The implementation of new business models is an essential element in the digital transformation process. Marina Guérin-Jabbour, Head of Digital Innovation Hub at Luxinnovation, stated this fact when opening the 4th L-DIH Talk session on 30 April.
Reviewing one’s own fundamentals, revising the components of one’s value chain, redefining one’s processes, technological organisation and workflows… a digital transformation process allows one to start from a blank sheet of paper to reinvent one’s business.
Optimise the existing
Ensuring digital continuity through the virtual and real worlds of manufacturing is CPI‘s core business, which focuses on this industrial sector.
Recalling that 86% of the firms that invest the most in R&D are manufacturing companies, and that the artificial intelligence market should represent $72 billion in 2021 (compared to $8 billion in 2016), Julien Zins, Continuity Coordinator at CPI, said that the future of this sector lies in “smart manufacturing”. “This doesn’t just mean adding a digital layer on top of what already exists, but going much deeper. It means changing the way things are done to optimise efficiency, building on the strength of the digital world, and above all interconnecting machine systems with customers, partners and all other production sites.”
According to him, companies must essentially answer three key questions: how to develop the skills of the future, how to achieve an adequate level of operational excellence, and how to integrate a very dynamic ecosystem of partners.
“Training users is not only about developing new methodologies to train users, but also trainers.” It is in this spirit that CPI is creating a digital training centre, targeting the Greater Region, with the support of ADEM and the national institute for the development of continuing vocational training (Centre National de Formation Professionnelle Continue, INFPC).
Interconnection between all parties involved is also one of the keys to a successful digital transformation. “By removing the barriers between the different partners, we increase the speed and efficiency of exchanges, as well as the responsiveness and agility of all. You don’t necessarily have to buy new machines, sometimes it can be enough to optimise existing processes.”
At the service of people
The implementation of new business models version 4.0 is part of the daily life of a global firm such as IBM, which is more than a hundred years old. With the implementation of key technologies (Internet of Things, artificial intelligence, cloud, data, etc.), new skills are needed to carry out the 4th industrial revolution: greater cognitive flexibility, negotiation capacities, coordination, human management, creativity… “These are qualities that can never be replaced by machines,” explained Ben Heyerdahl, Commercial and TSP Sales Leader at IBM.
Human beings will always be at the heart of these processes and the ethical dimension should never be neglected but considered in parallel with technological aspects. “The aim of artificial intelligence is to increase human intelligence, not to replace it. New technologies, including artificial intelligence systems, must remain transparent and explainable. Data and knowledge must always belong to their creators.”
Being able to respond in the best way to the way users and consumers behave must also be a key element of the process. “All new business models must take into account new ways of thinking,” Mr Heyerdahl said. “Important factors include being able to start and stop a process whenever you want, being flexible, responding to market demand, being able to deliver tailor-made solutions. While moving away from a traditional model based on buying and selling, we have gradually evolved towards formulas that take all these new parameters into account, with billing systems based on actual use and totally flexible subscription formulas. We are even beginning to generalise the principle of ‘contract-less’, based on real consumption only.”
The questioning of existing business models and the progression towards more efficient and flexible methods obviously affects the entire supply chain of any company, whatever its field of activity. “Today, all business models are being overturned in terms of partnerships, flexibility, internationalisation, operations and administration”, said Kevin D’Antonio, senior manager at EY Luxembourg.
In his opinion, the number of ways to position oneself well is not endless: “It is necessary to set up an ever closer coordination between the different partners and to rely on frequent exchanges of information. From production to distribution and administration, we need to intensify the links between everyone.”
In addition to the IT and technological tools that are used to intensify these links, the human factor obviously remains essential and change management will, in this context, be a key element for the success of such a project.
The human aspect can be evaluated through “stress tests”, which are essential. “Such simulations of critical situations are crucial on two levels. On the one hand, they provide valuable information on gaps in the supply chain that can have an impact on the customer and the business. They also validate governance, assess the relevance of roles and responsibilities, identify gaps, train those involved and validate the relevance and ease of implementation of procedures and documentation.
For Mr D’Antonio, the observation is clear: traditional supply chain structures at a global level are no longer adapted to deal effectively with an increasing number of unforeseen disruptions, and the current crisis shows this. “More than ever, companies need to shift from a reactive to a preventive mindset in managing their supply chains. Now is the time to invest in building a more resilient supply chain. A new standard needs to be addressed.”
Automotive spare parts: a sector to be digitised
Considering new business models does not necessarily mean focusing only on technological and digital aspects. Models that appear much more “basic” can also be effective.
The principle of circular economy is a good example and was illustrated by Luc Azilinon, founder and CEO of Interlinks-Auto, who previously has created and developed the Autossimo and Autopass platforms which offer the millions of reference car parts.
Interlinks-Auto is a platform that offers European garages and motorists a vast offer of recycled parts for a wide range of vehicles and brands, accessible via internet and mobile applications.
“The automotive sector is certainly an area of activity where the use of recycled parts from the circular economy will have a major effect on cost reduction and the preservation of natural resources,” he explained. “Currently, the global spare parts industry is worth €150 billion. Recycled parts currently account for only 2%, but according to McKinsey, the target for the next 10 years is to reach 10%. A number of challenges therefore need to be addressed.”
This will include an optimised and digital organisation of the supply chain, better identification of selected recycled parts and appropriate training for professionals.
The Interlinks-Auto platform puts consumers looking for a spare part directly in touch with the suppliers of such recycled parts, especially car breakdowns.
“This is a very traditional sector which does not really have such a facility to put the different players in contact. Our ambition is to facilitate the transition to digital and connected solutions.”