Distributors Must Get in Front of Coming Technological Waves
By Dan Markham, Senior Editor
Changes in technology are arriving at a rapid rate. Some of those changes merely improve life in a small way, making gains on the margins.
But other changes are more substantive. They alter the way business is done in enormous ways, opening new avenues for commerce, and closing off others. Identifying the kinds of changes that will fundamentally alter the metals distribution industry is crucial for service center operators. “Transforming the Future” was the theme of the 2017 Metals Service Center Institute’s annual meeting in Miami last month, and two of the meeting’s speakers gave the service center audience a glimpse not just into what the future holds, but how to carve out a niche in it.
Michael Steep, the senior vice president of global business operations at PARC, a Xerox company, delivered remarks on disruptive technologies, which are appearing at rates never been seen, he said.
Disruptive technologies are innovations that don’t just have an incremental effect on one industry, but developments that have exponential effects on multiple industries. Examples of past disruptive technologies are Uber and the iPhone. The changes in business are delivered either by massive improvements in economies of scale, or by generating new revenue outside traditional models.
The technology overhauls are being delivered through a multitude of channels, including printed electronics, artificial intelligence and material science. Steep pointed to Tesla’s newly developed solar roofing tiles, which are designed to look like conventional roofing tiles, but are implanted with solar technology to power the house within. The goal is to produce the tiles at or below the cost of existing roofing products, allowing the resident to power the home at no cost.
For the manufacturing sector, robotics is having a profound effect on business. Robotics is evolving from its current state, where machines are limited to single tasks, working independently of others. The robots of the future will instead have tremendous dexterity, and will work and communicate with other machines. And the future isn’t so far off, Steep said, pointing to a Chinese factory that has already cut its workforce of 320,000 people by 60,000, with further reduction of 240,000 anticipated. “Robotics will explode to the point where it will replace approximately 20 percent of the workforce over the next 20 years,” he predicted.
Understanding and capitalizing on these massive changes requires a new mindset, Steep said. Rather than start with a product and how it can be applied, the manufacturing sector should look at a problem and whether a solution exists within the rapidly developing technologies. “If you do technology the right way, it not only can improve the quality of your lives, but also drive new revenue. If you think of it as a problem, you get an entirely different result,” he said.
Another type of disruptive technology is predictive analytics. Tony Sardella, CEO and founder of Evolve24, explained to the audience how this technology is relevant to the manufacturing sector.
Predictive analytics capitalizes on the incredible amount of collected information, and the powerful growth in computing power, to put data to use in much more meaningful ways. Whereas previous analytics allowed companies to review past events isolated to their business and figure out why something happened, newer measurements collect trillions of pieces of information to determine what occurrences and trends are going to affect the future, and how. Moreover, this leads to prescriptive analytics, which inform businesses to not just respond to the future, but “make what you want happen,” Sardella said.
The data is available through the incredible growth in sensors, found in all the usual places, but also now present in buildings, roads and even metal itself. These sensors are constantly collecting and sending information for analysis.
One result of the successful application of PA for service centers is removing much of the guesswork out of forecasting, Sardella said. “Predictive analytics enables a de-risking of important business decisions.”