The new era of digitalization is changing manufactures as we know them
Germany is well known for producing goods. The country is mostly known for its automobiles, chemical goods and home appliances. According to a report of the German National Academy of Science and Engineering “22 of Germany’s top 100 small and medium sized enterprises are machinery and plant manufacturers with three of them featured in the top ten”.
But as the use of smartphones is exponentially increasing (a 2014 report by the Economist Intelligence Unit indicated that by 2018, the number of smartphone users worldwide is expected to reach 2,8 billion) the global economy is shifting to a hyper-connected status. And with it, the report of the National Academy says, the global trends for manufactures are gradually changing.
In this new era, gathering data and using it to produce new online solutions will be more profitable than making products. The report indicates that is now possible to “network resources, information, objects and people to create the Internet of Things and Services”.
This network, IoT, will allow companies to turn products into streams of information, when micro-sensors placed on their packaging are scanned. As a result, businesses will able to enhance, correct and even create tailored goods for particular groups of customers and also to create stronger relations with them.
The “Internet of things and services” will bring the 4th stage of industrialization where a company would be able to design a product in one part of the globe and within few hours start making it, into its factory located in another country.
In order to compete aggressively, large manufactures would have to create “open platforms” so their smaller and medium sized counterparts can build and sell online products on them. For these platforms to succeed all of their parts, manufacturers, developers and customers, would need to function in systemic way. There are several examples of successful platforms in consumer markets; the more apps people purchase the more data is generated and new online solutions can be created as a result.
This leads us to believe that even companies competing each other could end up inter-connected through products on open-platforms. Yet the mentality of German manufacturers along with the strict legislation about intellectual property shows that the creation of online applications based on shared information, might prove difficult.
Moreover the prevailing business spirit in Germany, in comparison to American businesses, is risk averse, a distinct cultural element. The country’s young workforce lacks out-of-the-box thinking and risk taking, two skills highly valuable in the world of data.
Even though the prices of many products and particularly those of “smart devices” are declining due to the use of multiple networks by manufacturers.
There are no signs that the end-users in Germany are properly informed about the use of their information. And whether finally, should this be a global trend, they agree to this trade-off.