IoT powered servitization of manufacturing – an exploratory case study

Abstract

With the rapid development of information technology and the Internet itself, companies are no longer confined within the information exchange between people, but they are expanding towards enabling communication between physical products. This third wave of the Internet development referred to as the Internet of Things (IoT) unlocks the potential for innovative product-service systems in a scale that has not been observed before. Companies more than ever are challenged to rethink their offerings while simultaneously being provided with a unique opportunity of creating or recreating their product-service systems.This article explores the potential for product-service development that IoT offers. By providing an overview of the technological breakthrough and its far reaching implications for different industries, as well as analyzing the literature on servitization, an attempt is made to combine those two concepts towards addressing the challenge of how organizations can actually reap the benefits that IoT has to offer in the product-service context. Moreover, an analysis of several successful IoT implementation cases in different industries is provided. As a result a conceptual framework for IoT implementation in product-service context is outlined.

Exploring How Usage-Focused Business Models Enable Circular Economy through Digital Technologies

“…Both scientific and grey literature acknowledge IoT, Big Data, and analytics as enablers for the transition towards servitized BMs [52] and CE [4,6,20,21]. While the enabling role of digital technologies for the servitization of companies has been investigated by previous studies (see, for instance, the work of Ardolino et al [53]), their specific role as enabler for CE has been quite under-investigated to date [5,23].…”

“…The Internet of Things (IoT) technology refers to supplying devices with sensors, which give them the ability to communicate and to become active participants in an information network [52]. The application of the IoT technology turns stand-alone products into smart and connected ones [54].…”

“…Thus, through IoT, companies may obtain real-time remote monitoring of product usage, status, and location [12,13,23]. Therefore, companies have a great opportunity to gain knowledge on how customers are using products, achieving a closer proximity with them [52], and thus transforming the interactions between manufacturer and their customers from negotiation to communication [12,19,56]. When products become smart, companies may upgrade only their digital components, such as the product firmware, thus enhancing product upgradability [52].…”

“…Therefore, companies have a great opportunity to gain knowledge on how customers are using products, achieving a closer proximity with them [52], and thus transforming the interactions between manufacturer and their customers from negotiation to communication [12,19,56]. When products become smart, companies may upgrade only their digital components, such as the product firmware, thus enhancing product upgradability [52]. Product upgradability may in turn contrast product obsolescence and its resulting material waste, thus enhancing the transition to CE [51].…”

“…To find the proper application, analytics need to work with large amounts of data [53]. In this case, analytics allow companies to transform data into insights, which provides the basis for a better decision making [52,58]. Thus, the combination between Big Data and analytics can positively advance management towards CE, by feeding sustainability-oriented decision-making processes with the required information [4].…”