Evolution of consumer IoT: 2019 forecast from WEF's annual meeting
I had the opportunity to take an active role in this year’s discussions at the World Economic Forum’s (WEF) annual meeting at Davos. Selected as a WEF Technology Pioneer, it is both exciting and validating to see the themes we evangelize come into focus with live debates and energetic conversations in the snowy, sunny Swiss Alps.
Consumer diversity in 2019
A lot of the discussion at Davos this year focused on the diversity of the environments in which consumer product brands and manufacturers are operating — for instance, balancing the need to respond to Gen Z’s values-driven purchasing behavior in contrast to the experiential needs of aging populations in developed markets. Or the tapestry of data management regulations across the world — Europe’s GDPR in one corner, China’s regime in another, and the relatively loose framework in the U.S. in another.
The fundamental message is we now live in a world where:
- consumers expect localized and personalized experiences;
- the effectiveness of data integration and data flow has to navigate national rules; and
- the competence of instrumentation and data management has moved from being a cost-center issue to being a value-driven determinant of competitive advantage.
Global impact of IoT
Specifically in 2019, we are seeing a couple of key drivers influence the global impact of IoT in the consumer products industry:
- consumer demographics and behavior; and
- digital-driven competition.
With this in mind, following are five trends to watch in 2019:
1. Transparency of product provenance and new models of localized and personalized retail and service delivery.
Meeting the divergent needs of Gen Z and Gen X is challenging the consumer products industry. Gen Z consumers are making values-based purchasing decisions, demanding transparency from brands. At the same time, Gen X and the aging population of retiring Baby Boomers are demanding ever more convenience. Brands that can deliver both transparency and personalized consumer experiences are going to rise to the top.
2. Increasing rules and competencies to gather and make use of real-time product data on a global scale — while protecting consumer trust.
When it comes protecting and managing consumer data, global brands are faced with a tapestry of rules and regulations. For instance, Europe led the way with personal data protection and privacy with the GDPR, which is great if a brand is only operating in Europe. But if a brand is global, it not only has to worry about the GDPR in Europe, but also a completely different set of rules in China, somewhat laissez-faire rules in the U.S. and so on. Despite the global differences, what is clear is regulations to protect consumer data and trust are inevitable. There simply isn’t going to be one consistent rule set. Global brands must navigate different rules in different geographies.
3. Real application of artificial intelligence to production and delivery processes.
We are increasingly seeing consumer product brands apply artificial intelligence to production and delivery processes to ensure supply chain integrity and to enhance speed to delivery. Not only are machine learning and AI transforming today’s supply chains and manufacturing plants, but the technology is being applied at scale.
For instance, machine learning is helping brands detect counterfeit products and protect against parallel trade at scale. Machine learning is also being applied in manufacturing plants to optimize the sourcing of raw materials and to predict movement in inventory.
We will see continued adoption of AI and machine learning as the technology becomes more accessible. This is important because the competitive advantage is exponential. There is a real sense that the countries, companies and platforms driving AI have a disproportionate amount of power in the emerging world.
4. Scaling up of new operating models for manufacturing to compete with agile and dynamic value chains.
At Davos, there was a lot of talk about the need for supply chains to operate in a much more dynamic fashion to meet real-time consumer demand. Not only do consumers expect real-time delivery of products and services, but they also want them customized to meet individual needs. The traditional model of high-scale manufacturing, churning out gazillions of the same widget, is no longer applicable. Manufacturing needs to adopt new models to close the gap between design and delivery in an era of instant gratification and mass customization.
5. Urgent — and necessary – high-impact response to sustainability and, specifically, to climate change.
We all need to be taking steps in a sustainable direction. Working together as a global economy to build consumer awareness and mandate supply chain transparency is the only way we will achieve a truly circular economy.
The good news is that brands are investing downstream in their sourcing, manufacturing and distribution processes to improve their capacity for sustainability. The challenge is making this information available to consumers. With strong consumer awareness, sustainability within the supply chain becomes a competitive asset for brands, strengthening brand trust and authenticity for consumers and winning market share. Today, consumers prioritize brands that promote sustainability as they seek ways to make an impact with their personal behavior. See my WEF blog post touching on this theme.
The future of IoT for consumer product brands
For my company’s mission to organize the world’s product data, it’s an encouraging picture. There are a lot of issues to work through for digital transformation in the consumer product industry to yield its full value potential, but the framework is coming into clear focus in 2019.
The ability to have traceability of every product item through the supply chain — into the hands of the consumer and beyond — is table stakes. Direct connection with the consumer is the only way to compete in an experience-driven consumer world. The fidelity and real-time application of data gathered during the product’s supply chain journey is the keystone to competitive advantage for consumer product brands — for efficiency, integrity protection, transparency, compliance and sustainability.
In the months ahead I’m looking forward to sharing more thoughts on the future of IoT for consumer product brands including:
- its impact on sustainability in manufacturing;
- blockchain in the supply chain; and
- consumer trends where these innovations are being applied.
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