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Service Economy: The Third Industrial Revolution Will Turn Customers into Designers

The first Industrial Revolution was about machines, the second about technology, and the third will take place inside the “Brilliant Factory,” says Christine Furstoss, global technology director at GE Global Research.

Based in part in the cloud, the Brilliant Factory will be a place where designers, suppliers and production engineers will collaborate over crowdsourcing platforms, design goods and virtually test production without touching materials or machines. “They will download the process to intelligent machines on the factory floor when they are ready,” Furstoss says. “When production starts, they will be able to make real-time adjustments based on what’s happening to optimize efficiency.”

A key element of that crowdsourcing collaboration will be the customer. “Service, the function that’s usually closest to the customer, feeds engineering with reality-based measures of product performance,” says Ian Boulton, senior director for solution strategy at the Big Data firm PTC. “Engineering, in turn, designs products with service optimization in mind.”

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Software and hardware technology called PowerUp allows wind farm operators like EDP Renewables to monitor performance in real time and boost power output by as much as 5 percent per turbine. This could translate to a 20 percent increase in profit. 

Boulton believes that the advent of the Industrial Internet (or Internet of Things), a network that connects machines with software, sensors and data, is “transforming product development processes and accelerating design innovation.” He calls this trend “servitization.”

He says that “only a decade ago, the data storage and analytics tools needed to deliver on the ‘design for service’ dream weren’t quite there. They are today.”

See what it takes to ship 50 million tons of freight across 21,000 miles of track in this video giving a behind-the-scenes look at the CSX Northwest Ohio Intermodal Terminal.

The Trip Optimizer system connects locomotives to the Industrial Internet. It works like an intelligent cruise control, crunching a complex diet of data ranging from train characteristics like length, weight and the number of locomotives, to track profile information like grades and speed restrictions. 

GE has already started connecting machines to the Industrial Internet and using software and big data analytics to improve their performance and minimize unplanned downtime.

A recent story in Barron’s story pointed out that GE was transforming itself from a seller of just equipment into a seller of services. “Airlines can use data from hundreds of GE sensors to reduce fuel costs and plan maintenance,” Barron’s wrote. “Railroads can do the same to optimize trips. Software now contributes $4 billion a year to GE’s revenue. And service contracts create a stream of high-margin income that can last for the life of the equipment the company sells—in some cases, three or four decades.”

Bob Judge, director of product management at GE Oil & Gas, says that GE needs to “move from the ‘break-fix’ model to a maintenance model where we can advise customers to service a component based on measurements of its performance.”

As service starts informing design, the idea is that there will be a lot less fixing and a lot more performance.

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