How does the distributed cognitive industrial Internet platform empower the digital transformation of enterprises?
The 7th Blockchain Global Summit hosted by Wanxiang Blockchain Lab, with the theme of “Digital Transformation”, will be held at W Hotel on the Bund in Shanghai from September 14th to 15th. This summit will further explore how blockchain can create a trusted digital base, protect data privacy, tap data value, and empower and accelerate the digital transformation of various industries after the integration and innovation of other digital technologies.
Before the start of the summit, we specially invited Zou Chuanwei, chief economist of Wanxiang Blockchain, to write a series of industry research reports on the issue of “How Blockchain Empowers Digital Transformation”, with in-depth interpretations in the context of new infrastructure and digital migration , How to integrate the development of blockchain with other technologies, and play the role of information infrastructure.
Author of this article: Wang Puyu Proofreading: Zou Chuanwei
According to the definition given by the Beijing Guoxin Institute of Digital Transformation Technology (Guoxin Institute) and the Zhongguancun Information Technology and Real Economy Convergence Development Alliance (CITIC), digital transformation is to conform to the new round of technological revolution and industrial transformation trends, and to continuously deepen the application of cloud computing , Big data, Internet of Things, artificial intelligence, blockchain and other new-generation information technologies to stimulate the innovation-driven potential of data elements, build and enhance the survival and development capabilities of the information age, accelerate business optimization and upgrading and innovation transformation, transform and upgrade traditional kinetic energy, and cultivate development New kinetic energy, creating, delivering and acquiring new value, realizing the process of transformation, upgrading and innovative development. Focusing on digital transformation, this article will discuss the following three questions: First, at the enterprise level, why do we need digital transformation? Second, what is the role of industrial Internet platforms in digital transformation? Third, what can the distributed cognitive industrial Internet provide in the digital transformation of enterprises?
Digital transformation development
In the fierce market competition, companies need to rely on product quality, price, service, and long-term accumulated brand image to maintain market competitiveness, but with the disappearance of my country’s demographic dividend, labor costs have risen, and the international trade situation is uncertain and the impact of the epidemic The resulting market development is blocked, and the original competitive advantages of enterprises are disappearing, and the industrial enterprises at the bottom of the value chain are even worse. How to get out of the predicament? At present, the ice is broken mainly from two aspects. The first is to reduce operating costs and continue to maintain a price advantage; the second is to increase profits by expanding market sales through innovative business models.
Before discussing operating costs, we introduce two groups of concepts. The first group is the supply chain model: supply-driven and demand-driven; the second group is the four major sources of profit.
1. Supply chain model
Supply-driven means that companies design, produce and sell products based on market forecast data;
The demand-driven type means that companies respond quickly on demand based on market orders, and meet product production and supply through efficient planning, organization, coordination, and control.
2. Four major sources of profit
The market is always pursuing lower prices and higher quality. In terms of price control, as shown in Table 1, it has mainly gone through four stages: the first stage is mainly to obtain profits by controlling the cost of raw materials and expanding the scale effect. When the first source of profit hits the upper limit, the second source of profit is started. Through lean management, it can improve work efficiency in the enterprise and extend the working hours of employees to reduce labor costs. When the new source of profit entered the upper limit again, people found that logistics costs accounted for 30% of the total operating costs of the enterprise. Therefore, reducing logistics costs became the third source of profit.
Table 1 Comparison of the four major profit sources
The first three profit sources are all focused on the internal cost control of the enterprise to increase revenue, but when the internal operating cost savings of the enterprise reaches the upper limit, people have noticed the operational management problems of upstream suppliers and downstream customers. Before a product with complete functions enters the market, it needs the cooperation of multiple companies in the supply chain. The high operating costs of any one company will cause the price of the final product to rise, which will make the product lose its competitiveness in the fierce market competition. . So around the supply chain information integration and information sharing began a new wave of cost reduction, known as the fourth source of profit.
As shown in Table 1, from the first to the fourth profit source, each stage has various systems to support information processing, storage and management, such as production execution management system MES, enterprise resource management ERP, warehouse management system WMS , Supply Chain Management System SCM and so on.
After experiencing the four sources of profit, where are the new sources of profit in the future? Governments, enterprises, and research institutions are all trying to find answers. For example, Professor Hao Hao of Shanghai Second Polytechnic University proposed in 2015 to use reverse logistics as the fifth source of profit, and realize product resale, reuse, recycling and remanufacturing through reverse logistics. Full life cycle management. There are also companies that believe that demand-driven personalized customization will become the fifth source of profit. The above statements are reasonable, but they are not accurate. This article believes that the real fifth source of profit is already on the way, that is, the digital transformation of enterprises. In the past ten years, the rapid development of technology has spawned a large number of new business models, including new retail, live broadcast delivery, community group purchases, etc. However, the upstream industrial field still maintains the traditional operation mode, whether it is the development of reverse logistics. Closed-loop management of life cycle, or C2M customized business model, both need to rely on the rapid response of each link, which has high requirements for enterprise digital management. Therefore, whether it is the need for companies to tap new sources of profit or the needs of the market, the digital transformation of industrial companies is imperative.
