highly important when making a purchase/ lease decision. The overall decision process itself will be based on a combination of online and showroom impacts. In the case of vehicles, the drive which TESLA is making to market EVs solely using the internet with a low number of ‘keynote’ stores in city centers is a questionable approach to this challenge.

    “Customer loyalty to automotive brands reached a 10-year high during the first quarter of 2015, according to analysis from IHS Automotive, a global provider of critical information and insight to the automotive industry and part of IHS Inc. “Michelle Culver, Marketwatch, quoting IHS Automotive

    In your opinion, what drives customer loyalty within the automotive industry?

    One of the major factors to influence customer loyalty is often laid before the potential customer has reached the age to acquire a new car. Marketing targeted at a generation who learn to operate hand held devices in early infancy but who are not yet in a position to acquire a new vehicle will become more important. Once a customer buys/ leases a vehicle it will be the traditional factors of design, performance and reliability that will keep the customer tied to the brand. A further factor will be seamless compliance between vehicles, the environment and interfaced devices. Not only the millennials and post millennials will appreciate this; an increasing number of ‘digital immigrants’ or ‘silver surfers’ will be equally influenced by these factors.

    With the increase of players in both premium and non-premium sectors, marketing and sales activities will need further refinement to reflect this expansion of complexity.

    What challenges does the German automotive industry face in keeping the consumer of tomorrow satisfied?

    The entry of new OEMs together with the introduction and acceptance of e-mobility will cause considerable changes and increase overall competition in the German market. The new OEMs in the German market will be focused mainly on e-mobility. The changes in attitude to ownership and use of motor vehicles will demand diverse paradigm shifts in marketing, sales and after sales. The prevalence of automated and networked vehicles will place strong demand on functionality, reliability and safety.

    This trend is, in effect, an extension of a trend which began at the beginning of the millennium, when OEMs began to offer wide ranges of derivatives or niche models based on common and modular architecture. All these changes, above all the blending of functionality between handheld devices and vehicles, will expand and change factors on which satisfaction in the motor industry has depended on for decades. Functionality and reliability will be supplemented by the demand for immediate and flexible satisfaction of demands on functionality, much in the fashion that ‘apps’ are now changing the way we access information and functions. The more traditional OEMs will be forced by a pincer action of changing client base and new competition to ‘think outside the box’ to find new ways of satisfying the demand of both the urban millennial and the customers who live in more widespread rural areas.

    “Fourth Industrial Revolution” interview with Tamas Horvath

    In the next few years, how does the future of Industry 4.0 look?

    Based on current estimation 10.9 billion Euro will be invested in the Industry 4.0. This significant investment clearly shows that we have reached another milestone in the evolution of industry.
    The vision behind the 4.0 concept is based on two major pillars, namely the smart factory – where the manufacturing factories are going to change from centralized control to flexible, self-operating plants – and the so-called global factory – where production networks are going to be established without geological borders.

    Personally I think that in case of Industry 4.0 we are talking about a step-by-step transformation, rather than a sudden change. This transformation impacts the whole value chain – communication, planning, production and logistics. In the upcoming few years the major focus is still on M2M communication and softwares.

    Relevant industry players allocate significant resources in industrial software developments. To give one example, an industrial giant like Siemens spends 50% of R&D budget on softwares. Roughly 17.000 out of the total 30.000 R&D staffing are SW developers.

    Besides internal developments, companies make alliances and joint projects, and, moreover, clusters have been established for Industry 4.0 to gather resources, expertise and knowledge.

    Still, there are challenges that we will continue to face until we reach the state of the total integration. Security of the system, data management, safety and communication platforms are the biggest barriers that the key players of the industry have been working on in order to be able to take the next steps towards full integration of cyber-physical systems within and across factories.

    What are the three main driving forces of change behind Industry 4.0?

    In the industry of the future, the product will become an information carrier and steer its own way through the production process, thus creating intelligent production.

    I see the following main driving forces:

    Flexible production, customization and cost efficiency even for small series, thus enabling them to combine the individual-tailored product with the benefits of scaled mass production. This means that the future factory is capable of meeting specific customer requirements within a short period of time and without without any significant losses.

    Effective logistics: Impressive development and big scale automatization can be foreseen in logistics as well. Connecting the logistics systems among the manufacturing factories and their suppliers provides major synchronization potential, huge cost saving and better capacity-to-demand ratios. Looking at longer horizon autonomous transport, automatized inventory systems will further improve the efficiency of the supply chain.

