Internet of things applications in business field in foreign countries and implications to vietnamese enterprises

INTERNET OF THINGS APPLICATIONS IN BUSINESS FIELD IN FOREIGN COUNTRIES AND IMPLICATIONS TO VIETNAMESE ENTERPRISES Assoc Prof Dr Do Thi Dong National Economics University Abstract This paper investigat[.]

INTERNET OF THINGS: APPLICATIONS IN BUSINESS FIELD IN FOREIGN COUNTRIES AND IMPLICATIONS TO VIETNAMESE ENTERPRISES Assoc Prof Dr Do Thi Dong National Economics University Abstract This paper investigates Internet of Things (IoT), one of the most popular technologies of The Four Industrial Revolution Based on the concept of IoT, characteristics and structure of IoT system as well as application of IoT in doing business in foreign countries, some implications are drawn to Vietnamese enterprises in applying this technological trend Key words: The Four Industrial Revolution (Industry 4.0 or FIR), Internet of Things (IoT), sensor, virtual - physical system Introduction The term Industrial Revolution 4.0 – FIR or Industry 4.0 was first introduced in 2012 in document originated from 2012 Hannover Exhibition Fair in Germany Industry 4.0 became the shared concern all over the world after the meeting of the World Economic Forum in January 2016 With the theme of “Mastering the Fourth Industrial Revolution”, the 46th Annual Meeting of WEF in Davos Klosters, Switzerland mentioned the shaping of Industry 4.0 and it challenges to human Industry 4.0 is creation in the base of digital revolution, especially the use of internet It refers to the development of cyber- physical system by the integration of Internet of Things, Cloud Computing, service innovation, Artificial Intelligence, Big data, and other technological advances Industry 4.0 created challenges to people in doing business as it makes a lot of changes in business system, such as change in communication between people and machine (people to people, people to machine and machine to machine), change in organizational structure to vertical networking (of smart production systems) and horizontal integration (via a new generation of global value chain network), etc (Hoa, 2017) Thus, understanding the key technologies of Industry 4.0 and their applications is important for enterprises Internet of Things applications helps companies gain profits to better survive and compete in the market by saving costs, enhancing productivity and quality and finally making customers more satisfied It, thus, contribute to enterprise’ sustainable development 359 The purpose of this secondary research is to investigate Internet of Things (IoT), one of the most popular technologies of The Four Industrial Revolution Based on the concept of IoT, characteristics and structure of IoT system as well as application of IoT in doing business in foreign countries, some implications are drawn to Vietnamese enterprises in applying this technological trend Internet of Things - IoT Internet Nowadays, people all over the world are familiar with the term “Internet”, a powerful global communication medium When the concept of internet first introduced, it was mentioned as computer network connecting two or more smaller networks Internet originated with the U.S Government It was known as ARPANET, a computer network that was built by the U.S Government in the 1960s The internet was brought to the public on a larger scale at around 1995 English Oxford Dictionary defined internet as a global computer network providing a variety of information and communication facilities, consisting of interconnected networks using standardized communication protocols Internet is a network of networks that consists of millions of private, public, academic, research, business, and government networks, of local to global scope, those are linked by a broad array of electronic, wireless and wired networking technologies Internet has been considered the most cost- effective communication method in the world Through internet, a lot of services are available, including email, conferencing services, online movie and gaming, data transferring or sharing, messaging, forums, social networking, online shopping, financial services, etc Internet has great impact on people’ lives since it formed new styles of social interaction, activities and associations There has been a tremendous growth in internet usage According to International Telecommunication Union (ITC), the number of Internet users has increased from 738 million in 2000 to 3.2 billion in 2015 That’s a seven-fold increase that brought Internet penetration up from 7% to 43% of the global population (ITC, 2016) Figure shows the number of individual using internet worldwide Regarding to the figure, the number of internet users rose from billion in 2005 to billion in 2010 360 Figure 1: Individual using the Internet worldwide Source: International Telecommunication Union, 2016 The comparison of proportion of young people aged 15-24 using the Internet and the total population is shown in Figure Regarding to the figure, the proportion of young people (71%) is significantly higher than the proportion of the total population using the Internet (48%) The percentage of individuals using the Internet in developed countries is higher that of developing countries and, of course, less developed countries Figure 2: Proportion of individuals