The logistics industry, currently one of the greatest winners in the 2020 pandemic world, is under enormous threat going into 2021 as one of the UK’s prime business sectors is targeted by sophisticated cyber-destructors and intellectual property...
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The logistics industry, currently one of the greatest winners in the 2020 pandemic world, is under enormous threat going into 2021 as one of the UK’s prime business sectors is targeted by sophisticated cyber-destructors and intellectual property thieves.
“The logistics sector is at a major crossroad... and the real winners and losers will more accurately be defined in the next couple of years” said Robert Garbett, Founder of Drone Major Group, and one of the world’s leading advisors on the advanced capabilities of unmanned systems (drones).
“This year’s lockdowns and now the Christmas rush of pent-up demand have provided virtually all logistics companies with a rapid accelerator for growth, and most have fared extremely well. But in 2021 and beyond, there will be a massive division between those in the logistics sector who have recognised the need to embrace fast evolving new technologies, and in particular those which are safeguarded against cyber espionage, and attackers targeting their supply chains, and those logistics companies who have simply ridden the wave.”
MODERN LOGISTICS MUST CREATE NEW TYPES OF INFRASTRUCTURE TO ADAPT TO A RAPIDLY EVOLVING LANDSCAPE
Last month’s report by IBM’s ‘threat intelligence taskforce’ highlighted how hackers ‘probably backed by a nation state’(1) appeared to be trying to disrupt or steal information about the key processes to keep the newly approved Covid vaccines cold as they travel from factories to hospitals and doctors' offices. “The potential for disruption of supply chains is enormous” said Garbett and, “until recently, logistics organisations have felt they have been relatively safe... but the stakes are getting higher as the need for more sophisticated logistics services, such as unmanned (drone) conveyance is increasingly in demand.”
The economic significance of the logistics sector is huge. Trade association, LogisticsUK, has confirmed that there are over 194,000 logistics enterprises in the UK, with 2.6 million employed in the wider industry. The logistics sector has a £1 trillion turnover, contributing £130 billion Gross Value Added (GVA) to the UK economy, which is 10.2% of the contribution to the UK non-financial business economy.(2) In comparison, the scale of this industry is far greater than UK construction (3), energy (4) and manufacturing(5) among others.
Garbett added: “Data security at every point in a logistics system is paramount and like any IOT (internet of things) system there are many points which will need protection, and a strong culture of cyber security will need to exist to avoid the inevitable human error and threat from malicious human interference, which are the cause of the vast majority of cyber breaches in any system. Modern sophisticated logistics must create new types of infrastructure on a world stage to adapt to a rapidly evolving threat landscape.“Drones have been shown to offer a wide range of benefits to logistics operations, providing a cost-effective and environmentally responsible alternative to traditional methods, as well as relieving the burden on our already stretched road traffic system. One of the challenges, however, is the need to adopt drone technology within a disciplined, holistic strategy which supports the organisation and ‘future proofs’ what is put in place. To maintain its global competitiveness, it is now more important than ever that the UK logistics industry recognises the speed of drone technology advancement, embraces it, innovates, and stays ahead of the hackers.”
- Read more about Parts Pricing and Logistics @ www.fieldservicenews.com/parts-pricing-and-logistics
- Read the UK Logistics Report 2020 @ logistics.org.uk/logisticsreport
- Learn more about Drone Major Group @ dronemajor.net
- Read the IBM X-Force Threat Intelligence Index @ www.ibm.com/xforce-threat-intelligence-index-map/
- Follow Drone Major Group on LinkedIn @ www.linkedin.com/drone-accelerator/
Having previously worked together on a white paper entitled the Radical Age of Uberization, Field Service News and Localz were reunited on the topic when the software firm hosted a morning briefing and invited Kris Oldland, Editor-in-Chief, Field...
Having previously worked together on a white paper entitled the Radical Age of Uberization, Field Service News and Localz were reunited on the topic when the software firm hosted a morning briefing and invited Kris Oldland, Editor-in-Chief, Field Service News to chair the day’s discussions...
Jan Van Veen, Managing Director, moreMomentum explains how field service companies can thrive in a disruptive industry...
Jan Van Veen, Managing Director, moreMomentum explains how field service companies can thrive in a disruptive industry...
