The New Wave of the Amazon Effect: How Digital Operations Are Changing Industrial Spaces

December 11, 2018

The demand market says, “have what you want, when you want it, where you want it,” and the rise of this slogan is called the Amazon Effect. The ruling paradigm in consumer markets such as retail and food, it is now rearing its head in industrial markets.

Digital operations are the only way to keep up.

What is the Amazon Effect?

The Amazon Effect is when Amazon-style consumer expectations begin to affect a new vertical market. The expectations are that every customer’s needs — and complaints — get satisfied, immediately. It’s associated with the ease of eCommerce. At Amazon itself, some more famous tools used to cater to this ideal are robots in warehouse spaces that can move boxes faster than humans and mass coordination of 3PL providers through Amazon cloud services to provide rapid delivery.

Outside of Amazon, the “right now, right way” demands of customers have been increasingly met in retail and food spaces through technology. Panera Bread’s self-checkout tablet kiosks let customers find, customize, input and pay for their order without ever speaking to a cashier. Chick-Fil-A’s app gives individuals the ability to avoid the line by ordering to-go, customize their food, and even get rewards for participating.

Batch of One Manufacturing

While historically exclusive to consumer retail markets, the Amazon Effect is coming to industrial spaces. In Stephanie Neil’s recent Automation World article, “The Factory Faces the Amazon Effect,” she describes these new pressures as the desire for “convenience, visibility and accessibility” in the supply chain. Corporate leaders used to this mindset in their personal lives are forming the same expectations in their business lives.

The first industrial vertical markets to be affected by the Amazon Effect were direct-to-consumer spaces, such as food distribution. In these manufacturing spaces, this demand market has led to “batch of one” style production goals and “flexible manufacturing” systems. Marc Wulfraat of MWPVL International emphasizes that the end demand for industrial organizations is “get it to me faster,” in his article “How the ‘Amazon Effect’ is changing the American Manufacturing Industry Forever.” For example, bottling companies have brought down minimum order numbers from truckloads to crates or even single servings that can be requested, packaged and delivered in one day.

As well, factory floor logistics come together like Lego constructions, with swappable block systems and transportable stations. This new internal pathway can be traced with electronic workflow software and complete digital threads. Emerson, a process systems and solutions group, has worked with pharmaceutical companies to accomplish personalized medicine packs with verifiable product history.

Digital Operations

According to Material Handling & Logistics in “Battling the Amazon Effect,” 18% of manufacturers say they are digitally mature, while 35% claim they will be fully digitized within three years. For most large industrial organizations, integrated planning and execution has been a successful avenue of technology investment. These investments aim to increase transparency, ease and access.

In B2C spaces, the front-facing technology meeting this demand market includes apps and responsive, user-friendly websites. While responsive, user-friendly web presences remain a priority, B2B and heavy industry leaders have a range of tools to digitize their operations: data science, demand sensing, eCommerce, automation, intelligent and flexible control logic, IIoT, cloud operation tracking and I/O communication.

The key to implementation is interoperability, seamless integration and advanced automation. That’s why one of the first elements of digital operations is data science. This technology comprises three parts: accurate, precise and reliable collection; thorough analysis and interpretation; and implementation of data-backed decisions.

Consider the use of data science in the heavy industries of molding or welding. Using sensors and IIoT devices, plant managers collect information about their process. Everything from operating temperatures to asset repairs get logged in a single-layer, Ethernet-connected cloud service. From here, observations get translated into numerical and digital values for data modeling. At this point, a factory digital twin can be created to simulate day-to-day operations. Using AI-analytics, information from simulations and models can interpreted and translated to next step solutions.

After those recommendations are taken into consideration, operations managers can effectively determine what digital and automation tools will help their process mature. Across the board, advanced robotics and machinery have returned positive results, especially in cobotic functionality. From magnetic cart systems to smart actuators, various elements of the manufacturing process can be updated. All of this results in less equipment sitting in stock and faster lead times, helping the budget move to black.

Amazon Effect on Industrial Spaces

These customized, advanced automation solutions deliver strong results. Consequentially, industrial operations across markets are anticipating the Amazon Effect reaching them. They are rapidly switching from legacy system controls to tailored, responsive digital operating models and technology-oriented business plans. The industries just feeling the wave include heavy machinery manufacturing, chemical processing, public safety and public services, such as utilities.

Of course, the blueprint for satisfying the demand market is different for systems and service-based industries. These kinds of enterprises include utilities such as energy or wastewater management. There is a complicated customer base of public entities, businesses and consumers that have varying levels of needs.

Consider public energy management. Utilities experiencing power outages may field angry calls from homes and businesses demanding them to “fix it now.” While this isn’t always possible, these utilities have taken steps to speed up their systems. A major tool is constant monitoring from IIoT devices embedded in the grid. These devices help prevent outages by sending warnings about atypical energy storage and transfer behavior. Customers don’t need fixes “now,” because the utility anticipated a problem and solved it preemptively.

Likewise, wastewater management services are gearing up to satisfy growing demands, as well as avoid water utility catastrophic failures that can put providers out of business. By using demand sensors to engage in remote pressure monitoring, water companies know their capacity and can streamline processes to manage volumes and quality better.

Regardless of the industry, digital operations are the new standard for industrial systems. Relying on control systems from 20 years ago will return results adequate for 20 years ago. If you would like to upgrade your factory floor or industrial process, Sealevel has the digital I/O solutions that will make your operations intelligent.