Different from the independence of the first four profit sources, the fifth profit source is the application of new technology to give the first, second, third, and fourth profit sources a new life. At the same time, innovative business models driven by data will appear in large numbers. Therefore, the fifth source of profit can not only reduce operating costs, but also improve active profitability.
The value of the industrial Internet platform
1. The first source of profit for the industrial Internet platform
The integration of IT and OT realizes real-time data collection and transmission of human, machine, material, material, law, and environment, and can realize real-time monitoring of the production process, and then apply AI, big data analysis and other technologies to realize automatic intelligent inspection and intelligence Quality inspection, intelligent fault prediction, intelligent parameter tuning, intelligent energy consumption optimization, intelligent equipment operation and maintenance, intelligent inventory, etc. can improve production efficiency, reduce costs, and upgrade from stand-alone intelligence to system intelligence.
2. The second source of profit for industrial Internet platforms
The management of traditional manufacturing has always revolved around people. The process of products from 0 to 1. Relying on manpower to achieve difficult or inefficient work, it can be replaced by mechanical equipment. However, after the impact of the industrial revolution and the information age, a lot of savings have appeared. Human mechanical equipment and operating systems (MRP, MRPII, MES, etc.) improve production efficiency and reduce production costs. With the development of information technology, although lagging data can be used as a reference, its essence still revolves around human experience and human on-site operations. The Industrial Internet can give a new role to the second source of profit, liberating people’s execution tasks from operation management, such as quality inspection, troubleshooting and other tasks to achieve intelligent operation management through AI and big data analysis. After reducing the number of executives, companies need more innovators to make the company’s innovation and development faster. Secondly, with the accumulation of human experience, it is transformed into a knowledge graph, which visualizes experience and knowledge domain, and guides artificial intelligence algorithm iteration and decision-making.
3. The third source of profit for the Industrial Internet
In the field of industrial Internet of Things, the development of logistics is relatively advanced. It has experienced manual logistics, mechanical logistics, automated logistics and now smart logistics. The management efficiency and cost of logistics have been greatly improved. For example, transportation management. From the early cargo transportation monitoring data that needed to rely on the data return and summary of the transportation means, now it can use GPS, RFID, and various sensors to grasp the temperature and humidity, geographic location and number of goods in transit in real time. Information, can plan transportation routes according to transportation destinations and real-time traffic congestion. Affected by technology, capital and other aspects, the current smart logistics is mainly developing rapidly in third-party logistics companies and e-commerce companies, while the development of industrial logistics is relatively slow, and most of them are still in the stage of mechanical logistics and automated logistics. Industrial Internet platforms can help industrial enterprises achieve rapid upgrade and transformation, and reduce the technical difficulty and cost of system development. Platforms such as IaaS, PaaS, and SaaS can reduce system development time from 0 to 1, and achieve rapid and low-cost digital transformation and upgrading.
4. The fourth source of profit for the Industrial Internet
Supply chain integration can improve enterprise cooperation, reduce supply chain costs, and inventory bullwhip effect to a certain extent. However, no matter whether the enterprise’s internal supply chain or the social supply chain, there is a problem of blocking the neck of multi-party collaboration, that is, the problem of data islands. . Earlier, we introduced the first to fourth profit sources. We mentioned MRP, MRPII, ERP, SAP, MES, SCM and other systems. Each system is like an isolated data chimney, which has a great impact on the efficiency of collaboration. There are two main reasons: First, the cost of the existing EDI data island connection solution is high, and it is difficult for small and medium-sized enterprises to afford it; second, when multi-party collaboration between supply and demand is involved, there is a lack of trust between each other and they are unwilling to share internal data with the outside world. The industrial Internet platform provides a variety of data collection and processing solutions to break data islands and realize unimpeded data flow. In the use of data, data security is ensured through privacy calculations, and at the same time, reasonable authorization is used to make data available and invisible, so as to solve the worries of data sharing.
5. The fifth source of profit for industrial Internet platforms
In the digital 1.0 stage, it belongs to the human adaptation system; and in the digital 2.0 stage, customized software that adapts to the company’s existing operating mode will play a vital role.
Figure 1: Comparison of the 1.0 and 2.0 stages of digital transformation
Therefore, from a technical point of view, how the platform allows enterprises to quickly and efficiently complete the development of customized software, which will play a very important role in the digital transformation of industrial enterprises. From the perspective of existing products in the market, including infrastructure as a service IaaS, platform as a service PaaS, and software as a service SaaS, industrial enterprises can easily use the low-code or even zero-code tools available from platform providers to complete system development and realize “people Everyone can be a developer”, that is, to solve the problem of “technical personnel do not understand business, business personnel do not understand technology, and the developed system is not easy to use”. In the future, low-code (or zero-code) development tools are like word, excel and other office software. The platform makes various interfaces into a graphical interface, allowing people who do not understand code development to develop their own software through icon dragging to reduce low cost. Efficient duplication of work. Employees have changed from passive executors to innovators, participating in the digital reform from top to bottom, and using tools to truly facilitate the work of business personnel.