The key challenge
In the manufacturing sector, a popular topic is the potential disruption, driven by:
- New technologies like artificial intelligence, Internet of things and augmented reality
- New technology specific to the equipment we offer
- Changing customers
- Emerging markets
- New entrants into the industry
And the potentially disruptive new value offerings, operating models and business models which could emerge.
As manufacturers, we run the risk of missing the boat, so the question is: Disrupt or Be Disrupted? Most of the companies will not be able to disrupt but certainly, need to know how to thrive in a disruptive world.
In my view, the following is required to be successful:
- Full understanding of disruption and its potential impact for the business
- Clarity on what needs to change in your business to thrive in a disruptive industry
- The high pace of continuous change to innovate and execute
However, too often I see misconceptions about disruption and disruptive innovation, a lack of clarity on what needs to change and too slow a pace of change.
By consequence, manufacturers tend to make inadequate assessments and develop inadequate strategies, allowing leading competitors and new entrants into the industry to take the lead.
In this article, I will focus on what disruptive innovation is, the impact and how to prevent typical pitfalls.
What is disruption?
Disruptive innovation is a nasty beast. We have seen quite a few strong brands (almost) disappearing because of disruption, like Kodak, Nokia, IBM computers and Polaroid to mention a few.
For clarity, I’d like to categorize innovation along two dimensions:
- Impact: mainstream versus disruptive
- Scope: Customer value versus internal capabilities
Mainstream innovations annually improve the value of products and services (including the related internal capabilities) as expected by the market. The aim is to increase our value and margins by better serving our best clients.
These innovations can be small and incremental or more radical.
Examples of incremental mainstream innovations are improved fuel consumption of cars engines, improved uptime of the equipment we sell through more reliable equipment and better maintenance.
Examples of more radical mainstream innovations are cars going electric and our services becoming more predictive and performance basedExamples of more radical mainstream innovations are cars going electric and our services becoming more predictive and performance-based.
Manufacturers that fall behind the competition, have not been disrupted yet The majority of the manufacturing companies are too slow in driving the mainstream innovation and see leading competitors achieving higher growth rates, higher margins, more service – recurring and stable – revenue and higher customer loyalties being ahead of the game. As Jack Welsh said: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
Disruptive innovations break with the ongoing and upward trend of improving value. There are two ways of disruptive innovation: offering lower value at a lower price for the low-end market or offering lower-barrier solution opening new market segments which have not been served so far.
At the early stages, disruptive products and services serve a small niche, often at a lower value level.
These solutions will follow a mainstream innovation journey, increasing value and price. Gradually the products or services become a viable alternative for a larger portion of the markets.
Examples of low-end disruptions are the low-cost airlines, which offer flights at lower service levels and lower prices. This is quite attractive for business travellers who do not want to pay a premium price for meals and convenience.
One example of new market disruptions in which a new product or service serves other needs are the PC’s, which after some time started competing against the mainframes. Another example is salesforce.com, which offered so much more flexibility and lower cost of ownership than the traditional on-premise CRM systems.
Innovating internal capabilities
New technology enables us to develop new organizational capabilities.
For example, the low-cost airlines have adopted quite different operating models which allow them to consistently fly at much lower cost and hence maintain good margins at a low price level. For service operations, we see many manufacturers developing capabilities like remote service, connectivity, big-data and algorithms and predicting failures.
These, in themselves, are not value propositions and have no value for customers. However, these can be crucial capabilities for new service propositions.
Innovating external (customer) value
For maximum impact focus on customer value, not on capabilities
The real impact to drive competitive value is by addressing unmet needs or barriers to use new technology or solutions with a new product, services or integrated solutions. Examples are:
- How Rolls Royce offers a zero-disruption proposition for aerospace engines in which clients only pay per flight hour
- How MAN reduces fuel consumption by improving driving behaviour
- How Caterpillar helps managing a construction plant and will ensure at every stage of the construction the right number of the required equipment is available.
Besides the services and products, we can also increase value by enhancing customer experience, our brand and (lower) price levels.
Why does this matter?
At the early stages of a disruption, incumbents may see the new products and services entering their market.
However, compared to business-as-usual, the new products and services are relevant for a small niche only, the market volumes are small and the added value often is much lower. Their best clients are not interested.
