Today, companies can employ technology to achieve a perfect synergy between profit and sustainability. In other words, they can move beyond viewing sustainability as a corporate ethical duty and reinterpret it as a driver of modernization and, most importantly, competitiveness. Smart connected products play a crucial role in this journey.
Literally, smart connected products are devices equipped with the ability to acquire, process, and transmit data throughout their entire lifecycle.
The manufacturing paradigm 4.0 is based on them, but the concept of smart connected products goes far beyond industrial shop floors: thanks to the integration of IoT technologies and advanced data analysis and transmission capabilities, any device, from healthcare to consumer products, can be made intelligent and connected, capable of interacting with its producer, service providers, users, supply chain actors, and other devices within a broader ecosystem, in a continuous exchange of information.
The opportunities that smart connected products offer businesses are significant, but to fully exploit them often requires a change in approach. Frequently, companies view digitalization and data valorization as mere drivers of efficiency; in reality, as we will see better later on, solutions like smart connected products can also help them rethink processes with a circular perspective and develop new business models aimed at achieving a perfect mix of profit and sustainability.
We have already mentioned that the ability to acquire, process, and transmit information is the distinctive feature of smart products and that this has a direct impact on corporate profitability. Connected products can not only be monitored to enhance their performance over time, but they also provide valuable feedback for updates and can predict potential issues. In this way, they:
Using, but also producing smart connected products is in itself an opportunity for all organizations.
Connected products exchange information within supply chains throughout their lifecycle, creating opportunities to implement the principles of the circular economy. For example, by collecting and analyzing performance data, companies can extend the useful life of their products and obtain valuable information for component reuse at the end of their lifecycle; they can then place orders only when necessary and organize efficient refurbishment or repair processes, further extending product life and reusing components for the development of new models, reducing waste and supporting sustainability initiatives.
Connected products enrich the product with services, creating new revenue streams and extending the product’s life: the user will not have to purchase new products if the product in use is continuously updated with new features and integrated with the best services.
This is how companies pursue so-called sustainable profit and gain not only financially but also in reputation and long-term value, positioning themselves as organizations capable of meeting current and future market needs, ensuring a positive impact on the environment and society.
Smart connected products are also fundamental for implementing a business model based on servitization, which jointly pursues profitability and sustainability.
In short, servitization is a business model focused on providing services rather than merely selling products. Smart connected products enable servitization, as the entire ecosystem of services that the company associates with the product (enhancing profitability) is based on the continuous processing, or rather the valorization, of data and information flows coming from the product itself and the ecosystem in which it is integrated. Consider, for example, predictive maintenance of industrial plants, smart management of energy consumption for any device, the ability to intervene preventively on smart building systems, mobility infrastructures, and much more.
Servitization can have a significant impact on company profitability as it allows for more consistent revenue streams through service contracts. This approach not only fosters greater customer loyalty but also differentiation from the competition.
The impact on sustainability is equally evident: servitization promotes more efficient resource management, reduces the need for purchasing goods, encouraging circularity and optimization of existing resources. As anticipated, the major goal (but also the challenge) for the manufacturer becomes prolonging the product lifecycle as much as possible, which in itself helps reduce waste and emissions associated with the production and disposal of any material element.