using the Internet, by age, 2017* Source: International Telecommunication Union, 2017 361 Note: * Estimates CIS refers to the Commonwealth of Independent States Proportions in this chart refer to the number of people using the Internet, as a percentage of the total population, and the number of people aged 15-24 using the Internet, as a percentage of the total population aged 15-24, respectively Sensor Nowadays, sensor becomes increasingly familiar with people A sensor is a device that converts a physical phenomenon into an electrical signal A sensor is often placed inside a protecting coverage to create a test probe which may or may not include supporting circuit This system is often called sensor also Sensors are important devices in virtual- physical system They represent part of the interface between the physical and virtual worlds Sensors have some characteristics At first, it has ability to transfer from physical input signal to electrical output signal Secondly, sensors have ability to ensure accuracy and precision Sensors are expected to represent the correctness of its output and give the same reading when repetitively measuring the same measurand under the same conditions Sensors are also expected to have ability to produce the same output value when measuring the same measurand over a period of time Thirdly, sensors have sensitivity It shows the relationship between input physical signal and output electrical signal Any change in input will cause in parallel change in output Fourthly, sensors have reproducibility, the ability to produce the same responses after measurement conditions have been changed Next, error exists in sensors It is the difference between the actual value of the measurand and the value produced by the sensor It can be caused by the variety of internal and external sources and can be systematic or random When the error is the largest, the uncertainty appears in the sensing system Noise also exists in sensors It is unwanted fluctuations in the output signal of the sensing system, when the measurand is not changing In addition to these characteristics, sensors have some more such as stability, drift, resolution, etc Internet of Things (IoT) The term Internet of Things was introduced in 1999 by Kevin Ashton, one of the founders of MIT’s Auto ID lab The concept is simple but powerful If all objects in daily life were equipped with identifiers and wireless connectivity, these objects could communicate with each other and be managed by computers (Lopez, 2013) According to Ashton, if people have computers that knew everything, using data they gathered without any help from people, people would be able to track and count everything, and thus, greatly reduce waste, loss and cost People would know when things needed replacing, repairing or recalling, and whether they were fresh 362 or past their best People need to empower computers with their own means of gathering information, so they can see, hear and smell the world for themselves, in all its random glory (Ashton, 2009) IoT describes a system where items in the physical world, and sensors within or attached to these items, are connected to the Internet via wireless and wired Internet connection (Lopez, 2014) IoT is defined as an open and comprehensive network of intelligent objects that have the capacity to auto- organize, share information, data and resources, reacting and acting the face situations and changes in the environment It refers to the use of intelligently connected devices and systems to leverage data gathered by embedded sensors and actuators in machines and other physical objects (GSM, 2014) In the term IoT, things are interchanged with the word “object” They could be living things and non- living things, including people, animals, plants, birds, servers, applications, cars, coffee machines, electronic devices, etc Sensors are the most important hardware in IoT system since they have function of transferring input physical signal into output electrical signal as mentioned previously IoT has some key characteristics as follows: Intelligence: IoT is a combination of computers and algorithms The system makes things smart, having capabilities to respond to changes in the environment in intelligent way Connectivity: Everything in IoT are connected in three ways including people to people, people to machine and machine to machine Connectivity helps individual objects contribute to collective intelligence of IoT Dynamic changes: Since IoT is intelligent and has capability to react to changes in the environment, the system is dynamic Status of each object in the system may change continuously and so does the environment Signals reflecting the changes are continuously updated Enormous scale: As objects in IoT can be people, animal, plants, machines and any other physical things and they can be combined by wireless or wired internet, the scale of IoT system can be enormous Manufacturing IoT system even has thousands of things Heterogeneity: Devices and / or objects in IoT are different from others in term of structure, hardware platform and software Thus, each object can interact with other in different ways 363 Sensing: As mentioned previously, IoT would not be possible without sensors, which are the most important hard objects of IoT system Sensing technology is specific characteristic