At the early stages of a disruption, incumbents may see the new products and services entering their market.Above that, there are so many trends and new innovations, it is hard to predict which ones will become successful. This, together with the pressure to optimize top-line and bottom line and adequately serving our best clients, means it is easy to ignore the signs and consider them as irrelevant.
Disruption most often comes from outside your industry
Historically it appears that often incumbents beat new entrants when it’s about mainstream innovations, as they will defend their main business with valuable clients. However, when it’s about disruptive innovation, new entrants disrupt the industry and incumbents only start to respond (in panic) when it’s too late.
The new entrants have built the knowledge, capabilities and the brand which makes it tough for incumbents to catch up in time.
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Feb 19, 2015 • Features • aberdeen • Aly Pinder • FSN20 • Fujitsu • Future of FIeld Service • Hilbrand Rustema • Martin Summerhayes • Noventum • Bill Pollock • IBM • Steve Downton • Steve Street • Strategies for Growth
Across December and January we asked our readers to nominate candidates for the inaugural #FSN20, a list of the twenty most influential people in field service. We received nominations from across the globe through social media, email and even a...
Across December and January we asked our readers to nominate candidates for the inaugural #FSN20, a list of the twenty most influential people in field service. We received nominations from across the globe through social media, email and even a phone call or two directly into the news-desk.
Armed with a list of candidates, a Field Service News panel selected the final list of twenty based on the number of nominations, their impact on the industry (past, present and future) and their sphere of influence in both the physical and digital world.
After much long deliberation, heartful debate (read arguing) and enormous amounts of coffee we managed to whittle our list down to a final twenty which we pleased to present to you here the inaugural edition of the #FSN20. You may not agree with our selection and if you don’t tell us, tell your friends, tell your colleagues, hell tell the world – because at the heart of it that’s what this list is all about, getting people talking about excellence in field service and raising the profile of those leading us to a better future.
We are now announcing who made the list in alphabetical order in four sections across four days. So without further ado we are pleased to bring you the final five of the #FSN20
Aly Pinder, Senior Research Analyst, Aberdeen
Having written or co-authored over 50 research reports, and benchmarked more than 4,000 service executives across 5 years with Aberdeen, he writes and speaks with authority and understanding and is widely respected across the market.
Bill Pollock, President and Principal Consulting Analyst, Strategies For Growth
Having worked for Gartner, Aberdeen and been a founding partner of The Service Council, his analysis is highly sought after and he has authored some of the most detailed research available in the industry. His white papers, blogs and posts are widely read across the globe.
Hilbrand Rustema, Managing Director, Noventum Service Management
Co-author of seminal service book, “Service Economics” and managing director of one of Europe’s most prominent Service Management consultancies, Noventum Service Management, Rustema has been at the heart of evolving service thinking across the continent for many years and remains at the forefront of the sector today.
Steve Street, IT Security & Infrastructure Architect, IBM
Steve Street, IT Security/Infrastructure Architect, IBM – In a long industrious career with computing giants IBM Steve has been an excellent servant to service science. He has worked with many of the key leaders and thinkers in this area including Professors Irene Ng, Scott Sampson and fellow Cambridge University Alumni Andy Neely on a wide range of initiatives to unite academia, government and industry in the development and promotion of service science as a discipline.
He remains a key figure in the evolution of the area and his work is shaping the way leading organisations are seeking to deliver services.
Martin Summerhayes, Head of Strategy and Business Development, Fujitsu
He was the man who devised HP’s service strategy which became a billion dollar proposition, he has advised London’s Metropolitan police force working with local and national government, paramilitary and commercial companies, before taking on his current role as Head of Strategy for Fujitsu. And he still finds time to take a proactive role in promoting service excellence in the UK nonprofit group, The Service Community.
Follow Martin @martinsummerhay
Special Mention - Steve Downton, Downton Consulting
Whilst Downton sadly passed away in 2013 his long-standing legacy remains both in the approach he developed to service as outlined in the book, ”Service Economics”, which he co-authored with Hilbrand Rustema and Jan Van Veen, as well as in the non-profit organisation he created, ”The Service Community”, which continues to operate as a significant organisation dedicated to sharing best practices amongst service companies operating the UK.
Steve’s impact on the field service industries will be long felt.