4 Ways to Digitally Transform Business Models with IoT Technology

Jennifer Davis

Digitization is changing the way people do business. Beyond the factory floor is edge country, where technologies like Mobile IoT, LoRa, and eventually 5G provide the network connectivity necessary for greater visibility and monitoring of the supply chain. Combined with cloud computing, blockchain, and sensors, IoT technology is useful for a diverse range of solutions that address pain points and illuminate new opportunities. Equipped with the right combination, and a well-defined process, businesses can gain more ROI from each transaction, preempt threats to product quality, and elevate the customer experience.

Companies use IoT technology to create new services and bring added-value features to their business model. Because off-the-shelf IoT solutions are few and far between, legacy businesses need the IoT ecosystem of device makers, middleware providers, app developers, connectivity partners, and storage solutions to complete their digital transformation. While every company has different needs, here are a few business cases that illustrate a clear path to ROI using IoT technology.

1. Product-as-a-Service

In the movement towards circular economies, more companies are recognizing the value in bundling their product with on-going services rather than offering single one-off purchases. Depending on the product, companies can provide end-users with value-added services that bill based on usage or have the system prompt sales calls when specific issues are detected. In this model, edge devices, sensors, network connectivity, and cloud storage work together to collect data on usage rates, performance, and other metrics.

Business Case for Product–as-a-Service

Rolls-Royce turned engine sales into a product-as-a-service model with its CorporateCare program for business aviation. Instead of just selling a product, the company began outfitting its engines with an array of IoT devices and sensors that enable them to monitor engine health. By billing a fixed hourly rate per flight hour, the program covers all maintenance costs associated with the engine, as well as many other services. Streaming data combined with a 24/7 global service support network allows the company to proactively maintain equipment, predict failures, and adjust performance based on customer needs. As a result, planes with Rolls-Royce engines covered by CorporateCare sell for a higher price and spend a shorter time on the market when resold.

2. Identity Verification

Businesses can provide data to downstream users needing to verify a product’s source or authenticity with the help of blockchain technology. IoT provides unique identification and traceability capabilities while blockchain provides tamperproof chain-of-custody information.

Identity authentication is especially important for producers of low volume, high margin items. Custom and limited run products benefit from the ability to ensure product integrity. Increased visibility of this process can reduce counterfeits, knock-offs, and even secure intellectual property.

Business Case for Identity Verification

The Provenance platform brings verifiable authenticity and transparency to organic producers and brands selling artisan goods or sustainable fashions. Available with numerous tracing options, brands can tailor their needs using IoT to assess the lifecycle of products from design to raw materials, manufacturing, and distribution. Blockchains tamperproof architecture enables brands to create digital one-offs, which enhances uniqueness and desirability. Depending on the brand, product information is shared through a serial number, chip, or QR code accessible through an app. These applications allow companies to build digital histories for individual products and leverage this information to increase customer engagement.

3. Cold Chain Management

Visibility in last-mile delivery can be especially useful for high-volume, high-margin items such as pharmaceuticals or other perishable items that require condition monitoring to protect consumer health. Peripheral sensors will often enhance IoT solutions of this type by monitoring physical and environmental conditions such as temperature, vibration, humidity, and more.

Business Case for Cold Chain Management

Similar to Amazon Hub lockers for packages, the LastMile Hub from Panasonic is an end-to-end cold chain solution for fresh groceries. As online grocery delivery continues to grow, LastMile Hub provides food retailers a way to guarantee food freshness while securing customer data. Using the LastMile Hub pickup lockers, customers can order groceries and pick them up at their convenience. Customizable storage units can hold different purchases for customers depending on whether the item needs to be chilled, frozen, or kept at ambient temperatures.

4. Remote Monitoring

Rather than waiting until an issue has occurred, companies can react preemptively through actionable data from condition monitoring. Companies can outfit their products with IoT sensors that relay data to let critical staff know if the product is being maintained at optimal conditions. For other solutions, sensors can be set to trigger new shipments when volumes reach a pre-determined level. Coupled with GPS technology or Mobile IoT connectivity, the location of a product can be identified to make delivery and restock schedules easier and more efficient.

Business Case for Remote Monitoring

Alpha Acid Brewery worked with Oracle to implement an IoT solution into their beer brewing process. IoT-enabled sensors installed on the fermentation tanks gave brewery staff the ability to monitor tank pressure and temperature remotely. They also expanded supply chain visibility to the company’s malt, hops, and yeast suppliers to track each stage of the raw materials process using blockchain. Through the use of a simple QR code and their smartphone, consumers could see which suppliers contributed to the beer they are drinking and rate which one they like the most. Access to this data allowed the brewery owner to gain valuable insight into both customers and the quality of suppliers.

Customizable Solutions for Every Industry

Supply chain visibility and streaming product data provides new ways for businesses to share their products, promote unique selling propositions, hold vendors accountable, drive conversion, and win customer loyalty.

Some decision-makers may show resistance to investing CapEx into unfamiliar technology, but sharing business cases using straightforward IoT solutions with clear ROI may be more well-received.

The creation of a one-size-fits-all solution has not been realized, and IoT adoption continues to be implemented on a case-by-case basis. Because the needs and potential uses of IoT devices and edge connectivity technology vary greatly, implementation includes a mix and match of hardware and software solutions. IoT solution architects and other system integrators are essential partners for implementation due to the customizable nature of the technology. Because each company’s business model has its own set of unique needs and requirements, these partners help ensure solutions are built on well-defined processes that result in clear outcomes for both ROI and the customer experience.

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