    Predictive maintenance: Whoever worked in manufacturing knows how painful the impact an unplanned down time has on business. It is not only the shut-down time, but indirectly such loss can lead to losing a customer or even market share.

    In the concept of 4.0 all manufacturing components have an individual IP address. With the support of sensors and intelligent softwares, a safety network can be created. Such monitoring systems detect the changes of parameters and inform the operators about the necessity of maintenance or even advise preventive repairing work. This leads to higher reliability and output.

    All the above mentioned items lead to one major goal, namely to enhance competitiveness.

    Many in the industry are turning to technological advancements such as artificial intelligence, 3D printing and smart factory manufacturing, to propel their aggressive business goals. How will these digital tools transform consumer demand as we move forward?

    Digital tools at the end of the day have one ultimate goal, namely to satisfy the user. All connected solutions have to focus on the users and their problems. The above mentioned digital tools take the customers’ wishes as the base during the development phase.

    Developing specific algorithms, huge data bases and the possibility to process them or the availability of powerful IT systems make the artificial intelligence a focus sector for the industry players with an estimated 20% annual growth rate in upcoming years. Out of the broad category of AI, I would highlight the autonomous robots as key, offering more flexibility, adaptability and mobility.

    The other technological advancement, which was mentioned in the question, is the 3D printing.

    In my point of view, the transformation – even the pace of the transformation – of the business objective of 3D printing is a key factor in understanding how the latest innovations will shape consumer demand. 3D printing had been designed and used to make prototypes, to shorten product development cycles and support the work of R&D. Currently, it has shifted towards mass production, offering lower material waste, production time and eliminating molds.

    In the end, all the functions and solutions provided by the above mentioned technological advancements need to aim to serve the users in a way, which makes the users’ life safer and more convenient.

    From the consumer perspective I would highlight the usability. Due to productivity and efficiency in our current environment, users need to have comprehensive understanding and broad responsibility. The users main expectation would be visualized, easy-to-use, intelligent tools, which make their daily work efficient.

    “Industry 4.0 Future Outlook – Promises and Challenges” with Mr. Willem Bulthuis

    There is much talk about Industry 4.0 in Germany. Why is this?

    The manufacturing industry is a key driver for the German economy. Therefore, any debate of the future competitiveness of this sector deserves and receives much attention. Discussions about highly automated factories trigger concerns about employment, while on the other hand reports about 3-D Printing and other new technologies ignite speculations about the future of manufacturing and logistics as we know it.

    The concept of Industry 4.0 has been promoted in Germany since 2012 by Professor Kagermann and others, as a wake-up call to the well-established German manufacturing industry.  A key element of this vision is the strongly increasing (digital) networking between machines, between factories and between companies in the value chain. Also, the vision of more intelligent, possibly autonomous, manufacturing processes, in which the unfinished product itself ultimately steers the production process, has been part of the concept. The latter element has been often described as the “batch-size 1” promise of Industry 4.0, enabling really individual products to be produced in a factory.

    In the meantime, it is broadly accepted that not only the production industry, but practically every business sector will be heavily impacted by what is now generally called “Digitization of Industries”.  The digitization of the Media Industry, which started already in the 1980´s with the music CD and, later, the Internet, was relatively straightforward as the “product” itself can be digitized (think MP3 music).

    The digitization of the manufacturing industry, however, can only address the monitoring and steering of processes – the product itself remains physical in the end, even when considering 3D Printing. Although we can learn much from understanding what happened to the media industry, the digitization of manufacturing will have its own characteristics.

    In the next few years, how does the impact of Industry 4.0 look within the German market?

    Much is happening already in a less-observed production industry – agriculture. “Precision agriculture”, levering satellite or drone-based sensors, Big Data analytics, autonomous machines and supply chain integration, is already used to reduce cost and environmental impact while increasing yield.

    In regards to manufacturing, we are seeing brand-new pilot or demonstration factories that give us a glimpse of the future factory floor. However, as the machines in existing manufacturing plants have a very long lifespan, new digital steering technologies have to work together with existing machines. Therefore, much of Industry 4.0 will happen as a rather evolutionary process.