Distributed Cognitive Industrial Internet Based on Blockchain Technology
The social economy is divided into two fields: production and circulation. The centralized industrial Internet platform uses digital technology to replace information technology to solve the problems in the production field, while the distributed cognitive industrial Internet based on blockchain technology solves the problems in the circulation field. Data trust issues, but data in the circulation field will affect product development and product quality management in the production field.
1. Reduce the cost of trust
The business model is moving from unilateral (scale effect) to bilateral (network effect), and towards a multilateral platform (ecological effect) after entering the digital age. The centralized method seems to be able to solve the trust problem, but the trust in the centralized mode mainly relies on the endorsement of a third-party authority, which is costly and inefficient. For example, when the buyers and sellers of international trade do not trust, they can use the letter of credit service to solve the payment problem through bank endorsement; in order to meet the requirements of the bank, both parties need to provide a large number of proofs to meet the terms of the letter of credit, which is very inefficient and costly. However, if blockchain technology is used, real data will be chained from the source to ensure data security, credibility and immutability. Before the transaction, the buyer and the seller have each other’s actual transaction records and product production information. Will this information help reduce the transaction cost? In the transaction process, through the application of smart contracts, once a certain agreement is reached, the payment can be automatically completed, which will greatly reduce transaction costs and transaction time. Especially when entering multilateral platforms, if a centralized credit certification system is still used, it will not be possible to build a moat of ecological construction-trust.
2. Redefine the collaborative relationship
Multi-party cooperation in the supply chain, centralized consensus mechanisms and governance solutions are more reflected in the contract level, but they cannot truly bind each other’s interests, and it is difficult to promote the sound development of the ecology. However, in a decentralized solution, the participants place assets on the chain in the form of tokens or points, and technically realize the binding of multi-party interests. Once any party makes a behavior that damages the ecological construction, it will affect the token or points. Value, which will affect the interests of all participants in the alliance chain. In the distributed cognitive industrial Internet platform, each participant in the alliance will actively maintain ecological interests, because this is also equivalent to maintaining their own interests.
3. Trusted data flow
In product development or product life cycle management, the circulation data needs to be obtained by industrial enterprises from multiple downstream partners. However, it is difficult to guarantee the authenticity and security of data under traditional technology. In the distributed cognitive industrial Internet, private computing can make data available and invisible to multiple parties, ensuring data security and compliance. In addition, tokens or points rewards are given to partners based on the amount of data contribution to encourage multi-party data sharing and circulation. In the future, the data transaction market may have more forms of compliance, such as data trust and data banking based on blockchain technology.
4. Ensure data security
In the traditional mode, industrial enterprises rely on physical isolation to isolate their data from the outside world. However, the physical isolation barrier is broken under the integration of OT and IT. How to ensure the security of data after it is delivered requires joint efforts by multiple parties. In device communication, it is necessary to do a good job in device identity authentication management to prevent data from being attacked, and the distributed cognitive industrial Internet platform implements anonymous management through device public and private keys, effectively reducing the risk of attack. In data storage, using distributed storage technology, even a single point of attack cannot allow an attacker to obtain complete data.
5. Empower business model innovation
Trusted data will usher in a new era of business model innovation, and the business role of each organization may change. Under the traditional business model (supply-driven model), information is very fragmented. Different participants in the supply chain have some product-related fragmented data. Using these incomplete data for product upgrades and customer service is difficult to achieve the best Purpose. But today with technological development, the market has begun to tap the needs of each consumer based on factors such as consumption habits and consumption characteristics. Manufacturing methods have also entered the C2M era from M2C. These require more complete, credible, and compliant data, such as , Not everyone in electric vehicles needs a battery with a battery life of 1000km. Through blockchain technology, users authorize driving data to electric vehicle companies and configure them with the most suitable and cost-effective battery. For another example, auto insurance no longer takes the value of the vehicle and the number of insurance risks as a single indicator of insurance fees. In the future, insurance fees may be collected based on credible mileage data. In addition to changes in business models, the business role of each organization may also change. The role of electric car manufacturers will also change from manufacturer to service provider. Take NIO as an example of the separation model of car and electricity, and rent and sell on behalf of others. Models allow auto manufacturers to extend their business to the management of the entire product life cycle. These model innovations are only the beginning of the digital age.
Note :  “Bullwhip effect” is a term in economics, which refers to a phenomenon of demand variation amplification in the supply chain, which makes it impossible to effectively realize information when the information flow is transmitted from the final client to the original supplier. Sharing makes information distorted and amplified step by step, leading to greater and greater fluctuations in demand information. The magnification of this information distortion is like a bullwhip on the graph, so it is vividly called the bullwhip effect.
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