An example of Business Model Innovation with IoT – Applying Lean Innovation and Growth Strategies

I can't tell you how many CEOs of manufacturing companies I've met up and down the Americas over the years. And pretty much every one of them thinks that an IIoT project has to be large and is going to take a lot of money to set up. Well, I won’t lie, in most cases they're right, but that doesn't always have to be the case.

If you're cute and the opportunities are there, then it's possible that even a small IIoT project could be the catalyst for a much bigger business transformation.??

'Lou's smart trailer' is a good example. And I'm writing about it because I came up with the idea in the first place (and I’m proud of it), and because it shows how using the IIoT creatively to solve a small and specific problem can lead to a whole new business model.

This project was for a supplier of consumables to the fracking industry in south Texas and it's all to do with vendor-managed inventory. In other words, the supplier holds stocks that are called off by the customer when they need them.

Here's the problem that was waiting to be solved.

As with any extraction operation, you need your equipment in the field to always be up and running because any downtime comes with a hefty price tag. And because most fracking sites are in the middle of nowhere, the last thing you need is to find you're missing the right filter or hydraulic hose, because getting a replacement means waiting at?least a day for it to arrive. For more complex pieces of kit, you can double or triple that time.

Not surprisingly, to prevent that happening, most operators try to keep a good stock of the consumables they're most likely to require onsite. The downside of this is that if you're not managing this inventory tightly, you're going to end up with a lot of 'shrinkage' through uncontrolled use, which means you'll end up being billed for 'ghost' products.

My solution?

Take an 8 ft by 24 ft mobile trailer, kit it out as a self-contained unit filled with every kind of pump, filter, gasket, belt, liquid and lubricant you're likely to need and park it somewhere onsite.

Then make the trailer secure by fitting a strong electromagnetic lock on the door to control entry and exit. So, you use a keypad on the outside to get in, the door closes automatically after you enter, and once inside, a surveillance camera monitors your movements.

The next step was to make the trailer 'smart' by fixing RFID tags to every item of inventory. If you want to take an item from the trailer you have to check it out on the system which immediately sends details of the transaction wirelessly to accounts for billing and opens the door for you to get out.

I think that's pretty neat because not only did my smart trailer give the consumables company an unprecedented degree of control over their stock, but it also created a new business model for them, since they could begin charging customers a monthly fee to?access this new secure parts store. And having an accurate digital picture of consumable use also meant they had a way to anticipate future inventory requirements, and even customize prices for individual items rather than having to charge a flat rate across every item.

I refined this project late by adding in air conditioning to protect temperature-sensitive consumables and help extend their shelf life.

At the time, this wasn't an easy project to put together because it involved having to connect many different systems and components to make it work. If I was doing the same thing today, to save a great deal of time and effort. I'd use an IoT platform to do most of the heaving lifting.

This just shows you what you can do with the IIoT with a little imagination. And for many smaller companies, a project like 'Lou's trailer' could be a smart answer. If you want to know more about how I did this, or how you could do something similar for your business, let me know and I'd be happy to talk.