    We will probably see more revolutionary change in business models and value chains. Digitalization, including the deployment of “Big Data” and ubiquitous sensors, can substantially impact topics like logistics, remote servicing and the tracking of products and their usage through their life cycle. Also in supply chain management and outsourcing, we might see more short-term impact of digitalization.

    If we consider the impact of internet-based “platforms” like Uber and Airbnb for matching supply and demand in their respective markets, we can imagine what might happen in industrial ecosystems. Such internet brokerage platforms tend to become rather powerful, due to their scale and networking effect. They therefore can take over part of the value that traditionally was allocated to the owners of physical assets like cars and spare beds – or, in our industry, factories or machines.

    It might take a while before there is an “Uber for the steel industry”, an “Airbnb for spare manufacturing capacity” or an “iTunes for 3D-Printable spare parts”.  But it they arrive, they will move fast and most likely not stem from traditional German manufacturing companies.

    Let´s also consider which trends that affected the media industry, in conjunction with societal changes, could also impact the manufacturing industry. An example is the shift from product ownership to service: consumers don´t buy music but subscribe to an online music library, young city dwellers don´t buy cars but use a car sharing service. In the B2B world, we see similar trends: building management companies don´t buy (LED) lightbulbs but subscribe to a lighting service, mechanics workshops don´t buy compressors but “hot air” on a pay-per-use basis.

    When Industry 4.0 allows us to produce “smarter” products, this raises the question whether products produced in our factories are still relevant after leaving the factory. If they are part of a subscription service rather than bought by the end-user, they can and should be tracked and re-collected at the end-of-life for recycling, especially of rare materials. If they can be remotely monitored, serviced and updated, a substantial part of the lifetime value is created after production. Thus the relationship of the manufacturer with their products can expand substantially.

    What advantage does Industry 4.0 have for small and medium companies in Germany?

    Generally speaking, Industry 4.0 promises to allow for optimization between cost and flexibility. In order to reap the full benefits, we have to consider “integral cost”, as especially aspects like logistics, maintenance and service during the product lifespan, as well as recycling, should be included.

    Flexibility can manifest itself in many ways, like being able to adapt production lines to rapidly changing demand and small batch sizes. In this context the notion of “batch-size 1” can be realized at different levels: from configuring standard building blocks (like when ordering a car) and personalizing software functions (like some PC manufacturers offer) to a fully individualized piece of hardware (as 3D-Printing enables). To what extent customers are willing to pay for individualization is, however, an open question.

    When increased flexibility is combined with better digital interfaces between players in the manufacturing ecosystem, it can become easier to outsource activities or to fill free capacity with small batches. This could help smaller manufacturers. However, if big internet platforms bring supply and demand together efficiently, this might create substantial price pressure, as has happened in other market sectors already.

    Whether Industry 4.0 will help smaller companies in Germany to deal with the expected shortage of qualified works, is also an open question. In general, digitization reduces the need for knowledge workers more than for factory workers. Robots could reduce the need for factory workers, but outside of heavy, dangerous, or monotonous tasks, human workers are often still more suitable and especially more flexible. Finally, the monitoring and steering of smart factories will require specialized staff – which is scarce.

    How can German manufacturers get ready for Industry 4.0?

    Established manufacturers should actively think “out-of-the-box” about how business models in their industry might change, what key assets they own and what their sustainable added value in the new business models could be – likely something different than what has made them successful until now. It is important to consider all functions and business processes integrally, as new business models are likely to impact several.

    It can be helpful to start by focusing on the changing expectations of end-users and understanding what happened to totally unrelated industries that are already “digitized”. We should keep in mind that paradigm shifts often come from outside industry – so looking at what competitors and partners are doing is not sufficient.

    As Industry 4.0 is largely based on smart usage of data, it is often said that “data is the new currency” – data can be highly valuable. Therefore, each company should consider what data it has or could collect, from its machines, business processes, products (in the field), customers and partners, and for whom it could be valuable. Such data should be actively collected and protected, and business models for monetization are to be developed.

    Legal and regulatory aspects must be considered, also their international differences. Unlike common belief, there is no concept like legal “data ownership”. Especially when establishing digital communication with value chain partners or machine suppliers, it must be clearly defined who has what access and what rights to use certain data, also taking privacy (of factory workers) into account.

