Change in value creation: In search of business model 4.0

By Ellen Sünkeler | Fraunhofer IML – Companies can only tap the full potential of digitization if they provide innovative digital products and services with new, valuable business models.

W hen it comes to digital business models, companies like Airbnb or Uber that have completely changed existing markets are often named. They have even managed to revolutionize an entire industry without a physical product of their own. Other companies, however, made formerly physical products like music CDs, books or video cassettes available anywhere and anytime as digital products on platform markets and founded a completely new market. In fact nobody can escape these changes in value creation today. That applies in particular to technological innovations by Industry 4.0: according to a study by business consultants McKinsey, 80 per cent of all companies expect this to have an influence on their own business model. However, a structured further development of business models rarely takes place in everyday business life – despite being highly relevant for a company’s success. In the context of digitization, growing companies in particular have the opportunity to develop new services and therefore new business models on the basis of established successful products.

In the Innovationlab Hybrid Services in Logistics, the scientists will use various showcases along the supply chain to demonstrate how both existing and new technical solutions can be combined with modern services. Practical business models must also be considered during this development process. A good example of this is the »passt« system (abbreviation for packing assistant), a digital support for intralogistics staff developed in the Innovationlab. »passt« (abbreviation for packing assistant) shows the employee the intended packaging position of articles within the shipping carton by marking them with LED stripes.

Example: The packing assistant

The benefits of this assistant lie in the clear visualization that neither restricts the employee’s field of vision nor the freedom of movement, in its simple integration in existing packaging workstations as well as in its cost-effective implementation. In combination with the PUZZLE® software, providing a packing scheme that either already exists or that can be generated dynamically by an optimization algorithm, the loading of pallets and shipping cartons can also be further optimized.

Within the context of developing the »passt« business model, the scientists focused the value proposition of the new packaging assistant on three key benefits for potential users. First, when packaging the goods, less space is wasted and process times are improved at the same time. Secondly, the risk of damage to the goods is reduced. Thirdly, the system is so easy to operate that employees can familiarize themselves with it very quickly. The key value proposition identified here was an improvement in the customer’s packaging processes in terms of time and quality criteria.

Up to now, the packaging assistant only exists as a prototype. However, the researchers in the Innovationlab have slipped into the role of a future supplier. If this »future supplier« wants to effectively keep up the value proposition of the new system, they have to actively control the quality of the processes at the customer’s site and thus continuously improve their product. In this context, the recommended business model is an approach in which the manufacturer does not enter the market as a hardware supplier but as a service provider. In the age of digitization, more and more business models are based on this principle. Several models are possible: subscription with monthly fee or pay-per-use, i.e. the customer only pays if he uses the system, possibly also depending on the size of the packaging or the weight of the goods. Such variants promise the customer a solution which is both economically profitable and technically reliable. The advantage of this business model 4.0 for the company is that they can position themselves as a service provider with additional consulting and services for all aspects of the product.

Dortmund, August 2019