of IoT One IoT system consists of four different layers of technologies supporting IoT They are smart device/ sensor layer, gateways and networks, management service layer, and application layer Technologies used in IoT are categorized into three groups including technologies those impact the devices and microprocessor chips, technologies those support networking sharing and address capacity and latency issues and technologies those impact the management services which support IoT application (Keyur and Sunil, 2016) Cyber- physical system (CPS) Cyber- Physical System or cyber physical system is a mechanism that is controlled or monitored by computer- based algorithms It is integration of computation, networking, and physical processes CPSs are systems that link the physical world through sensors If we consider IoT the basic infrastructure, cyber physical system is coming on the top of that infrastructure In cyber physical system, there are two key components including IoT and Cloud Computing IoT acts as “machine” to create data whereas cloud provides a “door lead to a room” to storage data Application of IoT in business field Although the term IoT was introduced nearly 20 years ago, it has been paid attention for several years, since the development of smart phone, tablets and wireless connection IoT can be applied in a number of areas Among them, eight popular areas are retailing, vehicles, home, offices, factoties, cities, human, outsiders The followings are some examples of IoT applications Factories IoT provides a strong means of monitoring various processes in manufacturing IoT helps manufacturers to optimize operations, transport production materials, assembly components, check product quality, enable preditive maintenance, predict deffects, etc It can be a base for a company to create smart factory in which a numbers of sensors are embedded to people and machines Each sensor records data about the situation of the object and send signal to others, who receive and understand the sender’s conditions and react to the situation By using IoT, the system run smoothly as long as the signal show that things’ situation are controlled IoT brings manufacturers benefits such as improving visibility across their manufacturing operation, improving resources utilization, reducing wastes, saving 364 costs, and finally improving productivity and quality It leads to a higher level of customer satisfaction Application of IoT can be seen in a number of factories Rich data, ubiquitous connectivity, and real- time communication are chaging the way companies work (Box 1) An example of applying IoT in quality checking in Daimler and Volkswagen is shown in box According to the box, by applying IoT, Daimler can reduce the deffect rate and make the production more cost- effective where as Volkswagen can better make decision in processes management since they have right information at the right place and at the right time According to many manufacturers, application of IoT is a must, but not an option Box 1- Application of IoT in the automotive sector The automotive sector is also using Industry 4.0 successfully Daimler, for instance, evaluates machine data to improve the quality of cylinder head production The persons in charge can thus detect deviations and irregularities at an early stage in the manufacturing process and take action quickly As a result, they reduce the error rate and make the production process more cost-effective Volkswagen is pursuing another exciting approach: In an Industry 4.0 project, it uses RFID (radio frequency identification) technology to capture data from components in test vehicles faster The components are already fitted with RFID chips by the suppliers When the vehicles are tested, engineers can identify the installed prototype parts effortlessly and display detailed information they need for development They thus have the right information at the right place and at the right time Source: Infineon, 2018 Outbound logistics Sensors are embedded to things such as people, trucks, containers, ships, etc in order to monitor the transportation process By receiving signal from on- board sensors, containers and packages can be tracked and data about environmental conditions in terms of temperature, hazardous, humidity, etc can be recognized to ensure the containers and packages are in safe conditions Sensors also helps carriers to prevent theft and product damage They also helps drivers easy for parking as they can easy access parking lot via virtual system Example of IoT application in The Port of Hamburg is presented in Box According to the box, the Industry 4.0 project helps to simplify the processes and the port can transship goods faster than before 365 ... structure of IoT system as well as application of IoT in doing business in foreign countries, some implications are drawn to Vietnamese enterprises in applying this technological trend Internet of Things. .. etc Internet of Things (IoT) The term Internet of Things was introduced in 1999 by Kevin Ashton, one of the founders of MIT’s Auto ID lab The concept is simple but powerful If all objects in daily... population using the Internet (48%) The percentage of individuals using the Internet in developed countries is higher that of developing countries and, of course, less developed countries Figure