    Last but not least, any Industry 4.0 implementation should be based on a solid IT-Security concept. The risks of industrial espionage and sabotage through cyberattacks are substantially increasing with digitalization of business processes. With the proper technical and organizational measures in place, this can be managed. However, this must be planned in advance, as is described in the White Paper “Managing security, safety and privacy in Smart Factories” edited by Dr. Florian von Baum and Willem Bulthuis and available on www.munichnetwork.com/2nd-smart-factory-innovation-forum/pressemeldung.html.

    Industry 4.0 is clearly a broad and complex topic, and there are no “one-size-fits-all” answers to the many questions manufacturers are facing. For many companies that want to take the digital future in their own hands, it is not realistic to develop in-house expertise and insights sufficiently fast.  External experts or Digital Advisory Boards therefore can be a good first step to develop a solid understanding of what the future might bring. The tough decisions, though, can´t be outsourced.

    What are they key trends that will impact the chemical market in 2015?

    In 2015, the principal trends will include (1) growth within emerging markets outside the Western region – where local players are ahead of the competition thanks to lower manufacturing costs, (2) tailored innovative solutions to both end users and supply chain players, (3) business and operational strategies driven by market demand, competitive landscape, regulations to increase revenue and the desire to win a better market share. In order for global companies to succeed they will need to take all these factors into consideration and be ready to dramatically adjust their overall business models to new market demands. But more importantly, green chemistry/sustainability and the elimination of the commerce of chemistries with unfavorable environmental characteristics is another important trend that offers boundless opportunities for companies to create new products through advanced manufacturing biotechnologies using biomass and new agricultural materials. These trends will play a major part in the year(s) to come, but there tends to be one overarching tenant in this discussion which I will focus on and that is increased regulatory burdens on chemical manufacturers to demonstrate environmental safety of their processes and products.

    As a practicing ecotoxicologist, environmental exposure analyst and environmental risk assessor for major chemical companies for the past 25+ years I will focus my remarks regarding the key trends in the chemical industry in 2015 toward the environmental safety perspective. As I note above, the overarching tenant in this discussion is the certainty of increased regulatory pressures regarding environmental issues that chemical companies will face in 2015 and beyond and the increasing time and resources required to address these regulatory requirements.

    Specific key topics that I wish to address include TSCA reform within the US, risk assessment in emerging markets, sustainability/green chemistry, endocrine disruption and finally, Persistent/Bioaccumulative/Toxic [PBT] chemicals and Persistent Organic Pollutants [POPs].

    The Toxic Substances Control Act [TSCA] was passed in 1976 and is the principal legislation within the US for ensuring the safety of chemicals used in commerce. At the time of this writing a modernized bill [Senate S.697] has been amended and approved by the Environment and Public Works Committee to be presented to the full Senate for review. Importantly, the amended bill has provisions for, among other items, a requirement that USEPA make an affirmative determination that a new chemical does not present an unreasonable risk of injury under its intended conditions of use before it can be manufactured, imported or processed in the US. The bill would also require EPA to designate existing chemicals (i.e., those on EPA’s TSCA Inventory) as “high” or “low” priority through a risk­based prioritization process and then conduct safety assessments of and make safety determinations about the high-priority chemicals. Clearly, this initiative while beneficial with regard to environmental health will increase regulatory costs as a function of increased toxicity testing and risk assessment activities for chemical registrants.

    China and Latin America [LATAM] are emerging markets for chemical companies. In addition to the nascent nature of these markets on the business side of the equation, the environmental safety assessment approaches of these emerging markets are in the developmental stages as well. In general, the assessment of chemical safety in these markets are conservative and reflect a Tier I level of analysis.  Tier I risk assessment are maximally conservative in terms of toxicity and exposure. In some instances these conservative assessments are based not on the risk assessment paradigm, i.e., toxicity versus exposure but on a hazard based approach. The hazard based approach evaluates chemical safety as a function of inherent toxicity of the chemical entity and lacks the scientific rigor of the risk based approach. The industry as a whole must educate the regulatory authorities in these emerging markets with regard to the state of the art of the risk assessment process and to the downside of chemical safety assessment based solely on hazard.

    Sustainability/Green Chemistry initiatives are growing significantly in today’s market place. The sustainability/green chemistry initiatives encompass sourcing and selection of precursor chemistries to chemical use practices. With regard to sourcing and selection of chemical precursors, consideration is of course given to cost but also and perhaps more importantly to the environmental profile of a particular chemistry in terms of characteristics such as, persistence, bioaccumulation potential and toxicity. Concerning sustainability and end product use, 2015 will see increased insistence of the market place for materials with low precursor and end product use volume, low environmental impact and relatively superior performance/safety profiles.

    Endocrine disruption issues have been at the forefront of the science of chemical safety assessments for 50+ years beginning with the publication of Rachael Carson’s Silent Spring in 1962. At issue is the activity of exogenous chemicals that mimic endogenous hormonal substances. Adverse effects in humans can include reproductive impairment, potential increased hormonal based cancer incidences, e.g., testicular, breast and prostate and premature puberty. In wildlife, causal links of chemicals to endocrine disruption have been established for aquatic invertebrates [imposex in whelks], egg shell thinning in birds [DDT], reproductive impairment in fish evidenced by changes in reproductive organ structure and function, and in terrestrial mammalian species [PCBs]. With regard to the potential environmental effects, it is noteworthy that most of the occurrences of these effects were found to occur in heavily contaminated areas. USEPA has developed an endocrine testing program and should be commended for their efforts.  However, while the breadth of the testing program is broad and comprehensive, it lacks a clearly defined risk assessment paradigm. Testing may provide toxicity endpoints in dose concentrations of sufficient magnitude to induce a toxic response in test organisms. However, how these endpoint concentrations relate to exogenous environmental chemical concentrations orders of magnitude lower, with less activity than the endogenous hormones remains to be established. Hormesis, the notion of chemical activity at very low concentrations with regard to the cellular mechanisms of the endocrine system is under significant debate. However, the consensus appears to be that hormesis in this regard is NOT a plausible mechanism for endocrine activity. Chemical mixture toxicity may a play a role in allowing low levels of exogenous chemicals to affect the endocrine system. Testing paradigms do not currently capture the mechanisms of the toxicological effects induced by chemical mixtures.

    PBT chemicals are persistent in the environment, toxic and by their lipophilic nature accumulate within the food chain. As such PBTs effect human and ecosystem health. Persistent Organic Pollutants [POPs], codified by the 2001 Stockholm Convention, are chemical entities that like PBT materials persist in the environment, bioaccumulate through the food chain and pose a risk of adverse effects to human health and the environment.  POPs have been identified under the auspices of the Stockholm Convention and slated for elimination from commerce with few exceptions e.g., DDT for malaria abatement in developing countries. The criteria for PBT and POPs are defined nationally/geographically dependent upon half lives in soil, water and air, octanol water partition coefficient (Log P) or Bioaccumulation Factors (BCF) and species specific toxicity levels. For chemical manufacturers the challenge is to eliminate potential PBT or POPs from their synthesis routes and /or product portfolios.  Substitutions of PBT chemicals from marketed formulations can be costly and can alter the efficacy of the formulated product. The key then is to define potential PBT materials during the initial stages of product research and development and to eliminate them from process/products prior to commercialization where replacement may become problematic.

    These key trends will continue to influence the chemical market place in 2015. Increased regulatory burdens will lengthen product development cycle time and increase costs of developing new chemical active ingredients. The use of state of the art risk assessment science at the product concept inception phase through sales and marketing will reduce development costs, support appropriate product stewardship and reduce potential product liability costs. Finally, awareness of the key trends in the chemical market space and forward looking risk assessment strategies with regard to environmental health and safety can be employed as a value added component of a chemical manufacturer’s product portfolio.

    How is the new city-making industry evolving to help cities create extraordinary economic value?

    A new city-making industry is perhaps the best vehicle for cities around the world to successfully deal with mega challenges such as: energy efficiency, environmental sustainability, natural disasters and manmade disruptions, infrastructure development & renewal, and the holistic deployment of smart technology.

    I have observed and participated in the making of this emerging industry since the beginning of the twenty-first century as I helped cities in Asia, the Middle East, Europe and the Americas plan and launch districts designed to support innovation and entrepreneurship. Conceived after the turn of the twenty-first century, the intent of such districts is to jump start extraordinary high value industry clusters within 10-15 years, a process that formerly took 30-50 years or longer in places like Silicon Valley, Cambridge, UK and the Kendall Square area around the Massachusetts Institute of Technology.  These projects are propelled by alliances forged among the following: public sector agencies at local and national levels, established start-up businesses of all sizes, education and research institutions, financing enterprises, real estate developers, and information & communication technology companies.

    At the heart of these alliances is a mindset that encourages participants to work together across organizational boundaries in order to invent new ways to discern and exploit economic and business opportunities. This attitude supports the adoption of new business models and the transformation of relationships that move participants beyond their own core competence and to a mode where they can create products and services outside of ‘what they always do.’ The organizational form and leadership of cluster-making alliances varies from city to city, influenced by local capabilities, interests and politics.

    High value clusters, which act as linchpins for economic development, are complex ecosystems of (i) physical facilities for corporate-specific & shared research, development, education, business incubation & acceleration, and product-making, (ii) communication technology, and (iii) human talent. These clusters serve as a platform for social and organizational networks to facilitate intersections among disciplines and organizations within knowledge supply chains, from the point of idea creation to marketable products and services. Underpinning the clusters is an array of inducements, e.g., tax or funding incentives and regulatory permissions, which support entrepreneurial risk management.  Clusters are hosted within large-scale, mixed-use developments (100-500 acres) with digitally enhanced environments designed to serve the life and work style of a creative, hard driving workforce.

    Three key characteristics mark the behavior and organization of alliances as they plan for, weave together, and create synergy among the many elements of the cluster.

    Convergence. Participants converge their expertise, interests and knowledge at the very outset of a cluster’s conception to co-invent a narrative that weaves together a coherent story about purpose and how it can be achieved by a blend of physical and human capital. The narrative is steeped in the economic, social capital, business capabilities and interests of the place, the region and its initial & future occupants. The narrative clarifies how development will add value to all interested parties and lays out a conceptual roadmap for creating the cluster’s ecology.

    Launch and Learn. Alliance participants quickly mount small-scale experiments and beta projects, even as they design the narrative. Planning and implementing these projects help alliance members to collaboratively envision potential futures at a time of uncertainty and rapid change.  This exercise also helps participants learn how to proactively contribute their expertise to one another’s work.

    Networked Leadership. Leadership for these alliances plays out through a network of people who engage and align the interests of the full array of stakeholders. These networks have little in common with traditional schemes for project management that function with predetermined roles and lines of authority. Members of the cluster-making network act with agility to achieve what has to be done. Three actors are critical for the network to function. One is the enabler – a person who forges a commitment to the cluster among colleagues and business units within his or her own organization.  A second is the trend spotter– a creative contributor who skillfully brings new –sometimes-disruptive – ideas into the concept and planning arena.  The third is the integrator – a person (sometimes a group) who plays a facilitative role working with the different groups to help them define their interests in the cluster and understand how those interests can be served through collaboration with others.  The integrator is essential for the group to weave together different perceptions and objectives into a shared narrative.

    Although industry clusters occupy a small part of their host cities, the lessons learned from the alliances supporting them are germane to how cities can respond to the mega challenges that they face. Like cluster-making, these challenges elude simple definition and defy solution through traditional compartmentalized, linear responses. They also require many independent groups to converge perspectives and expertise. Fluid alliances will continue to form in response to cities demanding effective solutions to the mega challenges before them and businesses coming to appreciate the extraordinary large market for solutions delivered through the alliance approach. Over time, these will add-up to a new city-making industry.

     

    What are the key trends that will impact the media and entertainment industry in 2015?

    The convergence of technology, devices, new content forms, and data continue to make the media industry one of the most fascinating consumer categories in the 21st century. The pace of change continues to accelerate as consumers move from the time-shifting paradigms brought on by the introduction of the DVR, to the long tail content discovery of the original Netflix offering, to the more recent behavior of binge watching one’s favorite show over the course of a single weekend. But even with this fast-paced change, you can still catch, and utilize, the key industry trends in 2015 which include (1) the battle for the living room, (2) the water cooler of the future, (3) media metrics and (4) a new Golden Age.

    The Battle for the Living Room

    For years, the battle for dominance in the living room drove competition amongst technology giants like Sony, Microsoft, Apple, Amazon and others to develop new smarter set-top like experiences that gave users more control over their viewing experience and greater flexibility in content offerings (video, games, and music) controlled centrally from the living room. Motivated by an overly optimistic perspective that the days of the cable bundle were numbered and the dawn of the à la carte entertainment service model was near, technology companies invested heavily in “Trojan Horse” like operating systems to take over the living room. The reality proved much more challenging. Comcast, Time Warner, DirecTV and other TV service providers demonstrated that they were up for the battle and have managed to slow the flow of cutters, at least for now, with nifty technical innovations of their own, as well as the clever management of digital rights across platforms, to make their service irreplaceable for marquis broadcast events.

    Similarly, the proliferation of mobile screens with strong A/V capabilities is chipping away at the old media adage that “the best screen” wins and thus rendering the battle for the living room as nearly irrelevant. The new battle will follow the trend of TV’s “appification” as device makers and content providers will follow viewers across these devices and battle for ownership and loyalty from the audience. As more viewership moves to Apps, we will continue to see an emergence of new media brands (the Kardashians, Five Thirty Eight, TED) and a reshaping of existing established brands as providers realize they are competing not only on the quality of their content but the quality of their experience across multiple platforms.

    The Water Cooler of the Future

    Much has already been written about the roiling impact that Big Data is having across the business landscape. Media is no exception as content providers, platform owners, and device manufactures have more sophisticated insights into how, when, and where users are engaging in content experiences. Over the last view years, the industry has seen several attempts to enhance this experience with interactive features on screen and via companion viewing devices like Xbox Smart Glass. While we have not yet witnessed the ultimate breakthrough experience, it’s likely coming soon. Broadcast hits like “The Voice” have proven that they can create a market for a previously unknown artists on iTunes. Sports giant ESPN has led in leveraging social media to extend the discussion on the latest sports story online. The industry should expect the social integration of media experiences to increase rapidly. Today, one’s social graph quickly extends the discussion about the latest show like a virtual water cooler, helping followers discover new content, while building viral excitement around the next big thing. Expect content creators to continue to leverage social sentiment and real-time data and analytics to more quickly inform decisions about what content to create and for whom. The emergence of the Audience Manager is a trend that is here to stay.

    Media Metrics

    In the midst of all of this, the manner in which we track audiences across devices and platforms is changing as advertisers want better gauges of their true reach. Billions of media dollars are still exchanged on the basis of outdated panel-based methodologies. Expect to see continued innovation in performance-based media measurement that follows users across platforms and ad dollars flow to providers that are able to demonstrate effective messaging performance against their marketing objectives.

    A New Golden Age

    Like the fabled Golden Age associated with the birth of television, we are in a new Golden Age of media. Consumers have more ways to access, discover, and enjoy content whenever, wherever, and however they choose on sleek, new & shiny devices. The quality of the content continues to improve as providers battle to “out-innovate” each other in search of the next big franchise. The proliferation of apps and platforms enhance the experience in ways previously unimagined. All of this comes at a cost that has to be funded by someone. Cord cutters hope that they will only have to pay for content that they enjoy. Glib in their technical savvy, many of these cord cutters don’t realize that they would not be able to enjoy “Breaking Bad” via their streaming subscription if not for the millions who still buy a cable bundle and fund AMC’s development cycle. Advertisers dream of more precise and efficient placements that solve the age-old Wannamaker problem – identifying the 50% of advertising that’s valuable – yet they still participate in media upfront buys and bid millions for 30 seconds spots during Super Bowl broadcasts.

    The business models that control this global category are deeply entrenched and managed by very strong and sharp companies. The trends outlined above will continue to put pressure on the existing status quo but we are still a few years away from true business model innovation in this category. Technology giants, TV service providers, device manufactures, and content providers are all battling for supremacy here. Innovation will come, the stakes are too high and the players too big. The clear winner will be the consumer in the short run, as they will have more unique content experiences to immerse themselves into. What will be fascinating to watch is whether the net cost of all this innovation comes at a cheaper price for the consumer. Regardless, as this battle continues to unfold, it promises to be one of the most exciting areas of business innovation for years to come.

    What cutting-edge technologies will impact the industrials sector in 2015?

    There are many cutting-edge technologies that we are beginning to hear about that will affect the industrials sector beyond this year. In 2015, we are seeing several major trends that are dramatically impacting the sector including the internet of things, 3D Printing, Robotics and LEDs. While none of these things should be new to any of us, they are unquestionably causing more disruption and impact in 2015 than ever before.

    The first cutting edge technology changing the industrials sector in 2015 is the Internet of Things, or IoT, by creating connected or smart environments for many different types of buildings and infrastructure. While the idea of having devices linked together is nothing new, the IoT has created the ability to do this with less capital, and with a simpler interface. While there is still a long way to go, connected buildings arguably became viral because of several factors including devices being addressed by individuals, cloud based capabilities and the interconnectivity of devices. Individually addressing devices is important in personal space within a larger shared area, such as a large open office. For instance, now everyone can individually address their lighting needs without having to adjust the full common area; each light can be individually addressed. Being able to connect these devices to the cloud allows for endless content capabilities. Finally, interconnectivity has been critical to improve the user experience; a single device or app can control HVAC, lighting, security, safety and many other things.  IoT now provides indoor connectivity, outdoor connectivity, retail connectivity and city connectivity.

    Next, 3D printing is becoming more and more widely adopted in many industries and the possibilities are limitless in terms of what other industries this technology will disrupt. In fact, it is hard to find an industry not impacted by this technology. The use of 3D printing is common in expected industries like electronics and automotive, and there are many unusual applications beginning to use 3D printing. For instance, a 3D gun has already been printed. Often, military equipment can be customized and replacement parts must be made quickly. Utilizing 3D printing will catch on in this industry shortly. Furthermore, 3D printing can be done in zero-gravity; there are now plans to begin using the technology on the International Space Station for printing tools, parts and other items. In common industries, 3D printing is widely used for product development and it is beginning to be used to replace manufacturing where it makes sense. There are many advantages to 3D printing over traditional manufacturing, the most important being its environmental impact; traditional manufacturing is often wasteful and dirty, while 3D printing can lessen the waste and carbon emissions. As the technology continues to speed up the process in a less expensive manner, we will see 3D printing as one of the most common manufacturing processes.

    Next, when you consider the impact of IoT and 3D printing on the industrials sector, it is hard not to also look at robotics at the same time. In manufacturing, robotics can be the brains that utilize the core competencies of the previous two technologies with additional manufacturing benefits. Robotics are now utilizing more sensors, such as vision and force-sensing, to work with more delicate components, increase accuracy and ultimately drive down manufacturing costs. Robots, utilizing IoT technology, are now being programmed and monitored remotely. Being able to monitor remotely not only allows a facility to avoid any manufacturing shutdowns, but also enables the ability to monitor and improve efficiencies. Finally, the overall cost of robotics has dramatically decreased, providing further opportunity for industries to take advantage of this disruptive technology.

    Finally, LEDs are completely transforming lighting as we know it. LED lighting now has shifted from ‘good enough’ for the early adopters, to performance and price points allowing for mass adoption. They are not only changing the performance and efficiency of lighting, but changing complete infrastructures. In the past when a high intensity discharge streetlight burned out, a truck would come along and replace the bulb that failed. It would not be unheard of to replace that HID lamp two or three times a year, sometimes more often. Now, the cost of an LED replacement, coupled with the enormous energy savings and the quality of light, the return on investment is down to one year, even less in certain cases.  Now LEDs are the choice for retrofitting, and the retrofit is now removing the antiquated screw-based fixture from the streetlight pole and replacing it with an integrated LED fixture.  This trend is not only catching on in exterior lighting, but industrial lighting and commercial lighting, while residential lighting is not far behind.

    Beyond general lighting, LEDs are making an impact on other niche markets. LED penetration in automotive lighting is growing dramatically. Additionally LEDs are providing much needed light, both visible and invisible, ultraviolet light in industrial automation because of their robustness and longevity compared to traditional light sources. LEDs are also gaining tremendous market share in horticulture and agriculture applications. With LEDs, you can now grow most plants, including food bearing, indoors throughout the entire year. You can now tune the spectrum of your light to positively affect livestock moods, therefore increasing the throughput of the farms production. The applications for LEDs are growing daily and penetrating markets never before thought of.

    Generally speaking, the cutting-edge technologies impacting the industrial sector can be looked at from a different perspective to see the true reasons why they are disruptive. Each of these technologies have blurred the lines of what the sector is and who is part of the value chain. LED light sources now have more in common with televisions than they do with incandescent or halogen lights. Tech giants have tried to bypass the traditional supply chain to treat it as an electronics appliance. This will continue to evolve as non-traditional manufacturers and applications continue to emerge because of LEDs. The same hold true for connected devices, 3D printing and robotics. Apple and Google will quickly gain tremendous footholds in the IoT realm by converting the value proposition in the software instead of the hardware. They are beginning to blur the lines between the industrials sector and the technology sector. We will continue to see each of these technologies grow exponentially through the rest of the year and into the future.